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Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 4:10 pm
by Sherassociate
Does anyone here have deductions taken from their compensation when a client doesn't pay?

I am a 2 year associate, and did work for a client who is currently 2 months past due. Our office manager says they will undo the payroll from 2 months ago (when the client's bill should have been paid) and deduct that from my earnings if the client doesn't pay. Does this seem right?

*I am not on a set salary but earn a proportion of what I bill. That means that if I don't bill, I am not compensated. (There is no paid sick leave or vacation time at this firm.) On the flip side, when I am busy, I can really earn a lot.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 4:30 pm
by 1styearlateral
Sounds like you answered your own question. If you have no set (base) salary, and your take-home is dependent on how much you bill, then yes your compensation will be lower if the firm doesn't realize any income from your work. Sounds like one of the pitfalls of having a compensation system like that.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 4:52 pm
by Sherassociate
But I did the work that was assigned to me. To a certain extent, I feel this ought to be considered a risk that the law firm should bear.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 4:53 pm
by kellyfrost
File a debt collection action on behalf of the firm. Bill time on that matter too. Plus, you might have a shot at collecting some interest.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 5:50 pm
by gaddockteeg
Sherassociate wrote:But I did the work that was assigned to me. To a certain extent, I feel this ought to be considered a risk that the law firm should bear.


I agree with you. You didn't bring in the client, so I don't think you should have to bear the risk of no-payment.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 5:53 pm
by MKC
Is there a contract or handbook or something that covers this? Maybe check the language there.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 5:58 pm
by tyroneslothrop1
kinda sorta sounds like a wage-and-hour violation to me

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 6:10 pm
by Anonymous User
I'm not sure what the law is but it definitely seems unfair. At the very least they should cover your incidentals - the percentage of your rent, and related expenses that were allocated to this client if you don't have access to financial info about the client.

I can't speak to law, but if you're not a partner, there are many jobs where the company gets a percentage of your pay. Barbers, cabbies, private tutors, agencies, etc. In each of these, you're generally either handling the money as a trustee for the company or are guaranteed payment for work performed. Not to get paranoid, but what's to stop a client from paying a partner in cash, and cutting you out? I'm sure that's not the case, but it's a bad deal for you to have blind risk and 0 control. At the very least, you should be allowed to make an informed decision on what matters to work on and which to pass up. Legally, this sounds like you carry the risks of a principal and are given the rights of the agent. If so, this is the case of not having your cake and not eating it too, which is essentially being ordered to eat a dead crow while your mouth is stapled shut.

Legally, they can't take adverse action if you report a wage violation (assuming there is one). Practically, I'd bet your odds of making partner are 0 if you complain, but if they treat their associates like this, the odds of partnership are probably poor to begin with. Filing a complaint (if you have one) would probably guarantee you're not fired for at least a year, but you need someone who knows what the law is - my uninformed guess is it comes down to whether you're considered a joint venturer or an employee/independent contractor.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 6:44 pm
by nealric
Sherassociate wrote:Does anyone here have deductions taken from their compensation when a client doesn't pay?

I am a 2 year associate, and did work for a client who is currently 2 months past due. Our office manager says they will undo the payroll from 2 months ago (when the client's bill should have been paid) and deduct that from my earnings if the client doesn't pay. Does this seem right?

*I am not on a set salary but earn a proportion of what I bill. That means that if I don't bill, I am not compensated. (There is no paid sick leave or vacation time at this firm.) On the flip side, when I am busy, I can really earn a lot.


Do you not have any sort of written agreement detailing your compensation schedule? It should specify. Come on, you are a lawyer, do some legal research instead of asking the internet :roll:

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 6:47 pm
by RaceJudicata
Is your pay based on hours billed or dollars collected? The answer to that question is the answer you are looking for. Definitely not the standard pay arrangement (no idea whether legal or not), but it is what you agreed to (despite the fact you probably had zero bargaining power).

Seems like an awesome arrangement for the Partner/Owner. They can just (1) write off your hours so they don't have to pay you as much and (2) only pay you when the actually collect. Honestly surprised this hasn't been an issue more frequently - I work at a small firm during school year and we always are floating clients who are slow to pay.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 7:53 pm
by favabeansoup
RaceJudicata wrote:Honestly surprised this hasn't been an issue more frequently - I work at a small firm during school year and we always are floating clients who are slow to pay.


