As Unpaid Bills Add Up, Some Lawyers Work for Free
When a tech client of attorney David West went bankrupt two years ago, it left Fenwick & West with an unpaid legal bill of $125,534.16.
But that’s far from the worst such problem those in the profession are facing, as they strive to strike a balance between collecting their fees in a tough economic environment and encouraging start-up clients to send more legal work their way, reports the Recorder.
“I just got off a call where the referring law firm has a $2 million receivable,” John Murray, a California bankruptcy attorney, told the legal publication earlier this week.
Even when it’s clear that the bill probably isn’t going to be paid, it’s often the better part of valor to continue to do free legal work—for a finite period of time, those who often represent start-ups say. Although this client company may be failing, those who run it will leave the firm with a good feeling about the law firm, likely leading to more business later.
Timothy Harris of Morrison & Foerster says he’s provided $5,000 to $10,000 worth of unpaid advice to several departing clients this year, focused on the proper handling of layoffs, landlord issues and limiting personal liability of the company’s management and the board of directors.
“The hope is that people will leave MoFo with a good taste in their mouth,” he says.
Related coverage:
ABA Journal: “Recession-Proof Your Practice”
