Most billing disputes between attorneys and their clients can be resolved quickly. And, as with many aspects of the relationship with their lawyer, clients have more leverage than they realize when it comes to complaining about or objecting to their lawyer’s bill or invoice.
The most important thing a client can do is to object to the attorney’s bill in a specific way as quickly as reasonably possible.
A timely and specific objection to your lawyer’s invoice can be much more effective than a similar complaint to another service provider, such as a plumber. That’s because lawyers and plumbers are subject to very different rules relating to how they handle money they receive from their clients. What do you think happens when you write your plumber (or most other service providers) a check at the beginning of a project? They deposit the check into their business bank account and are free to spend it right away. That’s not true of lawyers.
In most states, lawyers are required to maintain at least two separate business accounts. One, which is generally called the Client Trust Account, is reserved for money that the lawyer is holding on behalf of clients and unearned fees. The second is a General Business Account, from which lawyers run their business and pay for expenses such as payroll. When a lawyer receives your check or other payment when you first hire them, the lawyer is generally required to deposit your money into the Client Trust Account. Moreover, lawyers generally may not withdraw money from the Client Trust Account until they have earned your fee. Once they earn the fee, however, lawyers must promptly withdraw the money from the Client Trust Account. This is because lawyers must keep your money separate from theirs. Thousands of lawyers have been disciplined and some have lost their law license because they didn’t keep your money separate from yours. Lawyers who mix the two together are said to have commingled the money and that is a very bad thing for a lawyer to do.
So what happens when your lawyer sends you an invoice or bill? If you don’t complain about it or object to it within a reasonable time, the lawyer is deemed to have earned that fee and must withdraw the earned fee from the Client Trust Account and deposit it into the General Business Account. But, and this is the critical part, the lawyer can’t withdraw from the Client Trust Account funds that are disputed by the client. Thus, a written and specific objection to the bill can be much more effective than, for example, contesting the charge with a credit card company. Lawyers aren’t happy when clients challenge credit card charges, but they are often even more interested in making sure that the State Bar or other disciplinary authority doesn’t get involved in billing disputes. A rational lawyer will not want to mess around with any obligation relating to their duties to keep their money separate from their client’s money. This does not mean they will necessary agree with your complaint or objection, but it does mean that your complaint is unlikley to be ignored.
Because lawyers are obligated to withdraw money from the Client Trust Account as soon as it is earned, it is important that you act quickly. Review the bill as soon as it arrives and if you have a specific question or objection, let the lawyer know as soon as possible. Better yet, put the objection or question it writing. Be specific. Let the lawyer know what aspect of the bill is confusing or potentially wrong. Don’t just say that you have general questions about the bill without providing any details. Indicate the specific line items on the bill that you object to or don’t understand. The more specific your complaint, the harder it will be for the lawyer to transfer the full amount of the invoice out of the Client Trust Account. The lawyer should, when receiving your objection, withdraw from the Client Trust Account an amount that is equivalent to the undisputed portion of the fee or invoice.
Nothing about this discussion means that you can’t object to a bill, in part or in whole, after the lawyer has earned the fee and transferred the money into his or her General Busines Account. You can, and there are procedures in almost every state for resolving fee disputes between lawyers and their clients. Most lawyers will act reasonably when they receive your objection, whether or not they have already withdrawn the money from their Client Trust Account. You have more leverage, however, if you provide specific objections as soon as you reasonably can. It’s the difference between preventing money from being withdrawn in the first place and trying to get it back later on.