Legal outsourcing mark-ups

[Vinnyb]

Earlier this year I wanted to form a Delaware entity and so I enlisted the services of an attorney I knew. I gave him all the information he said he needed and waited to hear back. Weeks go by and no contact from him whatsoever. Eventually I grew tired of waiting as I knew something as trivial as forming an entity, especially in Delaware, doesn't take long at all. I happened to an entity search on the Delaware entity search site and found my incorporation formed days after I sent him the email, and so I went to contact the lawyer and he offered no explanation as to why he never contacted me and treated it as if nothing was done. So I went to collect the documents from him and got the bill. I paid it and didn't look back. There was no agreement or retainer signed or anything like that.

Fast forward a few months and I needed someone to handle the organization of the company, so I got someone who is very reputable this time. The new lawyer told me to get the person who incorporated the company to sign an Action of Sole Incorporator form. I looked at my Certificate of Incorporation and saw the Incorporator's signature and the relevant info was not of the lawyer I employed and was someone else's. I looked into the incorporator online and saw that they only handle incorporations and actually do quite a lot of them per year. So I got in contact with the people at this new firm and got what I needed but I also asked how much was it to form a Delaware corporation. They quoted a price around $400 cheaper than what I was billed and that includes everything I had received from the lawyer (actually I received less since he only gave me a few things and not all the documents). The lawyer actually billed me again for the registered agent fee which is already included in the outsourced firm's price and just put the rest into professional fees connected to the formation of my company to get to around $400 more than the other firm's price.

At the very least he double charged me for the registered agent fee but I am almost certain that he put in additional charges within the fee for professional services part that shouldn't be there. There was no organization of the company done and all I got was the EIN and the certificate of incorporation and the corporate book and seal. I asked him when I picked up my documents if any organization had been done but he said no he just formed the entity.

What are my options to get that $400 back from the lawyer? I have been reading into it and some sites claim it is an ethics violation to mark-up a client's bill when otusourcing. Can I go dispute this in arbitration court or any other court and can I file a complaint with my state's bar?

 

[army judge]

You can file a complaint with the state bar, file a lawsuit, or take any other action you wish.

Good luck.


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[Michael Wechsler]

Earlier this year I wanted to form a Delaware entity and so I enlisted the services of an attorney I knew. I gave him all the information he said he needed and waited to hear back.... There was no agreement or retainer signed or anything like that.... What are my options to get that $400 back from the lawyer? I have been reading into it and some sites claim it is an ethics violation to mark-up a client's bill when otusourcing. Can I go dispute this in arbitration court or any other court and can I file a complaint with my state's bar?

There are a couple of problems I can see. To start, the attorney can always claim that your discussion on what corporate entity to file and any other information qualifies as professional legal advice and services. I'm guessing that this may be part of the justification for the bill. And the fact that he has marked up the price for which he pays is not unlawful either on its face. If he said he was personally doing all the paperwork, I can understand the offense and the question of an ethics violation but it's unclear as to what the actual agreement was. I don't know about the double charging but the $400 might not be completely out of line if he gave you, e.g. 2 hours of time in discussion and preparation and handling. I'm not defending what the attorney did, just analyzing you being able to make a clear case of wrongful conduct.

My thought is that you should be prepared with what you have and discuss the matter with the attorney. You can let him know that if you wanted pure outsourcing, you could have accomplished the same thing yourself. Be prepared for the argument that he provided you with professional advice - but if that's minimal, then you should point all of this out. You can mention what army judge did - potentially filing a complaint with the state bar - but why not try to see whether you can negotiate first without anything resembling a threat. Perhaps you'll get what you want - but be very prepared to show that (a) there wasn't much work done, and (b) the attorney was responsible to detail what you were getting and what that cost and was included and he didn't. Best of luck to you.