A dilemma arising with greater frequency is that a client receives the lawyer’s bill, contends that it is too high and refuses to pay it unless the invoice is written down.
Several ways exist to respond to such a request, depending on how the engagement has been structured and billed.
If the client signed an engagement agreement before the matter began, the lawyer is under no obligation to write down the invoice simply because the client thinks it is too high. Because the engagement agreement is the foundation for all invoices, it should be as detailed as possible in the terms spelled out.
Two criteria in particular can prevent a write-down request. The first is to include a written fee agreement. States increasingly require all agreements to be in writing, so lawyers should embrace having a written fee agreement and a budget by which the client affirms what to expect in terms of events, money and time. Second is to bill in a regular and timely way, using statements that contain a full narrative of the work done and the goal accomplished by that work.
Under the rules of professional conduct concerning fees, the only professional requirement is that a fee should be reasonable and in proportion to the value of the services performed. Does the lawyer have the skill and experience to justify the fee? Does the client understand the amount and nature of the fee and the work done to justify it? Answering no to either of these questions could mean that an invoice write-down should be considered.
Note that what is being discussed here is not the result of a matter but the value a client attaches to it. Lawyers and law firms can be held accountable to a level of effort and standards of performance for service factors within the lawyer’s own control. A firm may feel that a write-down is the best way to resolve a dispute if the client insists that the value of the service provided did not match the price charged for it.
To facilitate this, some lawyers surrender the “power of the pen” over the bill. In other words, once they send the bill to a client, any dissatisfaction on the client’s part is reason enough for them to write down the amount that was billed to what the client thinks it is worth. Of course, one hopes this does not happen, and typically it rarely does. Simply giving clients the opportunity to exercise the power of the pen often means they will be reluctant to use it unless their dissatisfaction is substantial — in which instance it is best for the lawyer to close the matter.
A fee write-down, however undesirable, is almost the last resort in a fee dispute.
The final stage in the dispute can be the “nuclear option” — the lawyer uses a collection agency or sues the client to get paid and then the client countersues or files a complaint with the state bar.
For the lawyer’s part, this should not be done lightly and should not be done without adequate communication with the client and careful records of the client’s billing and payment performance.
Faced with the risk this entails, a fee write-down may be the better part of valor. However, where appropriate, do not back down from filing a collection suit. Clients, just as lawyers, must honor their agreements.
Edward Poll is a law practice management consultant. His website is www.lawbiz.com.