Michigan

Why and how attorneys should sue for their fees

I attended the State Bar of Michigan convention this week. It was fabulous. Among the top speakers was a practice management coach named Dustin Cole. His company, Attorneys Master Class, teaches attorneys how to run their practices efficiently. He opened my eyes to so many things this week that my head was spinning when I left his seminar. The ONLY thing he said that I do NOT agree with is that attorneys should never sue for their legal fees. He is wrong. Attorneys should sue for their fees when a client is going to stiff them. Here is how you do it to minimize your risks:

1. When you have decided that you are going to have to sue the client for your fees, send the client a termination letter. In that letter, inform the client that as of today, you are no longer going to represent him and that he should get other counsel. In that letter state that you have not been paid and that the client is in breach of your contract. This way, you have established a date for which you are no longer representing the client. If you are in the midst of litigation on behalf the client, file a Motion to Withdraw. Come to court with an order for the judge to sign that day after she grants your motion. Sent the client a copy of that order if the client does not come to court along with your termination letter.

2. Do not sue until the statute of limitations for malpractice has run in your state. In Michigan the statute of limitations for a malpractice suit is two years from the date of last service or six months from when the malpractice was or should have been discovered by the client. Lawsuits for attorneys fees are usually responded to by vindictive clients with a malpractice action and/or a grievance. Lets talk about these:

Grievance - There are two kinds of attorneys in this world; those who have been grieved and those who will be grieved. Many of us have cross over that threshold a long time ago. As long as you did nothing wrong, don't sweat a grievance. It should not be a deterrent to you pursuing your fees.

Malpractice counterclaim - A client may file a counterclaim for malpractice AFTER the statute of limitations has run. However, because the statute has run, the award on his claim can only be an offset to your claims against him. His malpractice counterclaim award cannot exceed the award you obtain against the client. Hence, even if you did do something that hurt your client, your exposure is limited by waiting two years. Moreover, if you have malpractice insurance, then you have no exposure other than your deductible.

I represent a number of law firms and we follow these rules when pursuing claims against clients. It makes suing a client for fees less perilous and more profitable. Is that the name of the game?

Full post as published by Michigan Collection Law Blog on September 29, 2007 (boomark / email).