Legal Billing Question/Dispute

Fearless Tower

Fearless Tower

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Fearless Tower
This is actually aviation related....

Question for the group:

A legal/CPA firm bills you for research on a tax issue. The information that they provide doesn't sound right, so you decide to research it yourself and find that they are clearly wrong.

Should you be responsible for paying for that research? Do you have a right to contest that portion of the bill?

The research involved admissions tax on airplane rides. The law/CPA firm got the answer wrong...
 
You are paying for time (research time) not for answers. That being said, I'd open a dialog with the firm and see how they want to proceed. You may find there are shades to the answer that affect how it's interpreted. Or you might find that they blew it and understand how you feel about paying.


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Good question. As a customer I pay for correct information. I can find wrong information myself.
 
If I do work for a client which has no value, I do not wish to be paid for it.
 
What does your contract say?
 
SCCutler said:
If I do work for a client which has no value, I do not wish to be paid for it.
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This. I don't know what a legal/CPA firm is, but I know the bar around here would take a dim view of an attorney demanding payment for incorrect legal research. My suggestion is to call the firm and tell them that the information they provided was wrong and you will not be paying.
 
A verbal contract is still a contract; it's just hard to argue it in court for obvious reasons. Look up attorney's liens for your state. However, if there wasn't a court case then I'm not sure what they can lien against? I'd do the right thing and explain to them what happened and come up with a compromise for their time (consider it paying for their time to confirm what you found out). If they refuse then I totally agree on walking and let them try to fight it. If I did a design and was wrong, at a minimum I would expect to forfeit my fee. Just remember that the ball is in their court in regards to legal matters.

(Note, I'm an engineer not a lawyer so I deal somewhat with professional contracts and disputes but am definitely not an authority.)
 
drjcustis said:
You are paying for time (research time) not for answers. That being said, I'd open a dialog with the firm and see how they want to proceed. You may find there are shades to the answer that affect how it's interpreted. Or you might find that they blew it and understand how you feel about paying.
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This is essentially what I was going to do. Contact then and explain why I felt I shouldn't have to pay for that line item on a bigger bill. I wanted to see what others thought first before contacting them.

I've been using this firm to set up my LLC and assist with accounting for the ride business. This dispute started when they were telling me I needed to charge sales tax. I showed them the local sales tax requirement which specifically said it was only applicable to the 'retail sale of tangible property'.

They said they would look further into it and came up with an 'amusement park admissions tax' and charged me for a second lawyer to assist in that research. Their argument was that charter boats pay an admissions tax, therefore airplane rides should pay an admissions tax. I asked other operators about it and no one else was paying such a tax. In the end it took me about 30 minutes and my iPad to find a Dept of Transportation General Counsel letter stating that states/municipalities could not charge an admissions tax on airplane rides/skydiving/hot air balloons....etc because they are considered '-air commerce'.

THAT is apparently why state tax codes spell out things like watercraft but no mention of anything aviation related.
 
Sounds like you need a new firm. Some companies get too big for the little guys. I found this with accountants. A big accounting firm was just overbearing in what they wanted to charge and completely incongruent with what services they wanted to provide. A move to another firm brought smaller offices but more personalized services; the cost ended up being about the same.
Don't forget that many professionals will answer a question conservatively not wanting to risk the possibility of going against the law in any way. As long as you follow their advice, you should be relatively protected.
Everyone should know a good lawyer, banker, accountant, and Doctor.


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Does the firm have a "warranty" on their work? Seems it might go better down that route. I'm kinda curious if the firm is local, so we're both in Norfolk... :)

I know an attorney in Chesapeake that specializes in Aviation law if you're looking for another opinion. I don't think he has anything to do with accounting though.
 
Have a meeting with them and be prepared to show clear evidence that they screwed up. Then simply state you don't pay for shoddy work, especially when it requires you to do more work to clean up their mess. If this was part of a larger effort then just strike that line item. They could try to say you still owe them for the work but make them come after you... I seriously doubt they will.
 
Fearless Tower said:
No contract.
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Then you're pretty much at their mercy. If they are good, moral people OR they think you'll come back and spend more money with them OR they think you'll harm their business by telling a bunch of other potential customers how they messed up, then maybe they will refund you something. But the ball is in their court.
 
bflynn said:
Then you're pretty much at their mercy. If they are good, moral people OR they think you'll come back and spend more money with them OR they think you'll harm their business by telling a bunch of other potential customers how they messed up, then maybe they will refund you something. But the ball is in their court.
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Totally understand. I'm not refusing to pay it. Just looking for opinions on whether I had a right to question the charge.

