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Legal Fees

Live and Die by the Immoral Sword

When I completed my Articles long ago, I was not hired back.  It was a time of economic recession and jobs were difficult to come by.  I sent out many application letters and eventually accepted an offer at a small suburban firm.  The day after I accepted the job, I received a phone call from one of Canada’s largest law firms offering me an interview.  I politely declined and said that I had already accepted a position.  A family member who will go unnamed thought that I was crazy, but I had given my word and I was not going to break it.

Perhaps back then I was just naïve about how business works, or maybe things have changed since then, but keeping your word no longer seems to be as important as it once was.

This is certainly the case in the practice of law.  When a client asks what will happen if they breach their contract, a good lawyer does not say, “don’t do that you immoral bastard.  You gave your word!” 

On the contrary, a good lawyer considers many issues which have nothing to do with the morality of breaking your promises.  In fact, the morality issue is never even discussed. Instead, there is usually a discussion about how to justify the conduct, what damages the other side will suffer, whether the other side also breached the agreement and how that can be used against them, what resources the other side has access to in order to fund litigation, and many other practical things.  The enquiry is not about what is ‘right’ but whether the client can get away with it.

Having participated in the creation of this legal environment and having reaped its rewards, it should hardly come as a surprise that sometimes clients apply these very same principles to paying their lawyers.  I guess that you reap what you sow.

In my experience, when it comes to paying their lawyers, smaller clients fall into four broad categories. 

First, there are those whose thought process is something like ‘I have to pay my lawyer.  They sue people for a living, for God’s sake.  If I don’t pay them all sorts of bad things will happen to me.’

Then, there are the clients who look at it as follows: ‘My lawyer is a trade just like all my other suppliers except that while good plumbers are hard to get, there are so many lawyers around that if I burn one of them, I can just get someone else. Let them wait for their damn money. They will be lucky if I decide to pay them at all.’

In the third category there are a few who believe that they have to honour their agreements, just because it is the right thing to do.

Finally, there are the clients who think as follows: ‘I really like my lawyer.  They are always there for me.  I value the relationship.  I would be willing to pay even more to have them on my side, but I am not going to tell them that.’

I was lucky to have had many clients who fell into the fourth category, especially in the latter part of my career when I had figured things out, gave great service, showed clients that I cared about them, and was willing to be more selective about who I would choose to represent.

But what about those clients who fall into the second category and treat their lawyers like one of the trades and stretch payment as long as possible?  I ran into a few of those in my career as well.

There was one client who caused all sorts of grief about his legal bill to the point where we had to cut a deal and write off a portion of the fees.  Months later he showed up, told us how happy he was with the work we had done previously and wanted to hire us again.  We said no thank you, and he was shocked that we did not want to deal with him anymore.

There was another client for whom we did leasing work for his office building for many years.  Every time we did the work, the Controller would bargain with us about the fees, and we would reduce the bill. Eventually I started up-charging every bill by the amount of the write-off that I expected him to ask for.  He would negotiate and I would lower the fee to what I wanted to charge in the first place.  Sometimes I even came out ahead.  This approach seemed to make everyone happy.

And then there was the client who never paid, and when sued for the fees, suddenly had a great number of complaints about the legal services.   The complaints had not been previously expressed, of course, even though the work had been completed many months earlier. 

Now, when a client complains about the legal work, the lawyer often has to report a potential claim to its insurers, resulting in wasted time and lots of stress.   

This strategy of defending a claim for fees by making allegations of negligence is so common that the insurance company which insures Ontario lawyers has recommended that lawyers simply walk away from unpaid accounts.

As a profession we have certainly contributed to the business climate that we live in which does not seem to put much value on keeping your word.  There is much that can be said about that.  However, there is little point in tilting at that particular windmill. 

What we can and should do is make sure that we recognize the environment in which we have to function and do our best to manage it.  Do the little things right:  Provide great service.  Charge reasonable fees.  Be transparent about your billings.  Get deposits.  Bill frequently.  Follow up on your accounts receivable. Stop work if you are not getting paid.  Be wary about clients who arrive complaining about their previous lawyers or who have been in business for years but have never developed a good working relationship with a lawyer. 

But mostly, steer clear of clients who you do not like or trust, and never, ever, ever act for someone again when they treat you badly the first time.  That last one seems obvious, but in my experience, it is shocking how many times lawyers ignore it or think that they can manage it.  

Frankly, having contributed so much to the business culture that does not require people to act honourably, we lawyers cannot complain about it, but we should be smart enough to navigate it successfully.

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