• June 21, 2012

From time to time, things don’t work out in litigation and cutting that check to the lawyers who were not as successful as hoped is sometimes unbearable for unhappy clients.  Their disappointment is obviously understandable (and in some cases justified) but stiffing the litigator can have undesirable, if predictable, ramifications.  You face a heightened risk of being sued.

But here is the good news!  This week the Minnesota Court of Appeals held that lawyers suing former clients for past due fees cannot tack on the costs of collection on top of the underlying fees they are owed under the Minnesota attorneys’ lien statute.

They cannot even do that if the law firm engagement letter with the client provided that the client agreed to pay attorneys’ fees if necessary to collect (as did Saliterman & Siefferman P.C. law firm’s engagement letter in this case (a firm also in the news lately here, incidentally, possibly on the threshold of being sanctioned for bringing frivolous claims)).  

We will see if the loser at the court of appeals with seek review at the Minnesota Supreme Court.  For now, though, this is the law in Minnesota.  Presumably this will incentivize lawyers to do their own debt collection — keeping the process “in house” since fees incurred in collection cannot be tacked on to the attorneys’ lien.

This, arguably, could paradoxically steeply raise attorneys’ fee collection costs more broadly because lawyers who do not specialize in this area of practice (collections) would take more time away from their primary areas of expertise to pursue payment and could gum up the court’s with inefficiencies attributable to their inexperience in this area.

Or, on the other hand, maybe it primarily would result in lawyers more readily negotiating compromise resolutions of disputed bills.

Whatever the ultimate result, the ruling prevents the “adding insult to injury” scenario of a lawyer providing unsatisfactory services and then recovering fees for bringing an action to get paid for work that clients might come to believe should not have been performed in the first place.

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