In the world of legal billing disputes, a key question often arises: When does the time limit to file a lawsuit for unpaid fees begin? This was the central issue in a recent Louisiana appellate court decision, The Kullman Firm v. Integrated Electronic Technologies, Inc. NO. 2024-CA-0138 (Sept. 27, 2024). The case provides valuable insight into how courts determine the prescriptive period for unpaid legal fees, particularly when a lawyer-client relationship is ongoing.

The Case at a Glance

Kullman, a prominent law firm, represented IET, a satellite installation company, in two federal lawsuits involving alleged Fair Labor Standards Act (FLSA) violations. Between 2011 and 2016, Kullman defended IET in complex and costly litigation. Over time, however, IET fell behind on its legal bills, eventually ceasing payments in early 2015. When the representation ended in August 2016, Kullman was owed over $250,000.

In 2019, Kullman filed a lawsuit to recover the unpaid fees. IET countered with an “exception of prescription,” claiming the suit was untimely under Louisiana’s three-year prescriptive period for open accounts. IET argued that the clock started in 2015 when it first defaulted on payments.

The appellate court disagreed, ruling that the prescriptive period did not begin until August 2016, when Kullman’s representation of IET concluded.

Understanding Prescription in Louisiana

Prescription, akin to a statute of limitations, sets a time limit for filing lawsuits. For unpaid legal fees, Louisiana Civil Code Article 3494 establishes a three-year prescriptive period. The central question in this case was whether prescription begins when a payment is missed or when representation ends.

The Court’s Decision

The court held that the prescriptive period for unpaid legal fees generally starts when the lawyer-client relationship ends, not when individual invoices go unpaid. This ruling is grounded in several principles:

1. Unique Lawyer-Client Relationship: The lawyer-client relationship is fiduciary and often spans years. Prescription starting mid-representation could disrupt the relationship and dissuade lawyers from continuing their services.
2. When Debt Becomes Exigible: Under Louisiana law, prescription begins when a debt is “exigible,” or legally demandable. In the context of legal services, the court found that fees become fully demandable only once representation concludes.
3. Balancing Fairness: This approach protects lawyers from losing their right to collect fees while giving clients clear notice of their obligations at the end of representation.

Since Kullman filed its lawsuit within three years of its representation ending in 2016, the court ruled the claim was timely.

What This Means for Lawyers and Clients

This decision provides clarity on when the clock starts ticking for unpaid legal fees, emphasizing that the unique nature of the lawyer-client relationship often delays the start of prescription.

Practical Tips for Lawyers and Clients

For lawyers, the ruling underscores the importance of clear communication and thorough documentation. Engagement letters should spell out payment terms, including when invoices are due and the potential consequences of nonpayment. Lawyers should also track the timeline of their representation closely and maintain detailed billing records to avoid disputes. While this decision allows some flexibility, it’s still wise not to let unpaid invoices linger too long—prompt collection efforts are essential.

For clients, it’s critical to understand the terms of your engagement agreement and stay current on your invoices. If you fall behind, be proactive in communicating with your lawyer to avoid misunderstandings. Additionally, if you dispute the fees, recognize that the prescriptive period generally begins when representation ends, so any legal disputes over billing must be resolved within three years of that date.

Conclusion

The Kullman case reinforces a key legal principle: in ongoing lawyer-client relationships, the prescriptive clock often starts ticking at the conclusion of representation—not before. This approach ensures fairness while preserving the integrity of the lawyer-client relationship. Whether you’re a lawyer or a client, understanding how and when prescription begins is essential for navigating billing disputes and protecting your rights.