Solo and Small Firm Practice
Bounced Checks
February
18, 2004
| Question: Client
comes to me a day before a hearing and begs me to represent her,
I juggle my calendar to accommodate her. The hearing resulted
in her favor. She puts a stop payment on the check. Does
not return calls.
What recourse do I have? If I sue her, are there any punitive
damages available? |
Answers:
Keith Bartnik- keithbartnik@yourMarylandLawyer.com
I have adopted the policy that when a client is
within 2 weeks of a hearing date and they would like to retain my office,
they can pay only with certified check, cash, or money order. NO EXCEPTIONS --
EVER!!! I have found this eliminates the potential that I am working
for free.
Michael L. Smith- mlsesq@juno.com
I thought I was the only one that fell for that
trick. I have since made it my practice to take cash and /or money
order. How are others dealing with this?
Mary Ellen Flynn- meflynn@a-f.net
Based on my experience doing collections work
for many lawyers and law firms, I disagree that malpractice claims often
occur when attorneys sue for fees owed to them. I do believe, however,
that before suing for fees you should consider whether the balance owed merits
your time pursuing that fee and you should look at the specifics of your
work and billing in that case.
Joseph C. Hangarter – jch@charlescountylaw.com
I agree with many of the comments here regarding
suing clients for fees. I have done it about five times in seven years
of practice. Generally, they will not even answer. However, the
one in ten that files a counter complaint for malpractice is enough of a
pain in the neck to chill future suits against clients. I am pondering
what to do with my current list of receivables that I let get out of hand.
Mark J. Muffoletto- contactus@mjmlaw.net
I have a collections practice and I actually have
a few attorneys’ that are clients. I am equipped to handle calling
the debtor/client and generate FDCPA complaint letters and baby sit payment
plans by using my computer system and staff. My suite mate sends her
receivables to me to send demands. I suggest setting up a mutually
beneficial relationship with a friend or suite mate. It creates a sense
of urgency to the former client. They tend to think that you feel the
debt is so important that you have hired your own counsel to address it. One
warning is that you have to make sure the friend sending the letter can follow
up with a call or two. Most people forget or ignore it thinking you
will let it die. A third party involved also removes the emotion sometimes
involved as well. I would also suggest that whoever sends the letter
know a little about individual debt collection. I find that my success
for other attorney’s collections depend on perception of the debtor
and what MAY happen not what will happen. Don’t threaten suit
if you know you will not sue. The option I sometimes give my clients is a
settlement. Account is past due, pay 75% as settlement in full, by
such and such date to avoid collection activity. When they think they
are cheating the attorney, they are also more inclined to pay.
These work for me in most cases and have worked
for others. Good luck list mates!
Bob Sher- Wagsher@aol.com
I respectfully disagree with those who are raising
malpractice/retaliation concerns over suing a client for a fee. I’ve
had the unhappy task of having to do this any number of times in my 28 years
of private practice and I’ve never been sued. In fact, I can’t
recall a client even defending the collection suit. A couple have gone
to fee arbitration, which is fine with me. If you’ve done your
job properly, you’re entitled to be paid. If Rule 1 broke down,
and client isn’t judgment proof, I say you do whatever you need to
get paid.
Teresa J. Breen- tjb@breen-law.com
Being a new practitioner, the concern of claims
is very real, but it seems to me that if you’ve done your job properly,
there SHOULD be no problem. We can all take that for what’s its
worth!
It seems this particular case would be distinguished
from the ordinary non-payment of fee (though technically the same) when client
took affirmative steps by stopping payment on check!
Arnole F. Phillips- afplaw@gcnetamil.net
Send letter to client and attach the criminal
statute. A well worded letter can do wonders in this situation. Suing
the client has its pitfalls, you still have to collect on the judgment from
the client which can be more difficult than obtaining the judgment. I
usually send a letter and write off the debt after 30 days if no payment.
Bob Sher- Wagsher@aol.com
Look at CR (criminal) 8-103(b) and 7-107. You
may have grounds for theft prosecution if you wish to pursue it. Civilly,
you have facts supporting a fraud scenario which would justify punitives. Also
look at CL 15-802 et seq.
Larry Finegan- LFineg@aol.com
Back in the day, I remember being taught that
one never threatens criminal prosecution in order to procure a civil settlement.
I’ve not researched this point for this comment but thought I’d
just throw this thought out for consideration and comment.
Seems to me – you either prosecute or you
sue but you don’t threaten the prosecution. Thoughts?
Stephanie L. Finn- SLFinnLaw@aol.com
When I first started practice, I got every excuse
in the book for why someone didn’t have the fee for services but they “will
on Friday when I get paid” and the like. Sweetheart that I am
(or was??), I would start the work and find, come Friday, the client had
a car payment due, rent, etc., and can I please wait because I get paid again
in two weeks, ect. Or, “I promise you, you have my word I’ll
be in Friday”, only to get a call on Friday saying their car broke
down, ect. This happened to me probably 3 or 4 times, with my putting
in approximately 25-35 hours of unpaid legal work for clients who never came
up with the money, and finally a mentor taught me how to become business-savvy
and make a living at practicing law.
