How Paralegals Can Recover Unpaid Fees for Professional Legal Services

Summary

Paralegals are often an integral part of the legal system, providing much needed assistance in the judicial process. Unfortunately, many attorneys do not pay their paralegals for their work, leaving the paralegals with not only no payment, but with a lack of recourse to recover their fees. This article will provide advice for paralegals who wish to collect compensation for their work, including how to approach the situation, how to figure out how much money is owed, and how to go about recovering said funds.

The first step in recovering paralegal fees is to determine how much money is owed. This can be done by calculating the amount paid to the paralegal, subtracting any taxes and other associated fees, and dividing the remaining amount by the number of hours worked. Next, the paralegal should determine what kind of recourse is available and what their legal rights are. Depending on their jurisdiction, paralegals may have the right to file suit against the attorney, as well as having the right to demand payment or a settlement.

After determining the amount owed and the rights of the paralegal, the paralegal should draft a demand letter requesting payment and outlining the consequences if the attorney fails to comply. This should include any and all details of the work performed, including the rate of pay, the hours worked, and any other relevant information. The demand letter must be sent out to the attorney, preferably via certified mail, with a return receipt requested. The paralegal should then wait for a response.

If the attorney still refuses to pay after the demand letter has been sent, the paralegal can consider additional legal recourse. This includes filing suit against the attorney and taking them to court. The paralegal should consult with an attorney before making this decision, as the process of trial can be complex and time consuming. If the paralegal prevails in court, they may have to go through the enforcement process to ensure that payment is made.

Paralegals may also have the option of recovering their fees through a lien on the attorney's assets. This can be done through the filing of a judgment lien with the county court system. Once the lien is filed, the defendant's assets will be subject to the lien until the outstanding debt is paid. Alternatively, the paralegal may be able to collect payment through an alternate means, such as arbitration or a bankruptcy court.

Recovering paralegal fees is a difficult process, but it is possible if the paralegal follows the right steps. These steps include calculating the amount owed, determining the rights of the paralegal, drafting a demand letter, and exploring legal recourse. Additionally, the paralegal can consider filing a lien on the attorney's assets or using alternate means, such as arbitration or a bankruptcy court, to recoup the fees owed. In any event, it is important for paralegals to understand their rights and to not be afraid to take legal action to ensure that they are paid for the work they have done.
 

Legal Suit to Recover Paralegal Fees

When attorney's fees and other legal costs such as paralegal fees are incurred in a lawsuit or arbitration, sometimes a court or arbitrator will order the other party to pay for the fees or other costs. The American Bar Association Publication, "Legal Fees: Law and Practice," provides attorneys with guidance on recovering their legal fees from opposing parties. It also emphasizes the importance of advising clients of the possibility of recovering their legal fees.
 

Recovering Paralegal Fees

Paralegal fees are the fees billed by a paralegal, defined generally as a person qualified through education, training, or work experience to perform substantive legal work that requires knowledge of legal concepts and is customarily, but not exclusively, performed by a lawyer. The rules governing the recovery of paralegal fees are not spelled out in the same way as legal fees. This can make it difficult for attorneys to know whether a court or arbitrator will require the other party to pay paralegal fees.
 

Factors Dictating Recovery of Paralegal Fees

In most cases, a court or arbitrator will consider several factors when deciding if paralegal fees should be reimbursed. These factors include: the marketplace value of the paralegal's services; the necessity of the services; the skill and expertise of the paralegal; the complexity of the litigation; the amount of time spent on the case; and whether it was cost-effective to use a paralegal instead of an attorney. It is also important for attorneys to consider whether their state's laws specifically include paralegals when determining whether the fees must be paid.
 

Documentation to Support Paralegal Fees

In order to obtain successful recovery of paralegal fees, the attorney must have the necessary documents. Attorneys should keep time sheets and billing records to document the amount of time and work performed by the paralegals. Keeping detailed records of the paralegal's hours, as well as a clear description of the tasks performed, is essential. Attorneys should also provide a suggested rate for the paralegal fee and a comparison to local rates charged in the legal community.

Attorneys are not the only legal professionals who should keep accurate time sheets: in most jurisdictions, courts have allowed firms to recover for reasonable use of a paralegal or legal assistant's time as well.
 

''The idea behind the recovery of paralegal fees is to free up the attorney and maintain more reasonable control over costs,'' says Cheryl Leone, former legal business manager and CEO of Catalyst Group, Inc., which provides management and administrative help to law firms and others. ''Clients can benefit from paralegal fees because they help keep the costs of attorneys' fees down.''

Courts have acknowledged that benefit by providing for the recovery of paralegal fees in cases where those fees were deemed reasonable. As for what is considered an acceptable hourly amount, the states have taken their own stances. For example, a Massachusetts decision provided that $60 per hour was ''reasonable'' for paralegal and law clerk fees,¹ and the Louisiana courts have deemed $55 per hour in paralegal fees ''fair and reasonable.''² Some of the factors courts will consider when determining reasonable fees include the professional nature of the tasks performed by the paralegal, the location of the firm, the total time spent on the case by paralegals and legal assistants, and the accuracy of billing records kept by the firm.

In reaching a reasonable hourly dollar amount for paralegal fees, the landmark United States Supreme Court case of Missouri v. Jenkins held that firms can recover paralegal fees based on prevailing market rates rather than the hourly amount the firm spends to employ the paralegal.³ Many courts still use the ''prevailing market rate'' calculation or the ''lodestar method,'' which multiplies the number of hours worked by the current hourly market rate to reach the amount owed.

And clients are not the only people who may benefit from the recovery of paralegal fees: the firm and the paralegal also do. ''[Paralegal fees] give the paralegal or legal assistant some control to contribute to the overall success of the firm,'' Ms. Leone said. In addition, paralegal fees may allow a firm to branch out to new areas of the law and take on additional cases. ''Firms may actually expand into other areas. [There may be certain tasks] which just wouldn't be productive if the attorney did them, but if the paralegal takes them on, they can create new markets.'' As such, paralegals and legal assistants may become profit centers for their firms.

An able paralegal will also have much to gain by recovering paralegal fees. ''If you can show the attorney that you're more than paying for yourself, the firm will [more likely] keep you and give raises,'' Ms. Leone explained. Add to that clients who are happy to pay less for legal services, and the paralegal may be considered a great asset to the firm that can recover his or her fees.

When billing paralegal fees to clients, there are a few considerations firms must take. ''[B]e accurate,'' Ms. Leone advised. Billing requirements may differ by firm. ''For certain tasks, some firms may even choose to factor paralegal fees into a flat fee that's charged to the client,'' she said. Whatever the case, close attention should be paid to time sheets and other billing documents. In fact, some courts have said that firms must clearly distinguish between clerical and professional tasks on billing sheets to recover paralegal fees. Others compel firms to submit clear and well-kept documentation of time before recovery of fees is allowed.

Paralegals and legal assistants should also be familiar with their states' requirements and local decisions, as individual states govern paralegal fees. Most jurisdictions require proof that paralegals are directly supervised by attorneys. Also, firms must take precautions not to allow non-attorneys to perform tasks which should be left to attorneys only; these include giving legal advice, setting legal fees, and providing court representation, among others.

The recovery of paralegal fees offers money and time-saving benefits all around. ''[Paralegal fees] are a fairly new concept, and they provide area-driven income to the firm,'' Ms. Leone stated. ''[Paralegals can] become ambassadors for their firms and take ownership for some of the success of the firm.''

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