What to Do When the Relationship With Your Client Sours Over Fees

By Linda Oligschlaeger

Unless you're independently wealthy and choose to do mostly pro bono work, most lawyers need to collect their fees to keep their office doors open. However, there is a big difference between billing and collecting. Although very few clients expect their lawyer to work for free, collection problems can be the result of misunderstood or unmet expectations. In other words, sometimes things go sour with clients when it comes time to collect fees, which is the time that previously silent clients may assert themselves. By refusing to pay your bill, clients may be attempting to send you a message – either the bill is too high or they are dissatisfied with the outcome or the quality of your service. The outcome may even have been favorable, but the unpaid bill could be intended as feedback to you about how your client feels he or she was treated during the lawyer-client relationship.

There is a big difference between clients who don't pay your bill because they don't have the means and those who don't pay because they have a problem with the fee itself, which often translates to a problem with you, their lawyer. For those clients who do have the money, the problem might be that they feel they didn't get much value for their money. Some unhappy clients may eventually pay, but they probably will not be back nor will they refer anyone to you. Other clients may pay but take their time about it. And a few will dig their heels in and refuse to pay or will begin searching for ways to file a complaint about the fee, if you can't work it out.

The secret is finding a way to collect fees from clients because they feel that you provided excellent service and did the best job possible, even if you didn't prevail. That's a simple concept called "value." This reminds me of a wallpaper handyman that I've used for several projects around the house. He does excellent work and actually shows up when he tells me he will, which can be a rare quality in the construction trades. I always cringe a little when we talk about the cost, because I know that he's always on the high end of other bidders. But he's dependable, he does quality work, and I'm always pleased when we're finished. (This is the value part.) What it comes down to is that he's expensive, but he's worth it! After a few months, I stop fretting about the cost, but I continue to bask in the quality of his services, and I tell everybody that I know to call him; over the years I've sent him a ton of business. His service is valuable to me and ultimately worth the money because I remain satisfied with the quality of his work and the prompt service. That should be the goal of most lawyers. You're knowledgeable, you give your all, you're dependable, and because of that you're worth your fee.

Enough of the idealistic – the facts are that things do go wrong and fee disputes between lawyers and clients happen every day. I would venture to say that even my home handyman has been involved in a cost depute every now and then even though he appears to do everything right. How lawyers handle those disputes is very important to collecting their fee and avoiding complaints being filed with malpractice carriers, the Office of Disciplinary Counsel, and fee dispute resolution programs. Successfully handling these disputes is also very important when it comes to referrals or repeat business. Dissatisfied clients don't come back and don't send their friends.

What's a Lawyer to Do When a Client Disputes the Fee?

When a client disputes a fee, it is important to meet with the client (please – no bills for this session) to listen to the client. Frequently, an honest explanation will soothe feelings and help clear up misunderstandings. Feelings can play a huge role in fee disputes; both lawyer and client often feel betrayed by the other. A meeting with the client can generate an opportunity to regain the confidence of your client for future business and referrals, make you feel better and get your bill paid at the same time. Be honest with yourself, if you were the client, would you be willing to pay this bill? If not, then you might want to consider offering an adjustment. Realistically, there are clients who want the world for a song even if you've thoroughly explained your fee structure in the beginning and they've agreed to it. You'll gain their respect by frankly providing a thorough explanation of your billing and outlining the value of the service that you provided.

You have several choices if you can't work it out with your client. You can review the file to determine if there's a reason to reduce the fee. You can stand your ground and continue collection efforts. You can file suit for fees that haven't been paid and risk a malpractice claim or disciplinary complaint being filed against you. Or, if you can't work it out with your client and you sincerely believe that you earned your fee, you may suggest to your client that you use the services of the Fee Dispute Resolution Program to resolve the dispute through mediation or binding arbitration. This can be an opportunity to resolve the issue and perhaps even collect all or part of a fee that otherwise might be written off. The dispute can be resolved confidentially without cost to either lawyer or client.

How Does The Missouri Bar's Fee Dispute Resolution Program Work?

First of all, it's important to know that the fee dispute resolution process is not a disciplinary action; participation is voluntary. That said, here's how the process works.

Only clients may file a complaint with the program, but lawyers may encourage clients disputing their fees to do so.

After a petition is filed, it's reviewed by the Fee Dispute Resolution Committee for jurisdiction and other criteria within the program rules. If the compliant petition meets those requirements, the file is opened.

The lawyer respondent is asked to file a brief, written response to the complaint and to voluntarily sign an agreement to participate in mediation and/or binding arbitration. Simultaneously, the client is asked to consent to mediation and/or binding arbitration.

A mediation session or a binding arbitration hearing is then scheduled in the area where the lawyer practices. The panel of volunteer mediators and arbitrators consists of both lawyers and non-lawyer professionals. Sometimes, if it's more convenient for the parties, mediation or arbitration is conducted by telephone conference, although meeting face-to-face is preferable.

If the parties are not successful in reaching an agreement in mediation, they may elect to send the case on to binding arbitration, or they may initially choose to bypass mediation and go directly to binding arbitration, which will produce a definite resolution to the dispute.

The Missouri Bar Fee Dispute Resolution Program has been in operation since 1991 and during that time has assisted with resolving numerous fee disputes. The Bar Association of Metropolitan St. Louis and The Kansas City Metropolitan Bar Association offer similar programs.

Malpractice Insurer Premium Discounts

The bar's endorsed professional liability insurer, The Bar Plan, offers another incentive for lawyers to use the services of the fee dispute resolution programs. The Bar Plan offers a premium discount for lawyers who adopt an office policy not to sue clients for fees, whenever possible, and instead attempt to solve their conflict over fees by using fee dispute resolution programs.

An Ounce of Prevention

Many fee disputes can be avoided from the start of the lawyer-client relationship by offering clients a clearly written and explained fee agreement. Throughout the relationship, clients may need to be advised that a particular course of action could be costly. It's important to remember that fees are your income, but they are an expense to the client. In communicating with clients, it's essential that you be clear and candid, keep their interests among your concerns and convey confidence in the value of your service.

Some lawyers are skilled advocates, but they nearly spontaneously combust with embarrassment when they have to talk about money and fees with clients. But a professional, business-like relationship with the client must include a discussion about fees from the beginning. Clients expect and welcome it. It goes a long way to prevent misunderstandings and surprises later.

Clients often perceive hourly fees as giving their lawyer a blank check. You might consider other types of billing methods or a combination that is more palatable to clients and will bring in the income you expect. I recently heard of a divorce lawyer who charges his client a flat fee-hourly fee combination for certain types of divorces. He informs his client verbally and in writing that he will regularly keep them informed about their case (which he is religious about), but every time they call him, they will be billed separately on an hourly basis for the call. This has caused his clients who would have a tendency to wear him out with phone calls to think twice before calling him unnecessarily.

For More Information

When things do go sour with a client over fees and you're not able to work out a resolution, the fee dispute resolution programs offered by The Missouri Bar, the Bar Association of Metropolitan St. Louis and the Kansas City Metropolitan Bar Association can help resolve the dispute in a confidential setting without the risk of other collection methods. The programs are also excellent referral sources for clients who approach you about being involved in a fee dispute with another lawyer.

For more details about the Fee Dispute Resolution Program click here or contact The Missouri Bar at (573) 635-4128.

Linda Oligschlaeger served as the Membership Services Director at The Missouri Bar from 1991-2012 where she administered the Fee Dispute Resolution Program.