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A Reminder About Collection on Unpaid Legal Invoices: Wait a Year

This is an issue I've written about before over at Creditor Rights 101, in Collection on Unpaid Invoices: One Really Good Reason to Wait a Year.

But, I mention it again because the Tennessee Court of Appeals revisited the issue recently, in Scott Ostendorf, et. al. v. R. Stephen Fox, et. al. (Tenn. Ct. Apps.,  No. E2013-01978-COA-R3-CV, July 16, 2014).

In that case, the law firm committed possible malpractice regarding the perfection of a client's lien security interest rights. The issue came to light in November 2008, and the client sued for malpractice in March 2012. Clearly, the lawsuit was filed more than one year after the facts alleged to be malpractice.

This was a pretty easy one for the Court, which cited the Tennessee Supreme Court's opinion at Kohl & Co., P.C. v. Dearborn & Ewing, 977 S.W.2d 528, 532 (Tenn. 1998):

"The statute of limitations for legal malpractice is one year from the time the cause of action accrues. Tenn. Code Ann. § 28-3-104(a)(2). When the cause of action accrues is determined by applying the discovery rule. Under this rule, a cause of action accrues when the plaintiff knows or in the exercise of reasonable care and diligence should know that an injury has been sustained as a result of wrongful or tortious conduct by the defendant. Shadrick v. Coker, 963 S.W.2d 726, 733 (Tenn. 1998)."

As I said in my prior post, I'm not condoning legal malpractice, nor suggesting that you should play hard-ball in collection of unpaid invoices for services that involved malpractice. But, as I said in my last post, if you sue a client for unpaid bills, it's more than likely going to result in that client claiming malpractice, whether it's merited or not.

If you think that such a claim will be raised from vindictiveness or tactic planning, then any lawyer should sit on the unpaid bills for services for at least a year. It's an easy "summary judgment" / "failure to state a claim upon which relief can be granted" issue.

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