When to compromise: Getting paid without getting sued

The wisest advice on the subject of when to compromise on your fees is the very same advice most lawyers give to their clients who are making tough business decisions: If you need to compromise in order to get paid most of what you are owed, or if fighting for your fees is going to trigger a lawsuit you might lose, it's best to settle than fight for a full recovery. While each situation requires its own analysis, there are some basic principles you should consider when dealing with a fee dispute claim.

The first principle is that of scale. If the amount at stake is less than 10 percent of what you have been paid (or, assuming a compromise is reached, how much you will be paid by your client soon thereafter), offering a reduction in the total fees owed to you is probably the wiser path to take. I am not suggesting that this is what you agree to right out of the box; rather, you should hold firm to your position if you feel the client's complaint has no validity. But only for a while. If your client is adamant that your fees are too high or that she or he lacks funds to pay you in full, and if she or he is willing to pay the undisputed amount in a prompt fashion, giving up 10 percent to get 90 percent of what you are owed is almost always worth it. If you are making such a compromise, be clear that this is only on the condition that the undisputed amount is indeed paid. If your client isn't able to make the payment promptly, then put it in writing that the discounted portion only applies to the final payment.

The second consideration involves the risk of a claim being made for malpractice. Reducing the fees doesn't guarantee that there won't be a malpractice claim later on -- and generally speaking it is not appropriate to even ask for a waiver of claims in exchange for a reduction in fees. Rather, it is the reverse: Pursuing a claim for fees is what is most likely to trigger a malpractice claim in response. I'll never forget the advice a prominent malpractice defense lawyer gave to my class on law practice management a few years back: "There are two secrets to avoiding malpractice claims: always return your client's calls promptly and don't sue a client for unpaid fees."

Rule number three is the one that says that you should follow your own legal advice, and when you anticipate that you would lose in a contested dispute -- either in arbitration or litigation over your fees -- it is prudent to compromise to avoid a total loss. It may be necessary for you to talk this issue over with a colleague who works in your field in order to get some clear thinking on the question, as it can be very difficult for even the most professional of lawyers to face the reality of a potential mistake. No need to call in your malpractice carrier, as a refusal to pay a bill does not rise to the level of a malpractice claim. As awkward as it is, don't be afraid to spend an hour or two with a trusted colleague, getting his or her opinion on your risk of loss.

And lastly, there are two interlocking rules that are not really "legal" in nature, but are more about public relations, cordial relations, and the smartest use of your time. Assuming the amounts at stake are not terribly huge, there are times it just isn't worth fighting over small amounts of money. Engaging in a battle over fees with a client is rarely a profitable use of one's time, and it certainly isn't a pleasant experience. If a compromise on your fees will calm down an angry client, or even better, turn a dissatisfied client into an appreciative one, that is a good thing. It is impossible to know just how this shift will benefit you, but most likely it will do so in unexpected ways.

At some times it makes sense to simply let the fees (or a portion of them) go unpaid, and at other times it is in your best interest to have an express agreement to waive some of the fees you are owed. If you feel strongly that you are owed the entirety of your fees, and you just cannot bring yourself to forgiving any of them, then don't -- but, except in the most extreme situation, that doesn't mean you have to pursue collection of the fees. Instead, you can simply let them go unpaid. However, in most situations, it is actually to your benefit to have an express agreement with your client about what fees are going to be waived and which are going to be paid. An express agreement generally increases the likelihood you will get paid the undisputed amounts, and will also improve your customer relations index.