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Legal fees > The risks in challenging an attorney's fees

The risks in challenging an attorney's fees

Nothing on this page should be construed as suggesting that you cannot challenge the fees charged by an attorney, or should not, if they appear to be excessively high, but they do illustrate what can go wrong if your challenge is unsuccessful or you are poorly advised by another attorney. 

Over the last few years there has been a lot of coverage of attorneys’ fees and legal challenges to attorneys’ fees.  There are not many stories which tell you what happens if you challenge an attorney’s fees without well thought out cause therefor, or if you follow incorrect advice. 

This is a story of one of the cases.

It is about a former client of ours who went to an attorney - who clearly had insufficient knowledge of relative legal principles, did not do cogent research and embarked on reckless litigation against our firm which cost her client dearly. 

I want to stress the fact that we advise all our clients that in 25 years of being in practice, the fees that we charged have never once been found to be excessive. To the contrary, it always transpires at taxation that we have charged well below the fees to which we were entitled to, simply because we always take a reasonable, err - on - the - side – of – caution – approach.

Taxation is the process to follow when an attorney’s fees are disputed by the client. A court official (“the Taxing Master”) assesses the attorney’s fees and determines what the reasonable fee should have been.

What a lot of people don’t appreciate is that when dispute fees and you ask an attorney to tax a bill of cost there are implications. 

The first implication is if the attorney taxes the bill at a higher amount than what he or she has charged you - and as long as they have warned you of that - you become liable to pay the attorney that higher amount.  In other words, if the attorney charged you R100,000 for the work they have done and you challenge their fees and the Taxing Master says that they could and should have charged R130,000, then you will find yourself in the unfortunate position of owing the attorney another R30,000 over and above what you have paid.  You cannot at that time step back and say that you are now happy with the R100,000.  You now owe more.

Unfortunately, that is not where the problems end.  Because we knew that we had charged fees that were very fair and reasonable in the case we are going to tell you about, we put up a very vigorous defence to the claims that were made against us by the client and his attorney.  The attorney, Keamogetse Nwaila of Nwaila Attorneys Inc. initially refused to agree that we refer the bill of cost to the Taxing Master and embarked on a full blown court action. The Judges eventually explained to her, as we had on repeated occasions, that fee disputes are not decided by the Judges but by the Taxing Master and told her to get our bill of costs taxed.  The client had initially been charged a fee, excluding VAT, of R288 258-77 on a claim that was settled for approximately R1,3 million.  By the time the Taxing Master had taxed our bill of costs he said that the appropriate fees we could have charged for the work we have done in that matter was R566 339-32 (excluding VAT and disbursements).  In other words – the Taxing Master said we could have charged our client very close to double what we actually charged.  This was so, even without a fee agreement. 

The fact that an attorney does not have a valid fee agreement in any event, as this case illustrates, does not mean that the attorney is not entitled to reasonable fees and our attorney/client bill of cost was taxed on the basis that attorney firms are entitled to reasonable fees.

Due to the attorney’s mishaps and mistakes along the way in challenging us, the client was liable for various costs associated with the action.  That is, without us proceeding to even worry about the extra fees that the Taxing Master had allowed us, we were still entitled to recover the costs of the failed action that the client had brought against us totalling approximately some R150 000-00.

The attorney, who had begun the case by suing us to return all the fees we were paid in the matter with interest, then offered us R10 000-00 to drop the case and also wrote a letter, addressed as “without prejudice” to us, saying that the client did not have any money to pay us.  A without prejudice letter usually cannot be used in Court – it’s a secret offer to settle a matter, but in this case she was obviously not aware that to claim you do not have assets in a letter like this is in fact an act of insolvency which can be used against the client.  She had made another blunder, which might well lead to the client being liable to be sequestrated.

We appointed tracing agents, obtained the client’s new address and sent the Sheriff of the Court to his premises with a warrant to attach and remove his movable assets when they arrived if he could not pay the money he owed to us.  As you can see in the videos the Sheriff of the Court went into his property and removed all his furniture for it to be sold at a later stage.  Sadly, the sale of all the furniture and movable goods will probably not cover what he owes us and so and, unfortunately, unless he settles his indebtedness, he runs the risk of being sequestrated.  This will be based on the fact that his attorney, in writing, advised us that he is incapable of settling the debt in the hope that we will simply “go away”.  Not having the money to pay a debt you may well lead to sequestration so it isn’t that easy to avoid paying what you owe if you get yourself into a hopeless case like the one he brought against us.

The bottom line is that the client was charged fair fees in the first place and decided for some unknown reason, perhaps on very bad advice from another attorney, to proceed against us and now as a result owes our firm a lot of money. 

It is very important then, and this does not mean that one must not challenge an attorney’s fees if they are unreasonable, to make sure that you don’t challenge fees unnecessarily and, before you go down a route like this to make sure that you are going to win the battle. If you don’t, you might well end up costing yourself a lot of money.

If you and your attorney take overly aggressive (and ill-advised) steps against your previous attorney over fees, you will probably find that whoever’s fees you are disputing is going to make sure that they don’t just let you walk away when you fail with the case that you brought.  You will probably be paying for it and the big winner is going to be the your “new attorney” who you will ultimately have to pay for “assisting you in bringing a case.”  It will be very hard to prove at a later stage that that other attorney has incorrectly advised you and one must bear in mind that many attorneys will take on a case like that and run up fees simply because they are aware of the fact that you have received a large settlement and will have the money to pay them.  They are going to get paid on an hourly basis whether you win or lose, or, as in this case with our unfortunate former client, you lose spectacularly.  He has not just lost the case, but he has lost the case in a truly spectacular form. 

There might well be other attorneys firms that overcharge – we certainly are not one of them – and there might well be cases where you do need to challenge your attorney’s fees, but the chances of substantial and meaningful success is usually fairly remote.  Most attorneys are honest professionals trying to do their best for you and earn an honest reasonable fee for it. And quite often even if you were to lower the other attorney’s fees, the chances that you will reduce it below what you will need to pay a new attorney and cost consultants are so unlikely that most attorneys are not even interested in taking on those types of cases.  Perhaps one should get very concerned if you do come across an attorney who does agree to take on the case – it might very well indicate that they simply do not know what they are talking about.  Certainly, our former client did not get a proper representation from Nwaila Attorneys Inc. and ultimately one would hope that he never paid them any legal fees to end up owing our firm money.  One suspects however, and we will update the story when we obtain that information, that he unfortunately has paid fees for what has been spectacularly bad advice. In the meantime, we have also laid complaints against her with the Legal Practice Council.