More and more large firms in the US are willing to go to court or request arbitration to force clients to pay up.
Collecting information from filings in Manhattan and Brooklyn Supreme Courts that involved Am Law 100 and Am Law 200 law firms, the
New York Law Journal found at least a dozen law suits in 2016 over unpaid billings and fees, or ex-clients suing to stop arbitration over receivables.
The publication notes that in the past few years, filings were fewer or initiated by smaller firms. Now, even the largest and wealthiest law firms are suing over fees of all sizes.
The
New York Law Journal attributes this to the softening of demand for legal services, less loyalty between client and law outfits and delayed payments of clients who are attempting to enforce retainer agreements that provide for delayed due dates for payments.
According to the report, the sums at question are both large and small, although most as large sums in the hundreds of thousands.
For example, biglaw Loeb & Loeb sued ex-client Advanced Green Innovations for US$825,000 (About $1.1 million). However, at the lower end, Shearman & Sterling sued Safka Holdings for US$25,645 (about $34,400) in unpaid fees.
Philip Touitou, a Hinshaw & Culbertson partner who has represented law firms in fee litigation, tells the publication that this is “the new normal”.
“Our clients expect us to be efficient and the law firms are demanding of themselves to be efficient. What that translates to is we can no longer wait 90 days, 120 days, a year or more to collect fees,” he said.
The firms that have sued are familiar names to those following the largest firms in the US. The list includes Sullivan & Cromwell, Shearman & Sterling, Arent Fox, Loeb & Loeb, Brown Rudnick, Perkins Coie and Kaye Scholer.
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