Thursday, March 12, 2015

More on Clients, Fees & Conflicts



In yesterday's interview, Anthony Davis talked about the impact of "less than optimally managed" client selection on firm financial performance:
  • "First of all, the pressure to collect has led a number of firms to go further than they traditionally did, or safely should, go in suing clients for fees. Today, they [law firm general counsel] are beginning to say to management: “We're seeing the tail end of the problem when it comes to needing to withdraw when clients don’t pay or suing for fees. You can fix this by designating someone responsible for the client suitability question during intake. When we seek to withdraw in the middle of an engagement and especially when we sue for fees, we face increased claims. Our insurers can see that we're not looking at the whole picture at intake and increase premiums. Let’s address these issues up front. Give us or someone else in leadership the authority to address this issues before new clients are accepted.”
A reader sent word of an update from BNA on this very topic: "The Ethics and Financial Impact of Dropping a Client for Nonpayment of Legal Fees," which provides a very detailed overview, packed with citations and notes, of the who, what, when, where and why on the matter.

The story starts simply enough: "'Filing suit 'against a current client to collect a fee creates an untenable conflict under [Rule of Professional Conduct] 1.7 between the lawyer's duty to that client and the lawyer's 'personal interest' in collecting his or her fee.' In re Simon, 20 A.3d 421, 27 Law. Man. Prof. Conduct 409 (N.J. 2011)."

But then gets complicated quickly, as the article digs into topics including:
  • Grounds for suing clients for non-payment of fees
  • Intersection of fee non-payment and grounds for withdrawal (or not)
  • Treatment of fee agreements (and fees due) when withdrawals are successful, prior to the conclusion of fixed-fee and contingent matters
  • Lawyer ability to pursue fees when discharged by the client
  • Standards and approaches for determining "reasonable" fees in these complex scenarios

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