Fees and expenses Flashcards
(12 cards)
A lawyer is prohibited from charging unreasonable fees or expenses. “Reasonableness” factors include:
- The difficulty of a case
- Preclusion of other employment
- The nature of lawyer-client relationship
- The fee
arrangement (e.g., contingent, hourly, prepaid) - The amount at issue and results obtained
- The lawyer’s
expertise - Customary fee charged locally
Can lawyers charge a contingency fee based on the outcome of the case?:
Yes, lawyers may charge a reasonable fee that is contingent on the outcome of the case if that agreement is
in a writing that contains:
- The client’s signature
- The calculation methodology
- The calculation of expense deductions, including whether expenses are deducted before or after
calculating the contingency fee and - A clear description of any expenses for which the client will be liable regardless of the outcome.
NOTE: However, contingency fees are prohibited in criminal cases and domestic relations cases (except
those involving the recovery of post-judgment balances due for support).
Payment in advance is permitted so long as:
Any unearned portion is returned when the representation is
terminated.
Is a refund of a retainer fee (i.e., money paid solely to ensure the availability of the
lawyer) generally required?
NOPE.
Fee splitting:
-Permitted among members of the same
law firm, including retired members.
Also permitted
among members of different firms if (don’t need to remember exact wording):
- Fee is proportionate to the services rendered
by each lawyer OR all lawyers assume joint
responsibility for the representation - The client agrees to the fee splitting arrangement
(confirmed in writing) and - The total fee is reasonable.
Referral fees are:
Generally prohibited.
-However, the referring
lawyer is entitled to a fee for work completed before the
referral.
May a fee agreement be modified?
Yes, if it is reasonable at the time of modification.
“Unreasonable” would be:
- change in basic nature of fee arrangement
- significant increase in lawyer’s compensation
Communication with client about fee arrangement
Lawyer needs to explain the basis/rate of lawyer’s fee within a reasonable time after representation begins.
Written communication about fees is advised but not required (EXCEPT FOR CONTINGENCY FEES).
Fee disputes
If a mandatory procedure has been established to resolve fee disputes (e.g., an arbitration or mediation
procedure established by the bar), then the lawyer must comply with that procedure. But even if such a
procedure is voluntary, a lawyer should conscientiously consider complying with the procedure.
A lawyer must promptly distribute all undisputed funds to the client but can retain disputed funds in a
trust account pending dispute resolution.
A client charged with Driving Under the Influence seeks to hire an attorney. The attorney offers to represent the client for a $5,000 flat fee. The client pays the fee up front. The attorney spends two hours researching breathalyzer reliability for a potential pre-trial motion. At that point, the client notifies the lawyer that he no longer requires his services–instead, he plans to hire a lawyer recommended by his brother-in-law. The client asks for the $5,000 to be returned. The lawyer refuses, pointing to the “non-refundable” clause in the fee agreement.
Is the lawyer subject to discipline?
Yes, because the lawyer is obligated to return the unearned portion of the fee.
Even though the lawyer called the fee “nonrefundable,” the lawyer didn’t actually do the work to earn it, and so must return the unearned portion of the fee.
Contingency fee written agreements must specify the following:
Whether the expenses will be deducted before or after the attorney’s fee is calculated.
Do clients need to be told about fee sharing agreements between attorneys in the same firm?
Nope.
