Disputes over attorney's fees are one of the most frequent causes for complaints to bar counsel. Most of these complaints are summarily dismissed and the complainant is referred to fee arbitration or another forum to resolve the disagreement. However, bar counsel will investigate if the fee is clearly excessive, if there is inadequate communication regarding the terms of the fee, or if some other misconduct is alleged.
The best way for lawyers to deal with fee disputes is to prevent the dispute from occurring. The terms of the fee must be clearly explained to the client at the time the attorney is retained. Although a written fee agreement is not required unless the fee is contingent, it is preferable to put the agreement in writing, especially when dealing with a new client. Mass. R. Prof. C. 1.5(b). Explain how the fee will be calculated, exactly what services will be performed for the client, whether expenses are included in the fee, and how payments are to be made. Where appropriate, the client can be given a realistic estimate of the total cost for the attorney's services.1 The estimate should be confirmed in writing with appropriate disclaimers so that the client does not misinterpret a budget as a fixed fee.
Occasionally, the attorney receives a cash payment toward legal fees and a dispute arises concerning the amount actually received. In order to avoid this problem, and pursuant to Mass. R. Prof. C. 1.15(a), the attorney must keep complete records of all payments received from and on behalf of the client. Checks from clients should be copied and retained prior to deposit and duplicate receipts should be given to the client for any cash payment. The receipt should state the amount of the bill, the date and the amount of the payment, the total amount received toward the bill, and the balance due, if any.
Attorneys usually should not wait until the end of the case to bill clients. It is preferable to send clients periodic bills to keep them advised of the costs and progress of the case. The client should not be surprised at the conclusion of the representation by the amount of the bill. If the fee is calculated on an hourly basis, and the client complains about the amount of the fee while the case is pending, the attorney should discuss the matter with the client and attempt to resolve the problem. Perhaps the attorney can employ some cost-saving measures. Perhaps the client will decide that a particular issue or costly strategy should not be pursued. Mass. R. Prof. C. 1.4 (a) and (b).
If the attorney has taken these precautions and a fee dispute still develops, there are several things that the attorney can do. Pursuant to Mass. R. Prof. C. 1.16(b)(4), if a client fails to pay an attorney's bill, the attorney may withdraw if the attorney has given reasonable notice to the client. However, once the attorney has filed an appearance in court on behalf of a client, the attorney cannot fail to appear or otherwise fail to prosecute the client's case without obtaining the court's permission to withdraw.
Occasionally a client's family retains an attorney, and the lawyer makes a fee agreement with the family and not the client. However, the attorney must remember that the family is not the client. If the family reneges on the agreement, the attorney must continue to represent the client diligently and attempt to negotiate an acceptable fee arrangement with the client. If the attorney has entered an appearance in a case and the client cannot pay the fee, the attorney must continue to represent the client diligently unless or until allowed by the court to withdraw. In a criminal case, the attorney also might consider requesting a court appointment to represent the client if the client is indigent.
An attorney who decides to move to withdraw must give notice to the client, allow time for employment of other counsel, surrender any papers or property to which the client is entitled, and refund any unearned fees. The attorney may not refuse to return the client's file on grounds of nonpayment if retention of the file would unfairly prejudice the client. See Mass. R. Prof. C. 1.16(c), (d) and (e)(7). If the court does not allow the motion to withdraw, the lawyer must continue to represent the client diligently and zealously and must delay any action to collect fees until after the representation has terminated. "The lawyer's own interests should not be permitted to have an adverse effect on the representation of the client." Mass. R. Prof. C. 1.7, comment 6.
An attorney who has received settlement funds on behalf of the client may not deduct fees from those funds without the knowledge and permission of the client. If the client disputes the amount of the fee, the attorney must promptly pay the client all funds that are not in dispute but may retain the disputed funds in escrow until the dispute has been resolved. Mass. R. Prof. C. 1.15(d)(2). Similarly, funds that have been received for a specific purpose, such as a down payment on a sale of real estate, may not be applied to legal fees without client consent.
A lawyer cannot bring suit against a client unless the lawyer's representation of the client has ended. Even then, filing suit against a client should be avoided wherever possible. The lawyer should instead consider submitting the fee dispute to mediation or fee arbitration. Mass. R. Prof. C. 1.5, comment 5. The lawyer should bear in mind that a suit against a client often will prompt the client to take reciprocal action against the attorney, such as a counterclaim for malpractice or a complaint to bar counsel. Fishman v. Brooks, 396 Mass. 643 (1986).
Lawyers are permitted to disclose confidences or secrets necessary to collect a fee or to defend against allegations of malpractice, but the disclosure must be restricted to that which is necessary to establish the claim. Informing the client's friends, family, employer or acquaintances about the existence of the dispute, or requesting payment or assistance in resolving the dispute, is improper and in violation of Mass. R. Prof. C. 1.6(b)(2).
Finally, in settling a fee dispute with an unrepresented client, the attorney should not give advice other than the advice to consult independent counsel regarding the settlement. Mass. R. Prof. C. 4.3(b).
In sum, most fee disputes can be avoided or minimized with written fee agreements. For those that cannot be prevented and which the lawyer feels it is important to pursue, alternatives such as fee arbitration should be considered. Litigation with former clients should always be a last resort.
Ellen M. Meagher is assistant bar counsel at the Board of Bar Overseers.
1. In Federal cases, the client must be given a budget in writing pursuant to the Expense and Delay Reduction Plan, Article 1, Rule 1.02 (d) (3).