File Action to Enforce Lien or Release Lien A couple years ago we filed a lawsuit to enforce a lien that ended up costing us $2200 to collect $2500 in bad debt. How can an incorporated company file a lawsuit with a lawyer that won't cost more than the amount suing for? It's my understanding that we can't represent ourselves but I find that most attorneys retainters are $2000 - $3000. We have a customer that owes $5000, I'm just wondering if it's even worth filing a lawsuit?
The issue you have raised is one of basic economics. The cost/benefit analysis should guide you in the decision making process. Typically, at least in my view, even if your contract has a provision for recovery of attorneys' fees, it is not worth the time and expense to try and collect on small claims of the type you describe. Of course, some attorneys do handle these types of cases on a contingent basis, so if that is the case, the attorney will ultimately bear the burden of collecting the fees. In other words, absent a recovery, there would be no fee earned. If this is an issue you have been dealing with or if it appears to be increasing, I would suggest you review the payment provisions of your contract and structure the fees in a manner that would be consistent with each phase of the work being performed.