The Lawsuit You Can't Win

When you sue a client, you always lose — not the case, necessarily — but make no mistake: When you sacrifice business, you're no winner.

In Frechtman v. Gutterman, a 2013 case before the New York County Supreme Court that was affirmed earlier this year by the Appellate Division of the Supreme Court of New York, First Department, Allen Gutterman, et al. fired attorney Bernard Frechtman via three letters in which Gutterman disparaged Frechtman's abilities as an attorney.

The letters stated, among other things, that "we do not believe that you adequately represented our interest" and "we believe that your failure to act in our best interest in reference to certain matters upon first engaging in the matter may equate to misconduct, malpractice and negligence."

The letters further indicated that the defendants did not believe that they should have to pay outstanding attorneys' fees because "we believe that your future representation on this matter only became necessary, as a result of mistakes and oversights made by you acting as counsel." Gutterman followed through by not paying money owed.

Frechtman sued, claiming that the letters were libelous. Gutterman argued that the statements in the letters were opinion and that, in any event, the letters constituted attorney-client communications not published by a third party. Frechtman claimed that the letters were in fact published because they were typed by someone else at Gutterman's direction.

The court acknowledged that the publication requirement could be considered fulfilled but that the statements in them were "clearly expressions of opinion of a dissatisfied client."

Thus, the libel argument could not be sustained. The court therefore dismissed Frechtman's complaint.

The case is a perfect example of what I have long preached: Do everything you can to retain a client. If a client is not paying his bills because money is an issue, work with him, not against him. Try in earnest to set up a repayment plan. If a client is not paying his bills because he is dissatisfied with your work, talk to the client — then talk some more — and try to resolve the issue.

Suing should always be a last-ditch effort to collect money, because once you sue a client, he will never remain your client.

In Frechtman, the lawyer did not sue the client specifically to collect fees. However, the withholding of fees was the underlying cause of the case, as the dissatisfaction that led to the withholding in the first place also led to allegedly libelous statements, which in turn led to the lawyer suing for punitive damages of $250,000.

Regardless, the end result is that a lawyer who had represented a certain party for about seven years has now lost the client. The attorney has also lost any referrals that the client might have made in the future.

In addition, despite whether or not the lawyer was justified in believing that the statements were libelous, he has probably lost other potential clients due to his handling of the situation, as a portion of potential clients whom have heard about the case likely will be turned off by a lawyer so willing to sue his client.

Thus, the legal end result of any case in which an attorney sues his client is inconsequential. From the perspective of the business of law, the real result is a loss — of business present and future.