client funds and fees Flashcards
what does 1.5(a) say about attoryes fees
they must be reasonble
1.5(a) says attys fees must be reasonable – how do we know what reasonable is?
see (a)(1) -(a)(8)
how do attys make money
Hourly rate, flat fee, contingency fee
what is the rule about what you can charge the client for
expenses for the client’s specific case are permitted, but general overhead costs
are not
can you double bill time? why or why not
no you cant; The reasoning is that you wont be as efficient if you are focused on more than one client matter
how does 1.5(b) tell us about communication of the fees to client? does that communciation need to be in wirting
requires that the scope of the rep and the basis or rate of the fees and expense be communicated to teh client within a reasonable time after rep starts
a writing is only required if contegency fees are involved
what is the 1.5(b) exception to communicating the fees to client
when the lawyer is charging a regularly reped client on the same basis or rate
what else needs to be communicated to the client under 1.5b
Any changes in the basis or rate of the fee or expenses shall also be
communicated to the client
what are some pros of the billable hour
Objective account for client, partners, and associates
The alternatives are worse
Burnout is not the billable hours fault, its the fault of the profession
what are the cons of the billable hour
Padding hours
Doing indeed work (ie being inefficient) - the billaible hour rewards this
Less incentive to settle a case
Burnout
Clock punching mentality
what is the most commonly enforced and violated rule
Rule 1.15: safekeeping property and client trust accounts
what does 1.15(a) commingling say
The attorney and the c money cant comingle
Must keep records (5 years after rep concludes)
Client money goes in client trust account
what is 1.15(b) excpetion to commingling
Paying bank service charges on client trust accounts
what does 1.15a say about safegaruding a clients property
“ Other property shall be identified as such and appropriately safeguarded.”
what does 1.15(c) say about advance payments
“A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.”
what is the main question to ask when we are talking about fees
what bucket does the cost fall under
Fee- is it reasonable?
Overhead – not allowed
Expense – is it the actual cost?
When is a flat fee earned?
what can you do with a fee that is earned?
If it’s earned at beginning its the attys and they can put in operating account
its also a jurisdiction
what is the south Carolina rule on flat fees
1.5 (f) A lawyer can charge an advance fee and “treat the fee as immediately earned if the lawyer and client agree in advance in a written fee agreement which notifies the client… [rule goes on to list what the agreement must contain]”
what does 1.15(e) disputed amounts say about the amounts in dispute and the ones not in dispute
disputed? the money should be kept seperate by the lawyer until the dispute is resovled
undisputed – need to dispense it promptly
whats the difference between fee splitting and referrals
Fee splitting = Lawyer Kim and Lawyer Jack (different firms) both rep a client in a matter: Kim does X and Jack does Y. Client pays $10k and they split the fee.
Referral fee = Client approaches Lawyer Kim about a personal injury case. Kim is too busy to take the case but refers the client to Lawyer Jack. Jack pays Kim a $300 referral fee
can attys in the same firm can share fees
yes
when can attys in different firms share
if the 1.5(e) conditions are met
pro rata split or joint responsibility
the client agrees, confirmed in WRITING
and the total fee is reasonable
one of the 1.5e requirements for attys at diff firms splitting fees is joint responbilty – what does this mean
comm 7
“Entails financial and ethical responsibility for the rep as if the lawyers were associated in a partnership”
what is the rule on referral fees? what about its exceptions?
see rule 7.2(b)
L cant pay or give anything of value to anyone for recommending her or referring a matter to her
exceptions:
Ads
Standard referral services
Reciprocal referral agreements (check requirements)
Others (see rule)
referal or fee spliting?
Lawyer Corky is approached by a neighbor who has been injured in an automobile accident. Corky does no work on the case except to refer the case to Lawyer Sam, a solo practitioner specializing in personal injury cases. Sam pays Corky $300
how would this analysis differ if corky was not a lawyer
This is a REFERRAL FEE that is not allowed by 7.2(b)
1.5(e) is also implicated because L corky is a lawyer – can split; since he didnt want to work on it, can split fee if he assumes joint responsbilites
if corky was not a lawyer, then you cant do it, full stop
can you fee split with non lawyers?
see 5.4(a)
prohibits fee sharing with non-lawyers
is this subject to the 5.4(a) rule against fee splitting with non lawyers?
Attorney is trying to start a solo practice, but she needs money. Attorney
tells her rich friend (nonlawyer) that one of her clients has a case that’s likely to settle
for over $1 million dollars. Friend agrees to loan her $50,000 in exchange for 20% of
Attorney’s cut of the settlement.
yes; cant do this because the freind is not a lawyer and the moeny is tied to a specfic case/rep
is this subject to the 5.4(a) rule against fee splitting with non lawyers?
Attorney pays legal secretary an annual salary. The salary is not tied to
a specific case.
nope! the salary isnt tied to a specific case or representation
south carolina Bar Opinion 16-06 – the attorney directory website with a fixed fee legal referal service
the atty signs up for the service by agreeing to offer flat fee services
Upon completion of the work, the service charges the attorney a “per service marketing fee”
which seems to be based upon the service provided and is only incurred when the lawyer
provides the service
isssues: does the arrangmet violate 5.4a ie no fee spliting with non laywers.
what about the reasonblen cost of ads as described in 7.2c1
5.4(a) – yes its vioative; its an indirect fee split between the lawyer and the legal referal service
7.2 – violates this as well becuase its not an ad because its tied to teh atty’s fee itself
what is a Contingency fee
Fee based on outcome of the matter
Usually percentage of the recovery (usually 33% of gross recovery)
when can expenses be deducted?
may be deducted before or after the attys fee is taken out
the expenses totald 5000 dollars
how would this be deducted before the atty fee? what about if it was after
Post fee deduction: 33% of 100k= 67k
67K minus 5k= 62k
Pre fee deduction: 100k minus 5k= 95k
67% of $95k = $63,650
the contengecy fee is the only fee that requires a writing 1.5(c)
what must that writing contain?
Must be a writing signed by the client, and the writing must state
1.How the fee is to be calculated
2.Expenses to be deducted
3.Prefer or post-fee expense deduction
4Expenses client is responsible for regardless of success
what are some pros of a contingency fee
Client and lawyer interests aligned
Promotes lawyer efficiency (compared to billable hours)
Access to justice; access to attorneys for people who cant afford an hourly rate
Reduces frivolous litigation
cons to the contingency fee
Overpayment question
Access to justice problem (lawyers dont take certain clients)
Encourage short cuts/lacks thoroughness
Not as easy for all reps
Unfair to clients (rules don’t put a cap on the fee)
Lack of transparency
1.8(i) tells us that a lawyer cant have a proprietry interst in the rep of a client
what can the lawyer do instead
aquire a lein to secure the lawyer’s fees or
contract w a client for a reaosnble conteingent fee in civil cases
1.5d limits what a lawyer can charage a contegnecy fee on. what are they?
No contingency fee for
Domestic relation matters (divorce, alimony)
defendants in a criminal case
what is the exception to no contengecy fees for domestic relation matters
you can have them on post judgment balances – see comment six
quick recap – when are referal fees ok if youre an atty vs a non atty
Attorney?→ okay if 1.5(e) met or if exception under 7.2(b) applies -
Non attorney? → okay if exception under 5.4(a) or 7.2(b) applies