Either way I am kicking them to the curb and switching firms. This is actually the second time they gave me incorrect advice. I pointed out the first instance, but did not challenge that bill.
 
Fearless Tower said:
Totally understand. I'm not refusing to pay it. Just looking for opinions on whether I had a right to question the charge.

Either way I am kicking them to the curb and switching firms. This is actually the second time they gave me incorrect advice. I pointed out the first instance, but did not challenge that bill.
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In that case, talk it out, pay em off, get copies of all of your records (pay em again) and walk away.
 
What was the legal question and how wrong were they?
 
Hank S said:
In that case, talk it out, pay em off, get copies of all of your records (pay em again) and walk away.
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That is my plan, although I looked more closely at the way they outlined the billing (very specific on some charges and others are lumped together) and I probably could only dispute less than $100. I'm just going to pay it and walk after getting my corporate seal/binders..etc.
 
iamtheari said:
What was the legal question and how wrong were they?
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It is addressed in post #12. They were telling me I needed to charge a sales/admissions tax on airplane rides because airplanes were like boats (VA admissions tax addresses watercraft, but no mention of aircraft/aviation at all).

They essentially reviewed the local tax code and guessed. After talking to other similar operators who were not paying the tax, I did a Google search for 'admissions tax on airplane rides' and in less than 30 minutes came up with the exact reason why airplane rides cannot be taxed by states/municipalities.
 
Back in school, no one cared how much time you spent on your homework, if you got the answers wrong you still got an F.
 
Fearless Tower said:
It is addressed in post #12. They were telling me I needed to charge a sales/admissions tax on airplane rides because airplanes were like boats (VA admissions tax addresses watercraft, but no mention of aircraft/aviation at all).

They essentially reviewed the local tax code and guessed. After talking to other similar operators who were not paying the tax, I did a Google search for 'admissions tax on airplane rides' and in less than 30 minutes came up with the exact reason why airplane rides cannot be taxed by states/municipalities.
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I'd look for a new CPA.

The one that did last years taxes didn't get me nearly what he should have back when it came to depreciating the plane.

You need a CPA who knows how this stuff works, not some clown who's trying to educate himself on your dime.
 
James331 said:
Back in school, no one cared how much time you spent on your homework, if you got the answers wrong you still got an F.
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That was kind of my first thought. Looking up case history and previous legal opinions when interpreting a law is kind of undergrad Legal 101.

It's certainly Ron L 101!
 
There is two separate issues here. One is a matter of engagement and performance of work. The other is a matter of professional liability. If I spin my wheels for two hours talking on the phone with a client, or chasing something down, I expect to get paid for two hours. As to the question of whether I should get paid or not if the information was crap, understand that it works both ways. If the information that I gave him was wrong and he acted on it and incurred damages, I (or the company, rather) could potentially be on the hook for paying for those damages.

Should that instance occur, the end result would be some sort of negotiated settlement.
 
drjcustis said:
You are paying for time (research time) not for answers. That being said, I'd open a dialog with the firm and see how they want to proceed. You may find there are shades to the answer that affect how it's interpreted. Or you might find that they blew it and understand how you feel about paying.


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That isn't true. You are paying for a service, that service involves time and legally-binding research assumed to be accurate in regards to tax law. If you pay a tax accountant to prepare your taxes, and he miscalculates your taxes causing you to owe tons of back taxes, you better bet that the tax firm you hired would be liable for damages if they didn't meet an assumed competency standard. In this case, I'd just contact them and dispute the invoice/charges citing that they had a duty to provide you with accurate tax interpretations and failed to do so in this instance which could have put me into a complicated legal situation if I had followed their advice. I'm willing to bet they'll concede that the research/conclusions made were insufficient and will credit the invoice.
 
Sac Arrow said:
There is two separate issues here. One is a matter of engagement and performance of work. The other is a matter of professional liability. If I spin my wheels for two hours talking on the phone with a client, or chasing something down, I expect to get paid for two hours. As to the question of whether I should get paid or not if the information was crap, understand that it works both ways. If the information that I gave him was wrong and he acted on it and incurred damages, I (or the company, rather) could potentially be on the hook for paying for those damages.

