Limiting Exorbitant Lawyer’s Fees – part II | Beit Din Eretz Hemda - Gazit | Beit Midrash

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Case: The defendant (=def), a real estate development firm, hired the plaintiff (=pl), a law firm, to represent it in Israeli courts, in a suit of an Arab in which Jordanian law was involved. The hope was that pl could remove the suit at a preliminary stage of the litigation. They signed a contract that provides pl an hourly fee of 750 NIS. Def was to pay immediately 7,500 NIS for a ten-hour minimum, and upon completion of those hours, was to pay monthly based on itemized billing. Def asked pl to inform them when the ten hours were about to finish, which pl did. As that point was reached and the court refused to throw out the suit, def expressed concern about the expense, and while continuing to interact with pl, requested negotiations about a fixed fee for the case; pl neither rejected nor accepted this request. About two months later, pl sent a bill for 39,000 NIS, which def claims not to have received for a few weeks. Soon thereafter, def sent a letter complaining that they had been charged before further negotiations. Pl slowed down their work to a minimum, and a few months later def fired pl, around the time pl sent another bill, for 36,000 NIS. Pl want to get paid according to their work. Def respond that they understand the agreement, in writing and especially orally, to require renegotiating. Def also claim that the Israeli Bar Society and the courts reject lawyers’ unjustifiably exorbitant fees, which applies here regarding land of modest value (their new lawyer is taking 400 NIS an hour).

Ruling: Last time we saw that pl’s reading of the contract is correct and that the basic employment agreement continued until explicitly changed.
The contract speaks of def paying monthly after receiving a time-specific bill. While this places an obligation of payment on def, it also puts an expectation of reporting monthly on pl. Had pl reported on time, def would have been more likely to either force a change in setting payment or an ending of the employment earlier. Therefore, def deserves, if only based on propriety and as compromise that is close to the law, to have a certain reduction. This reduction will be applied only from the time the first post-ten-hour specified bill was expected and up to but not including the point that def expressed unhappiness but continued pl’s work at a slow pace. The reduction will be of 15% of the fee due during the appropriate times.
Beit din rejects the disqualifying of the level of fee due to overpricing. According to Halacha, one cannot demand a return on overpricing for workers (Shulchan Aruch, Choshen Mishpat 227:33). Many of those who accept applying the law of the land, do so only in regard to actual laws, not rulings, and certainly not of lower-court rulings, as is the case here. Even in the cases in which the courts reduced the fee, it was for higher fees than this, especially when they took a percentage of the court award. Charging a fee per hour is reasonable. While def found someone cheaper, professionals are entitled to charge higher than average fees if they believe they provide a better service.