Should Lawyers Sue Clients For Unpaid Legal Fees?

Should lawyers sue clients for unpaid legal fees? A practising lawyer shares practical guidance on hardship, payment plans, communication and when legal action may be appropriate

One of the things I have never been comfortable with as a solo practising lawyer is taking legal action against a client for unpaid legal fees.

In more than 18 years of running my own practice, I have come close only once or twice.

However, I have never done it.

That is not because I think legal action is never appropriate.

Sometimes it is.

I also appreciate that lawyers in commercial and litigation practices may be dealing with much larger unpaid accounts and very different commercial realities to those I generally encounter.

This is simply my perspective from more than 18 years in solo practice.

Before Taking Legal Action, Ask Why

When a client has not paid an invoice, my first instinct is to ask why.

Not every unpaid account is the result of a client refusing to pay.

Some clients are experiencing genuine financial hardship.

Some are vulnerable because of circumstances in their personal lives.

Others may be unhappy with the service they received or disappointed with the outcome of their matter but have never said so.

Before escalating the dispute, ask the question again.

There may be more to the story than the unpaid invoice.

Pick Up The Telephone

If you really want to know why an account remains unpaid, pick up the telephone.

Not another email. The telephone.

I know I repeat myself on this point, but there is a reason.

A respectful telephone conversation often uncovers information that multiple reminder emails never will.

It also demonstrates that you are interested in understanding the situation rather than simply demanding payment.

A Payment Plan May Help

Sometimes a short payment arrangement is appropriate.

Sometimes it is not.

A payment plan is not the panacea.

If you do reach an agreement, put it in writing promptly, confirm the terms with your client and do monitor the arrangement closely.

Think Carefully Before Commencing Proceedings

I am not suggesting lawyers should never sue clients for unpaid legal fees.

Sometimes legal proceedings are the appropriate commercial decision.

However, before pressing any definitive button, I think it is worthwhile speaking with another lawyer, particularly someone who practises in litigation.

Ask them to test your thinking.

An independent view can be invaluable.

Use Honey Before Vinegar

One phrase I often use with the lawyers I advise is this:

Use honey before vinegar.

In my experience it is usually the better place to start when following up unpaid legal fees.

Professional communication often preserves relationships.

One Final Thought

Never threaten legal proceedings unless you are genuinely prepared to commence them.

There is an important difference between saying you may commence proceedings and telling someone that you will.

Threats made simply to pressure a client into payment rarely improve the relationship and can undermine your credibility if you are not prepared to follow through.

Recovering unpaid fees is part of running a law practice.

Sometimes the unpaid account is not just a debt to recover.

Sometimes it is also an opportunity to learn something about your client, your billing practices, your communication or your firm's systems.

Good lawyers as practice managers also ask why the account became overdue in the first place and try and fix it before it happens again.

Our Cash Flow, Clients & Getting Paid - A Solo Practice Self-Review Kit has been especially create to help solo lawyers identify where payment problems arise and what practical changes can improve cash flow before overdue invoices overwhelm them.

You can buy it here

We work directly with solicitors, barristers, and consultant lawyers on the decisions that shape an independent practice - set up, structure, positioning, pricing, systems, capacity, financial control, AI use, and strategic direction.

This is practical, experience-based advisory work for lawyers who want a stronger, better-run practice and clearer judgment about what needs to change next.

You can work with us through a Strategy Session or a Solo Law Firm Tune-Up.

We also offer practical tools, guides and webinars for lawyers who want to get on top of these issues properly.

Details are on www.paulippolito.com.au