100% probably has happened to several other attorneys at whatever firm OP is at. OP you need to ask around and see how others have dealt with this. There is no way you are the only attorney to ever have a client not pay on time for work done.

Re: Clients don't pay - deducted from salary?

Posted: Mon Feb 27, 2017 9:12 pm
by SFSpartan
Agree with others that this probably depends on whether the "percentage of what you bill" is defined as a percentage of billable hours, or a percentage of collections attributable to work you did. If it's the latter, that seems unusual but you are screwed.

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 10:52 am
by BaiAilian2013
It's not crazy for the person who originated the client to have their comp docked for non-payment, as I think this happened to me once with fee share, but if you're just someone who worked on the matter, yeah that is a dick move. But check the handbook, maybe that's the policy.

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 10:54 am
by RaceJudicata
BaiAilian2013 wrote:It's not crazy for the person who originated the client to have their comp docked for non-payment, as I think this happened to me once with fee share, but if you're just someone who worked on the matter, yeah that is a dick move. But check the handbook, maybe that's the policy.


My sense (and OP, correct me if I'm wrong), that this is a small firm. I'd bet that the firm has no "handbook."

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 11:14 am
by kellyfrost
Have you considered taking the steps to file a debt collection suit?

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 11:36 am
by JenDarby
I interviewed at a small firm once that explicitly had this same policy in place. They justified it based on the alternative of not paying employees until clients paid, which on average they felt was a less favorable payment system for associates.

It is a pretty basic feature of many commissioned based employment policies. For example, if you work at Nordstrom and sell a watch, and the customer returns that watch a year later, then yes you lose your commissions from that paycheck one year later.

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 12:43 pm
by RaceJudicata
JenDarby wrote:I interviewed at a small firm once that explicitly had this same policy in place. They justified it based on the alternative of not paying employees until clients paid, which on average they felt was a less favorable payment system for associates.

It is a pretty basic feature of many commissioned based employment policies. For example, if you work at Nordstrom and sell a watch, and the customer returns that watch a year later, then yes you lose your commissions from that paycheck one year later.


is bolded really true? No reason to doubt that whatsoever, but damn, that sucks for the sales associate. I return a lot of shit to Nordstrom.

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 1:57 pm
by JenDarby
RaceJudicata wrote:
JenDarby wrote:I interviewed at a small firm once that explicitly had this same policy in place. They justified it based on the alternative of not paying employees until clients paid, which on average they felt was a less favorable payment system for associates.

It is a pretty basic feature of many commissioned based employment policies. For example, if you work at Nordstrom and sell a watch, and the customer returns that watch a year later, then yes you lose your commissions from that paycheck one year later.


is bolded really true? No reason to doubt that whatsoever, but damn, that sucks for the sales associate. I return a lot of shit to Nordstrom.

Yes, it's very true. I worked there for a couple years in college. Maybe they've finally put some time caps on it hitting your commissions, but it used to be unlimited, so years after a sale you felt the hit of that "no return policy."

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 2:13 pm
by 1styearlateral
RaceJudicata wrote:
JenDarby wrote:I interviewed at a small firm once that explicitly had this same policy in place. They justified it based on the alternative of not paying employees until clients paid, which on average they felt was a less favorable payment system for associates.

It is a pretty basic feature of many commissioned based employment policies. For example, if you work at Nordstrom and sell a watch, and the customer returns that watch a year later, then yes you lose your commissions from that paycheck one year later.


is bolded really true? No reason to doubt that whatsoever, but damn, that sucks for the sales associate. I return a lot of shit to Nordstrom.

It's definitely true because otherwise sales associates could have their friends come in, buy expensive shit, and then return it while allowing the sales associate to retain the commish. Even if they split the commish with the friend it's a pretty sweet gig.

Re: Clients don't pay - deducted from salary?

Posted: Tue Feb 28, 2017 10:23 pm
by deadpanic
kellyfrost wrote:Have you considered taking the steps to file a debt collection suit?


I would just be cautious on this before you go file. One, you generally want to wait until the SOL has run on any malpractice action before doing so. And two, since the client is the firm's, the partners might be pretty pissed when the client calls them up and is like "uhhh, your associate attorney just sued me." (I know they haven't paid in two months, but you never know when they might come back around or how much business they have given you/the firm in the past)

I get that it is your money and all, but the client is not, and it just may not be worth it in the long run.