Legal Question in Business Law in California

I prepared and filed some state of CA documents as a nominee and obtained an FEIN number online, also as a nominee, and filed and obtained the business license for a CA small city. The client paid the necessary filing fees and I have receipts for those transactions. The client does not want to pay for my month of work until he gets some seed money, however, he wanted me to keep working. I declined his offer and invoiced him for my time which was already at a greatly reduced hourly rate. My question is I know I cannot get any joy from him for the 501 documents, Bylaws and an grant I prepared but, can I withhold those state/city/federal government forms I filed until he pays me? As they are government of one type or another I was unsure the legality. This is a start-up non-profit.


Asked on 7/29/11, 7:34 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Are you an attorney? If so, the answer is governed by the statutory and professional rules regarding client fee disputes. My suggestion is to go to the California Bar Web site and ask the question there on the ethics hot line. I suspect the answer will be that you need to turn over all files and related documents you obtained on behalf of the client, and may not hold them as collateral for payment of your bill. You do have a right to payment of earned fees, but the client may demand arbitration of any dispute as to the amount. Check with your county bar association regarding procedures for handling fee disputes with clients. If you are not an attorney, I wonder if you have been practicing law without a license.

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Answered on 7/29/11, 9:29 pm
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I agree with the other attorney answer. The most relevant issue, if you're not an attorney, is the unauthorized practice of law. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 7/30/11, 8:19 am


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