Fee Complaints: How to Sort the Reasonable From the Unreasonable
Most fee complaints fall into four general categories. Here's an overview and analysis of each type of complaint.
A healthy dose of detachment, otherwise known as professional judgment, is required in any effective response to a client complaint about fees. Just as you would advise your client to do when faced with an angry customer, you need to analyze the allegation from two perspectives: does the complaint have genuine merit, and is a neutral third party (i.e. a judge) likely to side with the complainant? If there is a substantial likelihood that you are going to come out on the wrong side from either perspective, it is prudent to compromise your fees.
This is not a simple task, and your analysis should be tailored to the particular type of complaint presented by the client. Most fee complaints fall into four standard categories, as follows:
Unauthorized work. Oftentimes a client alleges that work was done beyond their authorization—and of course, they generally only complain when the time spent doesn’t lead to a positive result. For litigation work it is useful to include in one’s fee agreement that you have the prior authorization to make strategic decisions without the client’s express approval, but even so, I try to always get that authorization whenever major decisions are being made. At a minimum, I advise my clients of what I’m doing so that they have an opportunity to object. For example, some time ago I was advising a client on a claim against a deceased business partner’s estate, and he elected to take a rather aggressive strategy. I sent him numerous emails, all very friendly of course, warning of the additional fees that were likely to result from this strategy, especially if it wasn’t effective in bringing the other side to settlement. I also insisted that he meet with litigation counsel sooner than later, so he’d have a clear idea of the costs of not settling. My motivation was genuine in wanting him to know the risks of his approach, but I also wanted a clear record of my warnings in case he ever disputed the fees he was racking up.
Inefficient work. This is an area where I believe there is often merit in the client’s complaints, especially where the ratio of time spent on a matter greatly exceeds the amount of money at stake. Sometimes it seems that lawyers lack the ability to scale their activities in proper relation to the task, and the client rightly is upset. Spending hours on discovery motions or court pleadings over a $1,000 detail just isn’t worth it, and a competent professional should be able to discern that truth. If a client instructs me to “fight over every point” without limitation, that’s a warning sign of a client who is likely to fight you in the same manner—and it’s not a client I want to work with. Frankly, it’s a matter of judging competence relative to your billing rate. If you’ve been in the field for twenty years and are charging accordingly, measuring the amount of time to devote to any particular task is a skill you should have acquired.
Unsuccessful Outcomes. Just as doctors cannot guarantee that their clients will live forever, even the best lawyer loses a case—and clients need to accept this truth of life. But there’s a difference between a case that is lost because of an underlying defect or legal barrier to success and one that is lost because of a lawyer’s mistake. It is not simply a matter of malpractice, as there are many mistakes that have consequences even when the errors don’t fall below the standard of care. Calling witnesses, admitting documents into trial, deciding which legal theory to advance all require sophisticated legal judgments, and in retrospect some of those choices turn out to be mistaken. Same goes for negotiations or representing clients in administrative proceedings. Here, the challenge is to be able to sort between the claims where no reasonably competent lawyer could have anticipated the problems, versus those where a lawyer at your stage of expertise should really have known better.
Client Regret or Lack of Client Funds. These are the easy ones to analyze, as it truly is not your fault if your client lacks the funds to pay you or regrets having undertaken the work you were authorized to do. Whether it involves a contested divorce, a complex business negotiation, or a collection claim against a debtor who files bankruptcy, oftentimes your client will genuinely regret having gone down the legal path and truly may be in bad financial shape. These are the situations that require compassion on your part, but don’t justify a refusal to pay your fees. Ideally you addressed these concerns in your initial advice to your client, and indeed, many of the nastiest fee claims arise where the lawyer overstated the likelihood of success. The singular most helpful advice from these posts it is that puffing the prospects of success at the outset of a representation is never a good idea, as it only provides nutrients for the growth of fee claims if the efforts are unsuccessful. If you have properly warned your client of a potential adverse outcome early on, you can refer back to that warning whenever a fee complaint surfaces.
Frederick Hertz, an attorney and mediator based in Oakland, has managed his practice for more than 25 years.
"The Art of Getting Paid" is a one-year series of blog posts that provides a comprehensive training to lawyers on how to get paid.
We welcome your questions and comments – and of course, your suggestions on how to master this insufficiently respected aspect of practicing law.
Responding to Fee-Related Complaints