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The Art of Getting Paid

When Can You Stop Working for a Client in Arrears?

If a client is in arrears but has an ongoing matter—litigation or otherwise—at some point, you will need to decide when to withdraw representation.

By Frederick Hertz  |  February 21, 2017
Art: Retainer Depleted


Whenever a client is seriously in arrears, I make it a practice to check in with them at least once every two weeks. Of course there are exceptions, especially if they client has made a specific promise to pay by a set date and you are awaiting that date to arrive. As with every other aspect of getting paid, it is essential that you stay alert to what is happening with your client, and let them know on a regular basis that the payment is important to you and you haven’t forgotten about their unfulfilled obligations.

If a client is in arrears but has an ongoing matter—litigation or otherwise—at some point you will need to decide when to stop working for that client. They need to understand that not paying you has consequences, and you definitely want to limit the expansion of the size of the unpaid debt. The only thing worse than not getting paid $10,000 in fees is not getting paid $20,000!

Ceasing work on an ongoing matter is really a decision of second-to-last resort (the last one being suing your client), and so it is not something one does lightly. And, you have to be extremely careful so as to not to create a malpractice problem for yourself if you withdraw from the matter improperly. As any litigator will explain to you, the rules are very different if it is a litigation matter, because you can’t simply withdraw from representation with the client’s or the court’s approval. Here is the best process to use when you are the attorney of record in a pending court action:

  1. Don’t let yourself get within 90 days of trial under the false illusion that you are going to be able to withdraw. The client may genuinely be unable to find a replacement attorney, and if so, chances are the judge won’t let you off the hook unless you can show a real hardship—and unless the other side is willing to continue the trial while your client finds a substitute attorney. Failure to pay fees is not always sufficient justification if your client will be seriously prejudiced by your withdrawal.
  2. Give ample notice to your client of your intent to withdraw—I recommend a minimum of 60 days. That way you have amplte time to ask your client to sign a substitution form, either with the name of the new attorney or with the client acting in pro per.   In most such situations you should ask the client to come into the office for a face-to-face meeting, given the serious import of the situation, and you should document the justifications for asking to be released from your role as attorney of record.
  3. Be prepared to forgive all or part of the bill if your client is willing to hire new counsel without giving you any hassle. Your goal at this point is to avoid further damage to your bottom line (or your available billing time), and so writing off some or all of the bill is the prudent thing to do. If it’s a contingency fee matter then there isn’t going to be any issue of unpaid fees, but you might have a problem with unpaid costs.  In that case you will have to figure out what is your proportion of the overall work, and you will probably have to negotiate with the new counsel on the allocation of any subsequently recovered contingency fees.
  4. If you have to file a court motion, do it as soon as possible to avoid running into a trial deadline. And remember, you are not supposed to disclose any confidential information about the non-payment in a court pleading that will be read by the opposing counsel.  Instead, you should simply state that irreconcilable differences have arisen between you and your client, and ask to speak with the judge in private about the details of the problem.

If you are not involved in litigation, then you are free to withdraw so long as it is in compliance with the terms of your written fee agreement.  My agreement expressly states that I have the right to withdraw if invoices are not paid in full within 30 days, and you should always include language to that effect in your agreement. Even in the absence of such a provision you have the right to terminate your services if you haven’t been paid, however. But as with all matters involving unpaid fees, it is not an “all or nothing” matter. You should be mindful of whether there is a particular deadline coming up, such that cutting the cord at this particular moment will impose undue hardship on your client. And, if your client makes a genuine promise to pay—even a part of the bill—if you agree to stick around, you should seriously consider doing so, at least for a while. Again, it is a matter of balancing the need to maintain good relationships with clients and avoiding hostility from the client against the risk of having the size of the unpaid bill doubling in size.

There is one additional service I always offer my clients, even those that owe me money. Whenever asked, I will spend an hour or two with the new attorney, briefing her on what has happened and pointing out the key issues of the matter. I tell my clients that I will do this at no charge, as an accommodation for their graciously releasing me as their attorney. Some clients are too angry to accept my offer, but I still know it is the right thing to do—and for most clients, it is a considerate gesture that they will greatly appreciate.

Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.

The art of getting paid

"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.

We welcome your questions and comments – and of course, your suggestions on how to master this insufficiently respected aspect of practicing law.

Responding to Fee-Related Complaints

When Is It Worth Negotiating a Partial Payment?

View the full series »

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