Should the fee be returned?
What does your engagement agreement say?
The answer to the question of when you should return a client’s fee may depend on how your engagement agreement addresses what the fee covers and when fees are considered earned. But when deciding whether to return a client’s fee, you must also consider the future impact that the return of the fee (or refusal to return the fee) might have on your practice. While I caution lawyers that they need to ensure that their clients do not take advantage of them and their billing policies, you must also consider the potential waste of time and energy in fighting the client on the fee, not to mention the potential for a malpractice claim or the filing of a grievance. And of course, there is the issue of good will.
Is it really worth the fight?
Sometimes, returning the client’s fee no questions asked may be the best course of action. Rather than wasting time and energy being angry or fighting this particular client about the fee, perhaps that energy would be better directed toward making your policies, engagement agreement and instructions to clients more clear in order to avoid such problems in the future. Follow up letters or instructions documenting both the client’s and the lawyer’s responsibilities and expectations are also helpful.
The situation described above might have been a simple misunderstanding or a miscommunication. The client may have been under the impression that the lawyer didn’t show up for the hearing, in which case the return of the fee would be expected. Good will might still be saved, and return of the fee (or at least a portion of it) might go a long way to preserving a relationship. On the other hand, perhaps the client intentionally refused to follow directions or didn’t respect the lawyer’s time. In that case, return of the fee might not save the relationship, but it might stave off a bar complaint and avoid additional headaches.
Do future long term benefits outweigh the short term fee?
When a client requests return of a fee, it pays to explore the issue with the client calmly to determine whether the relationship could be saved or whether the client was simply a bad client or not a good fit for your practice. Knowing the warning signs can help you avoid such clients in the future. The long term savings to you practice in refining your engagement agreement and client selection process may be far more valuable than the short term fee (even if the fee is several thousand dollars).