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Beit Midrash Series P'ninat Mishpat

Chapter 461

Payment to a Lawyer when Agreement is in Dispute - part II

The plaintiff (=pl) is a law office that provided extensive legal services to the defendant (=def). Pl sent an agreement to def, which states that the payment rate per hour of various lawyers would be as accepted in the firm, with a 25% discount; pl was to bill def on a quarterly basis. Def wrote back that because he wants success, he demands that Adv. N will supervise all the work done. Pl sent def a bill for 72,978 shekels for a period of four months. Then, a meeting took place between def and N, about which each had different recollections. Def claims that it was agreed that he would pay 50,000 shekels immediately and another 50,000 shekels if he would win the litigation (he lost). N denies that he agreed to any change in the payments. Subsequently, pl continued to work, and they sent, 8 months later, a bill for 207,189 shekels. Def claims that the agreement was not valid because he was not told the rate of each lawyer, he was out of the country when it was claimed he signed it, and it was changed afterward. Additionally, because pl did not bill quarterly and because N did not handle everything, there was breach of contract.
Various RabbisSivan 21 5778
31
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Based on ruling 69031 of the Eretz Hemdah-Gazit Rabbinical Courts
P'ninat Mishpat (576)
Various Rabbis
460 - Payment to a Lawyer when Agreement is in Dispute - part I
461 - Payment to a Lawyer when Agreement is in Dispute - part II
462 - Blame for Failed Partnership
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Case:
The plaintiff (=pl) is a law office that provided extensive legal services to the defendant (=def). Pl sent an agreement to def, which states that the payment rate per hour of various lawyers would be as accepted in the firm, with a 25% discount; pl was to bill def on a quarterly basis. Def wrote back that because he wants success, he demands that Adv. N will supervise all the work done. Pl sent def a bill for 72,978 shekels for a period of four months. Then, a meeting took place between def and N, about which each had different recollections. Def claims that it was agreed that he would pay 50,000 shekels immediately and another 50,000 shekels if he would win the litigation (he lost). N denies that he agreed to any change in the payments. Subsequently, pl continued to work, and they sent, 8 months later, a bill for 207,189 shekels. Def claims that the agreement was not valid because he was not told the rate of each lawyer, he was out of the country when it was claimed he signed it, and it was changed afterward. Additionally, because pl did not bill quarterly and because N did not handle everything, there was breach of contract.



Ruling: [Last time, we saw that we do not accept def’s claim that the original agreement for payment was changed.]

Was the lack of quarterly billing, as prescribed in the agreement, a material breach of contract? In general we would say that it is not. However, three factors made this delay particularly problematic: the first bill after the sides’ discussion was eight months later; the amount of money due was approximately three times the amount of the bill which had agitated def; given def’s complaints about pricing, he had a right to know how things were progressing so he could plan his steps. The claim that sending a bill is problematic from a tax accounting perspective if the client does not pay right away is irrelevant. It is pl’s problem to figure out and does not exempt him from carrying out his duty. We rule that pl will be considered in breach of contract from the time they were two months late.

Therefore until Oct. 2007, def will have to pay according to the agreed upon rates. Beyond that, the matter is complicated. One who does work without a pay agreement, gets paid according to the benefit he provided if his services were sought, and only according to expenses if his services were not sought. Here, he was interested in the work provided. However, we understand that def would not have continued to seek the help if he knew the price. Here, also, the benefit is questionable. On the one hand, the project never went through. On the other hand, at the time the service was provided, the service was considered of value.

This is then similar to the case of one who ate meat, thinking he inherited the cow from his father and it turned out that it belonged to someone else. The halacha there is to pay 2/3 of the going rate. In our case, though it seems fair to us for him to pay only 1/3 of the original asking price [details beyond our scope].
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