Should that instance occur, the end result would be some sort of negotiated settlement.
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I can see your point of view. In this case the information provided didn't pass the straight face test. I questioned it and they had a second in-house attorney review and concur with the first. I then did my own research and discovered that both wrong, but I personally addressed it before I incurred any professional damages.

But it is a dead issue. They'll get paid, but they have lost future business.
 
Fearless Tower said:
I can see your point of view. In this case the information provided didn't pass the straight face test. I questioned it and they had a second in-house attorney review and concur with the first. I then did my own research and discovered that both wrong, but I personally addressed it before I incurred any professional damages.

But it is a dead issue. They'll get paid, but they have lost future business.
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Just to be clear, in your case I would not bill for that, as it's fairly cut and dried. However, that isn't to say that if I spent several hours on something that did not result in a workable solution, I wouldn't bill for that.
 
See if your state has a fee arbitration system if they insist on payment.
 
You have a right to contest any portion of a bill for any service that you think was inadequate. Lawyer, accountant, plumber, doctor, carpet cleaner... It doesn't matter.

The first thing I would do is talk to the CPA/Attorney. Go over what I found with him or her. I know it's something just not done these days, but it's amazing how discussions can work wonders when demands fall on deaf ears.
 
midlifeflyer said:
You have a right to contest any portion of a bill for any service that you think was inadequate. Lawyer, accountant, plumber, doctor, carpet cleaner... It doesn't matter.
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The only difference being I have never heard of an accountant, plumber, doctor, or carpet cleaner facing sanctions over charging for a service the client wasn't happy with.

The first thing I would do is talk to the CPA/Attorney. Go over what I found with him or her. I know it's something just not done these days, but it's amazing how discussions can work wonders when demands fall on deaf ears.
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I suspect if you do this you'll be pleasantly surprised.
 
Fearless Tower said:
The owner is an attorney and CPA. They specialize in business law and accounting. Basically one-stop shopping all under one roof.
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Be wary; that's a potential conflict of interest. Accounting (the profession) is all about accounting (the verb) for everything correctly, no matter what. An attorney's job is to advocate for the best outcome for his client. Those two goals can be at odds.

(Full disclosure: wife is attorney and CPA. discovered she hates law, so came back to accounting side to stay. Definitely uses her legal background, but at the end of the day she's an accountant.)
 
The legal answer is if the firm is wrong, then you don't pay. So...
Get a big rubber stamp that says DENIED and stamp it!

Actually this sort of thing happens all the time. Sometimes you pay, sometimes you don't, sometimes you split the difference. Which party has more money??? Sometimes you can back them into a corner and "they owe you one". Wanna play hardball? Might ruin the relationship. **** these business deals that go bad! They cost money, give me gray hairs and are no fun at all!

I always TRIED to figure out how to make lemonaide out of a lemon.

If it was the last straw and I was dumping them, I wouldnt pay and see what happened!
 
I only pay for work successfully completed. I would strike through that line item on the bill, write a note as to why, and point them to the correct answer.
 
Fearless Tower said:
Totally understand. I'm not refusing to pay it. Just looking for opinions on whether I had a right to question the charge.

Either way I am kicking them to the curb and switching firms. This is actually the second time they gave me incorrect advice. I pointed out the first instance, but did not challenge that bill.
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We always have a right to question charges.
Don't tell them you're kicking them to the curb until you're finished trying to get your bill reduced ;)
 
Hi OP.

Try your best to resolve the issue out of Court.
If you take an Attorney to court you will likely not get the result you expect. Attorneys, in the eyes of the law / judges do not have to be right, or do a "good" job, if they can prove that they put in a certain amount of hours, the judge / attorney will award them the money.

Attorneys can say anything, and do a lousy job, and unlike every other profession, including Real Estate sales people where they can loose their license, they do not have to conform to it, in the eyes of judges, "attorneys just say things"
 
Van Johnston said:
Be wary; that's a potential conflict of interest. Accounting (the profession) is all about accounting (the verb) for everything correctly, no matter what. An attorney's job is to advocate for the best outcome for his client. Those two goals can be at odds.

(Full disclosure: wife is attorney and CPA. discovered she hates law, so came back to accounting side to stay. Definitely uses her legal background, but at the end of the day she's an accountant.)
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That is a good point. I was discussing this subject with a friend who is a DOJ attorney and apparently it is not even legal in some states.
 
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