WHEN IT COMES TO DIVORCE LAWYERS’ LEGAL FEES, SILENCE ISN’T GOLDEN
by Karen Winner
New York divorce lawyers have dusted off a 300-year-old archaic, merchant law in order to obtain quick and easy judgments for unpaid legal fees against unwary clients. Account stated claims, as they are known, have recently gained wide acceptance in the New York courts to the dismay of legal consumer advocates who contend they are unfair and dangerous to legal consumers. The courts’ rationale for account stated doctrine is simply this: if the client does not object to the attorney’s billing statement, the client’s silence amounts to approval of the attorney’s bill, and the implied promise to pay.
While it is generally known that unscrupulous debt collectors who buy debts in bulk typically use account stated claims to avoid having to prove contract terms, it is lesser known that lawyers use the same doctrine to avoid having to prove their fees are reasonable. The courts typically rule for the attorney if he or she produces a billing statement, along with a sworn-to statement that the client did not object. The court will attribute the client’s failure to object as a silent promise to pay whatever total dollar amount the attorney shows on his or her invoice.
With an account stated claim, a client will similarly get slammed in court if the client pays part of the attorney’s bill instead of not paying any of it. The same legal rationale is at work: if the client pays part of the bill, the client must have approved of all of it, and the lawyer’s billing statement becomes, voila – a pre-existing debt, with the client’s implied promise to pay.
Any divorce client becomes easy prey for a lawyer’s account stated claim because most clients are either too intimidated or fearful to object to unreasonable bills while their attorneys are still actively working on their cases. Often, a client won’t even know what to look for, according to Emanwel J. Turnbull, an International & Comparative Law Fellow at the University of Maryland’s Francis King Carey School of Law. “A consumer would need mathematical and legal knowledge, not to mention time and expense, which they do not possess,” he writes, in his recent law journal article, Account Stated Resurrected: The Fiction of Implied Assent in Consumer Debt Collection, published by Vermont Law Review.
In Mr. Turnbull’s view, judges are assuming facts without knowing if the facts are true or not, to approve lawyers’ account stated claims. “A consumer’s failure to dispute a bill does not equate, in the mind of the consumer or the business, to an agreement that the bill is accurate and a promise to pay it. This is simply an archaic fiction,” he writes. Also, “It is not a rule or an accepted practice among consumers that ignoring a bill is the same as agreeing that it is right.”
According to Mr. Turnbull, account stated doctrine was in disuse for most of the last century and only recently was resurrected with the growth of the debt buying industry which purchase defaulted consumer credit card debts in bulk. When reached for comment on this article, Mr. Turnbull expressed surprise that New York lawyers are also using account stated claims — against clients in family law cases: “In Maryland, the general reaction of attorneys to the words ‘account stated’ is a blank look – which is perhaps just as well for their clients,” he said in an e-mail, adding: “If New York prohibits attorneys from charging unreasonable fees, then the courts shouldn’t allow an ancient common law doctrine to override that policy, but it appears from [case law] that account stated does influence their decisions.” You can read Mr. Turnbull’s entire article here: 38 Vt. L. Rev. 339 (2013).
By way of example, in the 2005 New York case of Bartning v Bartning, a panel of appellate judges justified their decision to overrule a Manhattan trial judge who had rejected the lawyer’s account stated claim for the amount of $9,686.24 against his former divorce client. The appellate court judges expected the client to object to the bill if there was any problem. They ruled that it was up to the client to prove the lawyer wrong to their satisfaction, which he did not. The ruling stated in part:
An account stated claim exists where a party to a contract receives bills or invoices and does not protest within a reasonable time (see Herrick, Feinstein LLP v. Stamm, 297 A.D.2d 477, 746 N.Y.S.2d 712 [2002] ). Here, appellant [lawyer, representing himself] sent out regular invoices, including the final one, to which he received no objection. In response to the petition, plaintiff, pro se, [the former client, representing himself] failed to establish that he objected in a timely fashion to the invoices; rather, he merely asserted in open court that when he got the bills he raised to appellant his belief that the bills contained overcharges. Plaintiff’s response was insufficient to raise an issue of fact precluding summary judgment on appellant’s claim to fix his lien for his fees as billed.
In the next entry, I will take a look at the inconsistent and contradictory views of the New York courts in determining how long clients can wait to object to their lawyer’s billing statements in order to successfully challenge an attorney’s account stated claim.
Remember, to be a Winner at Law, information is key.
Karen Winner, an attorney and legal consumer advocate, is the original author of the the Statement of Client Rights (New York’s Court Rules, 22 NYCRR 1210.1), and author of the nationally acclaimed book, Divorced From Justice: The Abuse of Women and Children by Divorce Lawyers and Judges, (ReganBooks/HarperCollins, 1996.). Ms. Winner is currently working on an update of her book. For more information, see Winneratlaw.com