Billing requirements in New York matrimonial cases are very strict. The strict rules were put into place in order to avoid abuses. One of those rules, which can be found in New York 22 NYCRR 1400 et seq, requires matrimonial lawyers to bill their clients at least every 60 days (1400.3). The bills must be written and itemized.
Recently, a Long Island, NY lawyer who handled a matrimonial action for a client in Suffolk County was denied the right to recover legal fees earned due to her failure to follow these rules.
The lawyer took a retainer from the client and sent bills in December and then in February. At the time of the Februrary bill, the client had a credit balance of over $2,000. However, the attorney failed to provide the client with another itemized bill until June - more than 120 days since the date of the previous bill.
Although the lawyer claimed that she had several conversations with the client during the months between February and June, and that she advised the client that the retainer had been exhasted and that additional charges were accruing, at no time did she provide the client with a written, itemized bill.
The client claimed not only that he did not receive a bill, but also that he was never told by the attorney that he owed additional legal fees. Further, he claimed that he had advised the attorney that he was financially unable to pay additional legal fees, a fact he claimed the attorney was well aware of, as the attorney was working on a modification of the separatin agreement with the client's wife due to changed financial circumstances.
Nassau County Supreme Court judge William LaMarca, in Verkowtiz v. Torres held that the attorney, Charlene Verkowitz, failed to follow the rules set forth for matrimonial attorneys and therefore, held that she was not entitled to recover the legal fees contained in the June bill. [Verkowitz was discharged by Torres in July]. However, the court also held that she did not have to return the balance of the retainer which had not yet been earned at the time of the February bill, since those fees were properly earned.
The message for attorneys is twofold:
Be mindful of the rules of your jurisdiction regarding legal fees, and read them very carefully. Follow the rules to the letter. Where a bright line rule such as this one exists, there is no room for error. There is no reason to forfeit an earned legal fee by failing to timely send a bill to the client.
Where a client indicates an unwillingness or inability to pay for legal services, or where the representation makes clear that the client is experiencing financial difficulty, do everything in your power to safeguard your fees. Put everything in writing as often as you can. Unless you're willing to work for free, get additional retainer funds up front and monitor billing and collections closely.
Whether specifically advised by the client that he was unable to pay or not, the attorney should have been aware of the client's financial situation, since she was requesting a modification of the separation agreement on that grounds. Not only should the attorney have been extra vigilant about timely billing, but she should have taken steps to ascertain whether the client was able to pay, or taken steps to withdraw to avoid performing legal work for which she couldn't be compensated. While the court may not have granted the request to withdraw, at least the lawyer would have made a record with respect to the legal fee issues.
Under any circumstances, 120 days is far too long between legal bills, particularly when you are dealing with clients in financial distress. Rather than failing to send the bill in 60 days, this attorney should have considered sending bills every 30 days if she suspected that the client would not be able to pay, or if significant legal work was being performed.
According to the court's decision, as of February, the client had a credit totaling over $2,000, and yet the attorney sued for almost $8,000 on the June bill. That means that between February and June, over $10,000 in legal work was performed for a client who was in financial difficulty, and yet the attorney failed to put anything in writing to document the work performed or to bill the client for the work during that 120 day period.
This situation is more common than it might seem. Lawyers are focused on performing the legal work that their clients require, but they often neglect the business side of their practice, failing to send bills timely, failing to follow up on accounts receivable, and taking little, if any action to collect until it's too late.
While it's important to do good work for your clients and to keep up with your obligations to them, you must also pay attention to your bottom line.
If you need help developing an effective billing, A/R and collections procedure, or any other systems and procedures in your office, visit my website, www.LawyerMeltdown.com to see how I might be able to help.
A lawyer who agrees to be hired in a matrimonial matter must enter into a written retainer agreement, signed by both the lawyer and the client, which states the purpose of the representation and the details of the fee arrangement.
Posted by: Louisiana Car Accident Lawyers | July 16, 2013 at 05:59 PM
I guess it is good that lawyers are focused on this clients, but at the end of the day it is a business. They need to make sure that they are compensated!
Posted by: Car Accident Lawyer | December 06, 2009 at 06:09 PM
We all belong to a respectable society and it is our sole responsibility to maintain the rules and regulations made by the society in which we live. A lawyer is a person who helps us in maintaining the law of conduct in the society itself.
Angel Thomas
Posted by: Personal Injury Lawyer | June 20, 2009 at 05:02 AM