I now require cash, check or money order up front
in the form of a retainer. I calculate the retainer to be 10 hours
of work at my hourly rate- if any portion is unused at the end of the matter,
it is returned. If it becomes apparent through weekly review of timesheets
and billings that the matter will require more than 10 hours of work, I ask
for another retainer in keeping with the estimated time I expect to be able
to complete the matter. For uncontested cases, simple wills, simple
deeds, simple bankruptcies, ect., I ask for a flat fee up front. If
a check is rendered for services, I call the bank from which the client’s
check is drawn and ask for a
“merchant’s verification of funds on the check” while the
client is in the office. If the bank responds that the funds are unavailable,
they must come back with cash or money order.
I’m so glad I’m not the only one who’s
fallen for these excuses and lost valuable time- for time truly is money! Thanks
to everyone who has shared their experience on this issue. I truly
feel the Email List is helping to open up communication and enhance civility
between practitioners of all levels of experience and helping us all to become
better colleagues and better lawyers. I have no misgivings of choosing
the as my profession and our clients reap the benefits- a win-win situation.
A great weekend to all!
Stephanie L. Finn- SLFinnLaw@aol.com
See MD. Code Ann., Comm. Law 14-202(2)
My dunning letters for bad check situations informs
the debtor of the possible remedies under criminal law and civil law. I
may have a standard letter for a bad check scenario if anyone’s
interested.
If the debtor’s debt does not violate any
criminal code, I NEVER threaten criminal action. Again see 14-202
Put it another way, it advises the debtor of all
remedies available under law and the possible means of enforcing the debt-either
through criminal or civil means. As such, my view is that informing
the debtor of all remedies afforded in law is stated mere fact, rather than
threat. As one colleague insightfully stated before, it’s a matter
of the way the issue is presented to the debtor.
Daniel Bendt- danbendt@marylandlawyer.biz
If you use the Commercial Law section mentioned
before, you can send the letter printed in the code and it kind of threatens
the criminal prosecution. But at least you are allowing the statute.
Michael J. Jacobs- mike@jacobsbarney.com
Actually, while I would recommend against it,
unless the threat begins to equate extortion, I believe that you can threaten.
My feeling is to take one course of action or
the other. Or advise what you intend while obliquely making reference to
possible more serious consequences absent an informal resolution, but don’t
threaten.
From my personal point of view, that really isn’t in accord with the
way we should proceed.
If your reputation is that you will do what you
tell someone you will do and you don’t make idle threat, then that’s
probably where you get the real leverage. Armed with that information,
the other party can make a choice and then you can proceed as appropriate.
But a great deal of this id personal style/method
of proceeding and it is always better to err in favor of caution.
Royal G. Shannonhouse- rshannonhouse@attg.net
Threatening criminal prosecution [explicitly or
by implication] to collect a civil claim is call extortion; the usual language
is to effect that claimant may pursue all legal and equitable remedies and
sometimes, enclose a copy of a civil complaint ready to file, with a deadline
for response…but don’t bluff.
Richard S. Stolker- rstolker@stolker.com
Just to throw my two cents’ worth in, I
think an attorney who lets clients stick him or her with an unpaid fee is
not sending the right message to other clients. If you have earned
the fee and the amount justifies the additional hassle of collection, I say
go for it.
Stephanie L. Finn- SLFinnLaw@aol.com
And to raise two cents more, I think a cost benefit
analysis of litigation is appropriate prior to filing suit. What is
the amount due? The cost (in time and money) of litigating? Was
the client satisfied with his/her results? Will filing suit raise malpractice
claims?
Will the judgment be collectable? Will prejudicial measures, such as demand
letters or outsourcing the debts to other collection agencies and /or attorneys
bring satisfactory results? Will the client consent to a settlement agreement
providing monthly payment plans, judgment by consent in the event of client’s
default, and a limitation of defenses (i.e. limiting defendant’s defense
to satisfaction only, thereby mitigating malpractice defense)?
As a former collections agent and licensed collection
agency, I don’t rule out suing clients as a general rule, but I do
consider all factors stated above before making a final decision. I simply
can’t grow a business without income not by having a reputation by
clients that I’m easy to swindle!
Daryl Price- dwprice@hotmail.com
When I accept a check for a large amount of money,
I’ll usually telephone the drawee bank and tell it that I have a check
in my hand for such and such an amount of money and see if funds are available. If
it’s drawn on a local bank, I may even make a special trip to that
bank and cash it on the same day. This way, even if the funds aren’t
available I can return with the check on another day and see if funds are
available (and so on, and so on) thus avoiding the loss of the check which
occurs when depositing the check into my business account and accompanying
bounced check fees. It takes some work, but it’s worth it gotten
me paid in cases where clients give me uncertain language as to when funds
will be available. I realize all this ca be avoided by accepting cash,
but I try to make it as convenient as possible for a client to pay me.
Lawal Momodu- LAWMOD@msn.com
Yeah
Somebody suggested that before. I have used
it a few times. It works
Adele L. Abrams- SafeyLawyer@aol.com
I’ll chime in with a similar perspective…if
a client stiffs, and then refers someone to you, they’ll stiff you
too.
Happened to me!
Wallace Kleid- wkleid625@hotmail.com
All of the responses have been well reasoned
with many interesting do’s and don’ts; but the bottom line is still:
WELCOME TO THE REAL WORLD… COLLECT YOUR FEE IN CRIMINAL/TRAFFIC CASES
IN ADVANCE (AND I MEAN CASH MONEY) NO MATTER HOW COMPELLING THE STORY>>>DON’T
EVER FORGET THAT ONCE YOU HAVE EXTRICATED THE NEFARIUOS NO GOOD NIX FROM THE
JAWS OF JUSTICE SYSTEM HE HAS NO FURTHER USE FOR YOU.
