Since the panic of ’08, many lawyers have seen an increase in the number of clients who stop paying them for their services. And, the legal malpractice industry reports that there has been an upswing in the number of legal malpractice claims against lawyers in the same time frame. One need not be a genius to see the correlation. Hence, standard advice has been for lawyers not to sue for fees if there is a chance of a legal malpractice claim (there always is, it seems) or, if the lawyer is going to pursue the fee claim, wait for at least one year from the date of last service/termination of the relationship before doing so due to the statute of limitations for malpractice claims.

In California, before a lawyer can sue a client for unpaid fees, the lawyer must give the client notice that the client may elect non-binding arbitration of the fee dispute. It is non-binding because either party may reject the resulting arbitration award by filing a court action or filing a de novo request in a pending court action (if any).

In a recent case, the lawyer who did not like the arbitration award against him in favor of his client timely filed a small claims court action for the usual statutory maximum of $5,000 (he claimed he was owed more, but would take that amount). The Court of Appeal in Giorgianni v. Crowley (Aug. 4, 2011) No. H035398, ruled that such a filing was a proper rejection of the arbitration award, so the client’s petition to the superior court after that filing should not have been granted by the superior court.

So, lawyers, wait at least a year after the attorney-client relationship has clearly ended to pursue a deadbeat client for fees and evaluate if it’s worth it, even then. For clients, if you stop paying due to some dissatisfaction, how about letting your lawyer know immediately, rather than waiting until it’s a big problem for everyone?

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