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Home > Blog > AttPro Tip of the Month February 2023
TUESDAY, FEBRUARY 7, 2023

AttPro Tip of the Month February 2023

Do Not Pass Go Do Not Collect $200 Waht to do When Your Client Doesn't Pay

If only having your bills paid was as easy as collecting rent for Park Place.  Unfortunately, when clients do not make timely payments, or simply refuse to pay your bill, lawyers are put in the position of possibly having to file suit to collect their fees.  However, before you file – and potentially open yourself up to a malpractice claim – consider the following:

  • Review your client contract – What does your fee agreement say about handling past due balances?  Be sure to follow your contract and cite the agreed upon collection procedures in your follow up demand correspondence to your client.  Your letter could prompt payment if your client is reminded of their payment obligations and potential for additional fees incurred if you file suit. 
  • Conduct a review of the file – Be sure to thoroughly review your file for any potential wrongdoing that could become a counterclaim or grievance.  Perhaps have a colleague take an objective review for anything you may have missed.
  • Consider whether collectable – Although you undoubtedly worked hard to earn your fee, a judgment against your client on your bill is meaningless if they are unable to pay.  Moreover, you may spend more time and money to file a lawsuit, obtain a judgment, and try to collect it. 
  • Has the statute of limitations passed? – If possible, wait until the statute of limitations for a malpractice claim has passed before suing your client for fees.   

How can you avoid a fee dispute in the first place?  Be sure to carefully track monthly payments and keep your client advised of the balance before it becomes overwhelming for them.  They may not realize how quickly fees may be incurred on an hourly basis.  If they are unable to pay your bill in full each month, set up reasonable payment arrangements.  This will help your monthly cash flow and provide them with a reasonable time frame for payment.  If you anticipate receiving a settlement check for a contingency fee matter, have the check be made payable to you and your client and be sent to your office.  Provide your client with a breakdown of the costs and expenses and your fees that they can sign off on and then cut them a check from your trust account.  By staying on top of your accounts receivable and following the best practices for collection, you can avoid rolling the dice on whether you are paid – or perhaps even sued.  

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This document should not be construed as legal advice. Because the facts applicable to your situation may vary, or the laws applicable in your jurisdiction may differ, please contact your attorney or other professional advisors if you have any questions related to your legal obligations or rights, state or federal laws, contract interpretation, or other legal questions. Attorney Protective is a MedPro Group/Berkshire Hathaway company that protects the reputations and assets of attorneys across the nation. "Attorney Protective" and "AttPro" are also used as marketing names used to refer to the attorney professional liability programs administered by Attorney Protective or its affiliates and underwritten by National Liability & Fire Insurance Company, AttPro RRG Reciprocal Risk Retention Group, National Fire & Marine Insurance Company – each of which has earned an A++ financial strength rating from A.M. Best – or other Berkshire Hathaway affiliates. Product availability is based upon business and/or regulatory approval and may differ among companies. © 2023 Attorney Protective. All Rights Reserved.

 

 

Posted 2:35 PM

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