This is case is worth reading because it involved a law firm that did legal work for a client for a period 12 years, but never billed the client. The firm claimed that it had entered into an oral agreement with the client to defer billing until a parcel of real property was sold. When the property was sold, the lawyers delivered a legal bill for $274,850.64 to the client.
One can speculate that the client, who had not received any bills before that time, was enraged to receive a huge bill after that amount of time. She refused to pay.
The firm sued for (a) breach of contract, and (b) equitable estoppel. The client filed a motion to dismiss the breach of contract claim based on the statute of limitations and the statute of frauds. The motion to dismiss was denied.
After a trial, the court entered judgment for the Defendant and denied the entire legal fee request. The opinion explains it this way:
After the conclusion of the trial, the court ruled in Ms. Burley’s favor on two grounds. First, the court found that OMNG had failed to prove the existence of an oral agreement to defer billing and payment until the sale of the real property, which meant that limitations barred the firm’s claim unless Ms. Burley was equitably estopped to deny the existence of the agreement. Second, the court found that Ms. Burley was not equitably estopped.
In finding that OMNG had failed to prove the existence of the oral agreement, the court commented that “the only two people that can say there was an agreement [were] Ms. Burley and Mr. Marks” and that not calling Mr. Marks “sp[oke] volumes.” The court was “flabbergasted” that a law firm would enter into an agreement to defer billing and payment for a decade “without documenting it any way.” The absence of documentation confirmed the court’s conclusion that the parties had never made such an agreement.
In finding that Ms. Burley was not equitably estopped to deny the existence of the agreement, the court said that it was “absolutely unreasonable” for the firm to do $275,000 of work without informing the client on a periodic basis of what it had done and how much she owed. The court also said that it would have been inequitable to impose liability on Ms. Burley in view of the firm’s failure to memorialize the alleged agreement and its failure to keep her informed about what it had done and how much she owed.
The Appellate Court agreed with the trial court’s reasoning and affirmed the judgment. The law firm received nothing. While the result is harsh, remember that the client could have chosen to fire the lawyers or dispute the bills had they been presented to her. A legal bill gives the client lots of information about the matter and lets the client set a reasonable budget for the matter.
Edward X. Clinton, Jr.