Attorney Fees Flashcards
Fee Agreement
Under ABA and California law, a contingent fee agreement must be in writing and state the method by which the fee is calculated, including whether expenses are deducted before or after the fee.
In California, where it is reasonably foreseeable the total expense to a client, including attorney fees, will exceed $1,000, the services contract must be written and include (1) basis of compensation, including hourly rates, statutory fees, and other charges, (2) general nature of the legal services provided, and (3) lawyer and client contractual responsibilities.
Retainers
Under ABA and California, a lawyer may collect a fee in advance in the form of a retainer, but unless the advance payment is a true retainer to reserve services, the lawyer must return any unearned portion
Contingent Fee
A contingent fee requires the client to pay a fee only if there is a favorable outcome. Under ABA, contingent fee are not permitted in criminal cases, when the lawyer represents a defendant, or in domestic relations cases. Under California law, contingency fees are not allowed in domestic relations or criminal cases.
Unreasonable [Unconscionable] Fee
Under ABA, a lawyer cannot charge unreasonable fees. Factors in determining whether a fee is reasonable include (1) time and labor required, novelty and difficulty of the questions, and skill requisite to perform the legal service properly, (2) likelihood representation will preclude the lawyer from accepting other employment, (3) customary fee in the locale for the kind of work, (4) 2amount involved and results obtained, (5) time limits imposed by the client or circumstances, (6) nature and length of the client professional relationship, (7) lawyer’s experience, reputation, and ability, and (8) whether fixed or contingent fee.
California prohibits unconscionable fees, and uses factors similar to the ABA for determining unreasonable fees to determine unconscionable fees, in addition to the following factors: (1) whether the lawyer engaged in “fraud or overreaching” in negotiating or setting the fee; and (2) whether the lawyer has failed to disclose material facts.
Fee splitting with lawyers
Under ABA, lawyers not in the same firm can divide legal services fees if (1) division is proportionate to each lawyer’s services, (2) client consents in writing, and (3) total fees are reasonable.
In California, a lawyer shall not divide fees with a lawyer who is not a partner, associate, or shareholder, unless (1) client consents in writing at the time of the agreement or as soon as reasonably practicable after full diclusre of the fact a division of fees will be made, and (2) total fees are not increased solely by reason of a division and not unconscionable; (3) the client is informed of the identity of the fee-splitting lawyers and terms of the division; and (4) the lawyers enter into a written agreement to divide the fee.
Fee splitting with Non-Lawyers
Under ABA and California law, a lawyer or law firm may not share fees with non-lawyers, except via a compensation plan, even though based on a profit-sharing arrangement.
Referral Fees
Under ABA, a lawyer shall not give anything of value to a person for recommending the lawyer’s services, except a lawyer may refer clients to another lawyer or a non-lawyer pursuant to an agreement that provides for the other person to refer clients to the lawyer, if (1) the reciprocal referral agreement is not exclusive, and (2) the client is informed of the existence and nature of the agreement.
In California, a lawyer may pay a referral fee to an outside lawyer who refers a case if (1) client knows all the terms and consents in writing, and (2) total fee is not increased and not unconscionable because of the referral.
Expense Advances
Under ABA and California, a lawyer may advance court costs and other litigation expenses, the repayment of which may be contingent on the outcome. ABA does not require a written agreement to advance expenses.
In California, a written fee agreement must include (1) basis of compensation, including hourly rates, statutory fees, and other charges, (2) general nature of the legal services provided, and (3) lawyer and client contractual responsibilities.
Third Party Payor Rule
A lawyer must not accept compensation from a third party for representing a client unless (1) client gives informed, written consent, (2) third party does not interfere with the lawyer’s independence or the client representation, and (3) arrangement does not compromise the client’s confidential information.
