What to Do If You Retained an Attorney, But Bankruptcy Wasn’t Filed
A recent email arrived with a question from a women who hired an attorney two years ago to file a Chapter 13 bankruptcy. She paid the bankruptcy attorney $1,000 up front. No other payments were made, but the Chapter 13 bankruptcy was never filed. Her question was this: is it possible to obtain a refund since there was no bankruptcy?
In the event that an attorney took no action on a case, it is fair to assume you should be able to rightfully request a refund of money paid for their services. If the attorney was paid and no paperwork was completed or prepared for the bankruptcy case, the petitioner (who never actually became a petitioner) is entitled to a refund. In some cases, they could be entitled to the entire retainer fee.
If you feel you could be entitled to a refund of your retainer fee, first confirm that the bankruptcy attorney you retained did nothing on your bankruptcy case. This is the key to whether or not you are entitled to a refund. Attorneys are hired to perform a service. They charge a specified fee for their services. Providing the services takes time. If the attorney you hired took time to work on your bankruptcy case, something was done. Services were provided. Simply not moving forward with the bankruptcy filing at this point does not erase work already completed. It does not mean the bankruptcy attorney did nothing.
Every attorney will have their own methods and habits, but when I receive a new bankruptcy case, I complete most or all of the petition for bankruptcy when I am first hired. I spend a few hours preparing all the necessary documents for the new client and send them to the client. In most cases, the work completed up to that point actually exceeds the up front payment I received in the initial consultation. I prefer this process because, typically, my hiring follows an initial consultation that lasts about 30 minutes. When I get the client’s first, up front payment, I like to make sure that they are eligible for bankruptcy relief right away. After the initial, 30-minute consultation, I spend a minimum of one hour and up to several hours preparing the petition and schedules, any necessary memorandum specific to the case, and prepping a comprehensive list of additional documentation needed for the case.
At this point, I send the client the petition, schedules, memo and list of documents. This constitutes the completion of a large portion of the work needed to file the case, in combination with only a fraction of my retainer fee.
Having said that, I am not defending the specific attorney about whom I received the email. The description above was meant solely as a defense of the overall process and practice of law in general. Attorneys don’t usually produce a product, but provide a service that takes time to perform. Since the attorney can’t get the time back, the client is not entitled to get money back. But this all hinges on whether or not the attorney performed any work in relation to the case. If an attorney took time to work on your case, they have earned some or all of the initial retainer. Depending on the situation and what happened after the initial consultation, you may or may not be entitled to obtain a refund. If the attorney followed through on the intention to file by preparing paperwork and documents needed for the process before you cancelled your request for bankruptcy filing, you may have to accept that the decision to hire an attorney cost you money, even if you eventually decided against going through with the bankruptcy filing.
If you have additional questions about the bankruptcy process or want to file bankruptcy, please get in touch with one of the experienced southern California bankruptcy attorneys at Westgate Law.