Shabbat Parashat Vaetchanan| 5770

Ask the Rabbi: Billing Practices

[We are presenting a short series to familiarize the public with issues that our batei din, Eretz Hemdah – Gazit, deal with and their solutions (in condensed and anonymous form).]

Case: The defendant (=def) hired a distinguished law firm (=pl) to work on a major project. After pl sent def a letter outlining the work and payment guidelines and def responded positively, pl began working for def in 02/07. One matter that was raised was that billing would be on a quarterly basis. For 02-04 /07, pl billed for 73,000 shekels. In 06/07, def met with members of pl; one of the issues was def’s dissatisfaction with the high fees. Def claims that pl then set the total fee for successful completion of the project at 100,000 shekels (50,000 to be paid immediately). After much activity from 05/07 till 02/08, pl sent def a bill for 207,000 shekels. Def refuses to pay the full amount with the following claims: def did not sign a formal contract with specific sums of money spelled out; the agreement was changed to have a 100,000 shekels cap; def had specified his expectation that a specific senior lawyer would handle the project, while he actually did little work; pl did not succeed in the project’s goal.

Ruling: The written communication between the pl and def, even if it involved def’s representatives, suffices to set the work agreement between the sides. It specified that they are governed by pl’s standard practices and rates. While def’s response mentioned his trust in a specific lawyer’s ability to succeed, it does not stipulate the level of his involvement. It is standard practice at law firms for younger staff members to do most of the work, under the supervision of a seasoned lawyer.

Pl denies they agreed to change the billing procedure. Def brought witnesses only to the fact that he said after the meeting that he was relieved by its outcome, whereas he is required to prove a change was agreed to. The fact that there was a long delay in billing after the meeting fits well with def’s claim but falls short of proof.

The main question is whether the delay in billing is a significant breach of contract. Considering the agreed upon fact that def reacted strongly to the quarterly bill of 73,000 shekels, it was clearly and legitimately important to him to realize the mounting costs that reached an additional 207,000 shekels. While small delays should not invalidate a contractual agreement, there must be some cutoff point. We conclude that after five months without billing (10/07), def was no longer bound by their written agreement.

Even without a contract, one has to pay for work done on his behalf, but the rate must be determined. There are a few halachic models, none of which fit perfectly here. When one is hired but no rate is discussed, one pays according to the lower rate for such workers in the field. However, it appears to us that had def known how much this work would cost him, he would not have continued pl’s employment (he already had full-time legal counsel) so it is not considered working with approval. If the work was slated to be done, he receives the amount that a person would pay for such a job. If not, he is paid no more than expenses (Shulchan Aruch, Choshen Mishpat 375:1). Here it is hard to determine because he wanted the work done but not at the cost discussed now.

Our case seems more similar to people who ate someone else’s meat, thinking it was from their animal. The gemara (Bava Kama 112a) says that they pay at a cheap rate (two thirds of the going rate- Bava Batra 166b) because they would have refrained from eating had they known how much they would have to pay out of pocket. In this case, where def had legal counsel on hand at a lower rate per extra work, one third of the requested payment, starting 10/07, suffices.

Def’s claim that there was no benefit is rejected because pl helped in certain areas and also made progress regarding the project, for which they deserved compensation. The fact that afterward things did not work out does not retroactively erase the previous obligation. 

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