On 6 March, 1992, a firm of solicitors started a claim in the Crewe County Court against a former client for the recovery of £6,840 of fees for acting in a small building dispute. Eight years later the House of Lords handed down their opinions in the landmark case of Arthur JS Hall v Simons [2000] which removed immunity from suit for advocates for negligent acts and omissions in court. The solicitors' fees claim had been met with a counterclaim from Mr Simons alleging negligence in the conduct of the building dispute. If you Google 'Arthur JS Hall' you will get around 1,200 results; it is probably not the kind of notoriety that the firm anticipated when it started its £6,840 fees claim.

Of course, it is difficult to know whether a client would have brought its negligence claim even if the firm had not pursued its fees. In practice, the only time when you know for sure is when the former client immediately suggests a 'drop hands' settlement. This is not uncommon. However, there are undoubtedly a significant number of fee claim-induced negligence claims which then just take on a life of their own. The current economic downturn will inevitably lead to an increase in unpaid invoices. This has led some insurers to express concern about a knock-on increase in negligence counterclaims.

Indeed, the problem is exacerbated by the fact that a number of claims are now arising from losses that are only emerging because of the credit crunch. In addition, there is a perception that clients are more willing to sue their solicitors. A survey carried out last year by Legal Week found that 72% of participants believed law firms are at increasing risk of negligence claims being brought against them due to a shift in clients' attitudes towards the 'blame' culture.

With all this in mind, law firms face a difficult question – whether to sue clients who default on payment of their bills. There are a number of issues to consider and firms will not want to underestimate the impact these negligence counter-claims can have. They can give rise to tensions with their professional indemnity insurers. As the number of counterclaims increase, some insurers will want to encourage firms to take a view on whether to pursue their fees claim. The negligence claim will rarely be a defence in law to a fees claim. But settlement discussions where the claimant demands that the fees claim is abandoned or at least set off against the negligence claim often complicates the insurer's and the firm's position. The firm does not see why it should waive its fees. The insurer is understandably reluctant to make good that loss.

Irrespective of these claims there is an obvious economic impact for the -solicitor. The mere fact that the negligence counterclaim is brought will have an effect on their claims record and the future cost of their professional indemnity insurance. This is so whether the claim is meritorious or not. Of course, if the claim results in a payment being made then this will have an even greater impact. That is to say nothing of the fee earning time lost in having to deal with the claim itself.

Prevention is always preferable. If the firm can stop itself from being in a position where it is having to think about suing a client then it simply won't be at risk of the negligence counterclaim. Perhaps the lesson in the current economic climate is to maintain strict credit control procedures – ensure that credit checks are undertaken, that lawyers stay on top of work in progress, incorporate payment schedules and regularly bill clients. All of this will ensure that bad debt does not build up in the first place. If the firm is considering suing then it will inevitably wish to have some idea of the risks it is running in the particular case before taking a final decision. Even the smallest of faults on a file can cause the basis of a counterclaim and it is sensible to have the particular file reviewed by the firm's claim partner or risk manager.

None of these measures can offer a cast-iron guarantee and suing for fees will always present a risk for the most well-managed and successful firms. This is not only by absorbing management and lawyers' time at considerable expense to the firm but also by affecting its reputation. In the words of Benjamin Franklin: "Glass, china and reputation are easily cracked and never mended well ."

Nick Bird is a partner and Vicki Teasdale is an assistant in the professional risks group at Reynolds Porter Chamberlain.