LAWBIZ COACHES CORNER: Sue, and lose a client

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You will always lose when you sue your client.

What you’ll lose is not necessarily the case, but the client.

In Frechtman v. Gutterman, a 2013 case in the Supreme Court of New York County that was affirmed in 2014 by the Appellate Division of the Supreme Court of New York, First Department, Allen Gutterman et al. (hereinafter Gutterman) fired attorney Bernard Frechtman via three letters in which Gutterman disparaged Frechtman’s abilities as an attorney. The letters stated, among other things, that “we do not believe that you adequately represented our interest” and “we believe that your failure to act in our best interest in reference to certain matters upon first engaging in the matter may equate to misconduct, malpractice and negligence.”

The letters further indicated that defendants did not believe that they should have to pay outstanding attorney fees because “we believe that your future representation on this matter only became necessary, as a result of mistakes and oversights made by you acting as counsel.” Gutterman followed through by not paying money owed.

Frechtman sued, claiming that the letters were libelous. Gutterman argued that the statements in the letters were opinion and that, in any event, the letters constituted attorney-client communications not published by a third party. Frechtman claimed that the letters were in fact published because they were typed by someone else at Gutterman’s direction.

The court acknowledged that the publication requirement could be considered fulfilled but that the statements in them were “clearly expressions of opinion of a dissatisfied client.” Thus, the libel argument could not be sustained. The court therefore dismissed Frechtman’s complaint.

This case is a perfect example of what I have long preached: Do everything you can to retain a client because that client represents future business. If a client is not paying his bills because money is an issue, work with him to set up a repayment plan. If a client is not paying his bills because he is dissatisfied with your work, talk to the client and try to resolve the issue. Suing should always be a last-ditch effort to collect money because once you sue a client, that client will never remain your client.

In this case, the lawyer did not sue the client specifically to collect fees. However, the withholding of fees was the underlying cause of the case because dissatisfaction that led to the clients withholding fees also led to allegedly libelous statements, which in turn led to the lawyer suing for punitive damages of $250,000 based on a libel claim.

Regardless, the end result is that a lawyer who had represented a certain client for about seven years has now lost that client. The lawyer also has lost any referrals that the client might have made in the future.

In addition, despite whether or not the lawyer was justified in believing that the statements were libelous, he has probably lost other potential clients due to his handling of the situation: some potential clients who have heard about the case will be turned off by a lawyer who is willing to sue his client.

Thus, the legal end result of any case in which a lawyer sues his client is inconsequential. From the perspective of the business of law, the real end result of any case in which a lawyer sues his client is a loss; a loss of the client and future business.