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Engagement Letter Defeats Overbilling Claim

Lawyers are often asked to provide an estimate of the costs of a matter. Inevitably the client regards the estimate as a limit on the attorneys total bill, even if the case becomes more difficult than originally anticipated. In Dubon v. Drexel, 2021 NY Slip Op 04119, the plaintiff claimed that the lawyer promised him that the matter would cost $100,000 and then sued the lawyer for overfilling when that sum was exceeded. That claim was defeated by a written engagement letter. As the court noted:

The plaintiff hired the defendants, Allen Drexel and Drexel, LLC (hereinafter together Drexel), to represent him in a divorce action. The plaintiff and Drexel entered into a retainer agreement (hereinafter the retainer), which set forth the terms of Drexel’s representation of the plaintiff. Pursuant to the retainer, Drexel, among other things, would provide the plaintiff with itemized billing statements at least every 60 days. The retainer further provided that any modifications to the agreement, fee estimates, budgets for work to be done for the plaintiff, or adjustments to Drexel’s bills “will be valid only if in writing and signed by [both parties]” (emphasis in original)…..

The Supreme Court properly granted that branch of Drexel’s motion which was to dismiss so much of the first breach of contract cause of action as alleged that Drexel breached the retainer by billing the plaintiff for legal services in excess of $100,000 (see Palero Food Corp. v Zucker, 186 AD3d at 496). Drexel demonstrated that such claim was conclusively disposed of by the retainer itself, which did not contain a provision stating that the plaintiff’s legal costs would not exceed $100,000, and which stated that any fee estimate must be in a writing signed by both parties.

The Appellate Division affirmed the dismissal of that portion of the claim. Plaintiff was allowed to proceed on other overbilling claims.

Estimating fees is fraught with peril. If you give an estimate, include numerous disclaimers and caveats so the client does not later claim that you misled him.

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