My small business lawyer asked for a retainer of 3500$ to file incorporation papers and help create a partnership. As is standard and in most retainer agreements, my business partner and I were told that we would be notified if we incurred additional expenses on a monthly basis and that the firm would obtain instructions from us before they went any further should the retainer deplete. This was in June. Today, they sent us a bill totalling almost 10 thousand - 6500$ in additional fees for emails and a handful (three) zoom calls negotiating terms with NO knowledge or instruction to us letting us know we owed more money. How can we proceed? We cannot afford this, it will likely put us under.
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Unless you have some extremely complex legal situation the cost to incorporate would not be anywhere near those fees.
I’d like to hear 2 things before passing judgement:
- What’s the nature of the business.
- How long have you been working with the attorney.
Arranging a business partnership could, under the right circumstances, be complicated. If there are fees for incorporating your org and filing with the state and for an EIN, it’s not inconceivable that the bill went into a few thousand dollars.
A retainer for $3500 on a simple partnership organization would have been the first warning sign. So either you’re a mark and got taken or it’s more complicated than you’re intimating.
Trying not to pay your attorney is going to be difficult, btw. They have all the resources to get a judgement against you.
You should, as another person said, let them know a correction needs to be made for the unauthorized charges. Get an itemized bill whether it was or was not, then proceed from that point.
I would think a simple agreement plus all filings would run $2000-3000. Even the retainer was too much if you ask me.
Argue with them about it. I’ve argue with every single attorney I have ever worked with. I’d refuse to pay.
You’re halfway to a good DUI defense!
HAHAHAHAAHA no. Send them an email telling them to get fucked and you’ll be reporting them to the Better Business Bureau and reporting their fraudulent billing practices to both local law enforcement and the Canadian Anti-Fraud Centre.
Same thing happened to me during an acquisition. Bank told me to cut them off and they’d have their attorney clean up anything needed. They said the price was insane. Requested an itemized invoice and found lots of “negotiation” between my lawyer and the sellers lawyer when there was nothing to negotiate. Infuriating.
This is a contract right? They didn’t follow the terms so I would ask them why not? Was there a stupendous emergency? This seems ridiculous but talking to them may help. They’re lawyers, they should know how to follow a contract!
Yep lawyers are the biggest criminals out there. I’ve sold pot since I was 13 the most vicious criminals I met were lawyers.
Just wanted to say thank you everyone for the comments and advice. We have moved forward contacting the managing partner, and have a lawyer family friend looking over the itemized bill and retainer / engagement letter
Alberta just set up and Co LTD. Was 2300 and change including trademarks, and all corporate documents/ board meeting minutes the works.
Have you asked the attorney?
$10k seems absurd for forming a partnership
Crazy that the lawyer couldn’t look at the situation and tell their client that their regular fees would be absurdly out of proportion for the value given to a small startup.
For a standard partnership, yeah, that’s absurd. For those kinds of numbers, you’d have to have asked for something unusual and bespoke. I’ve charged those kinds of numbers to iron out a massive custom partnership agreement during a change in ownership, but never for a standard startup.
Mine was $6k total for formation and partner agreement, which included writing custom stuff for 4 partners.
If they didn’t follow the terms of your retainer agreement - that is, notifying you in advance of additional billed time - then they’re in breach. There’s a good argument that you don’t owe them for that time unless you specifically instructed them to do the work.
Incidentally, $10,000 in fees to set up a partnership is absurd, especially one that can’t afford $10,000 in legal fees. That’s an associate who doesn’t know what they’re doing, and their supervising partner owes you an apology.
Do you have to pay for that?
Sorry that happened. Similar circumstances happened to me long ago.
Ever since then I’ve deduced the following: It’s simple; attorneys are crooks!
For my circumstances. I refused to pay then they tried charging me money to “close my file,” because the entire firm was corrupt. They ended up charging off the balance and left me alone. I think it’s because I got the Attorney Regulator Bureau of Colorado involved and they knew they were being unethical. Attorneys are all crooks!