March 13, 2017 Top Story

Dispute Period in Law Firm Retainer Agreements in Doubt

Clause in retainer agreement providing 15-day billing entry objection found unenforceable

Christina M. Jordan

Attorney-client retainer agreements often include a clause providing that if the client does not dispute a billing entry within a certain period after receipt of the bill, the entry shall be acknowledged as correct. In Cannon & Nelms APC v. St. Andrews Development Corp., an appellate court held such a provision unenforceable. The appellate court found a 15-day period does not comport with the fiduciary relationship between attorney and client.

Dispute Provision Is Unenforceable

In Cannon & Nelms, the underlying dispute stemmed from St. Andrews' insurance claim against Travelers Excess and Surplus Lines Company. Travelers was the underwriter of insurance covering St. Andrews' interest in an apartment building destroyed in a fire. St. Andrews sued Travelers after it failed to pay the claim. The Cannon firm represented St. Andrews in the case.

The relationship between Cannon and St. Andrews deteriorated as St. Andrews began questioning the legal bills. The case settled before proceeding to trial. Cannon subsequently sent St. Andrews three invoices totaling almost $400,000. St. Andrews did not pay the invoices.

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