Billing disputes with clients often lead to malpractice claims. Rule 1.5 of the Rules of Professional Conduct requires that when an attorney has not regularly represented the client, the basis of the fee shall be communicated in writing before or within a reasonable time after commencing representation. Rule 1.5 also requires that all contingent fee engagements are memorialized in writing. Ethical obligations aside, it is good business practice to set forth your billing arrangement in a written fee agreement and to send your client detailed monthly invoices. These simple tools can help to avoid billing disputes and to inform your client what you are doing in furtherance of their matter. Ensure that there are accurate records of the amount of time spent on the client as well as how that time was spent. Time should not be padded. It is also advisable not to bill for a group of items in one time entry. Clients should be billed regularly, and the attorney should follow up with the client if the bill is not paid promptly.
An attorney can place a retention lien on the files of a client who for some reason fails to pay for services. A retention lien is for a client who has terminated representation or has been terminated for failure to pay. The purpose is to inconvenience the client and leverage payment of the fees. Each jurisdiction has circumstances under which the lien is appropriate. Delaware has applied a six-factor balancing test for such situations.
In more extreme situations, an attorney can initiate a suit to recover the fees earned during representation. However, if an attorney decides to use this approach, he or she should exercise extreme caution in doing so and have a detailed plan for recovery. Initiating a suit against a former client for fees will often result in a retaliatory counter claim for legal malpractice – whether or not the claim has merit. Here at Gibson & Perkins we advocate taking billing disputes to your local bar association’s fee dispute resolution committee. In fact, a provision requiring the submission of billing disputes to such committees appears in all of our written fee agreements with clients.
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