client funds and fees

Question 1

what does 1.5(a) say about attoryes fees

Answer 1

they must be reasonble

Question 2

1.5(a) says attys fees must be reasonable – how do we know what reasonable is?

Answer 2

see (a)(1) -(a)(8)

Question 3

how do attys make money

Answer 3

Hourly rate, flat fee, contingency fee

Question 4

what is the rule about what you can charge the client for

Answer 4

expenses for the client’s specific case are permitted, but general overhead costs
are not

Question 5

can you double bill time? why or why not

Answer 5

no you cant; The reasoning is that you wont be as efficient if you are focused on more than one client matter

Question 6

how does 1.5(b) tell us about communication of the fees to client? does that communciation need to be in wirting

Answer 6

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

Question 7

what is the 1.5(b) exception to communicating the fees to client

Answer 7

when the lawyer is charging a regularly reped client on the same basis or rate

Question 8

what else needs to be communicated to the client under 1.5b

Answer 8

Any changes in the basis or rate of the fee or expenses shall also be
communicated to the client

Question 9

what are some pros of the billable hour

Answer 9

Objective account for client, partners, and associates

The alternatives are worse

Burnout is not the billable hours fault, its the fault of the profession

Question 10

what are the cons of the billable hour

Answer 10

Padding hours

Doing indeed work (ie being inefficient) - the billaible hour rewards this

Less incentive to settle a case

Burnout

Clock punching mentality

Question 11

what is the most commonly enforced and violated rule

Answer 11

Rule 1.15: safekeeping property and client trust accounts

Question 12

what does 1.15(a) commingling say

Answer 12

The attorney and the c money cant comingle

Must keep records (5 years after rep concludes)

Client money goes in client trust account

Question 13

what is 1.15(b) excpetion to commingling

Answer 13

Paying bank service charges on client trust accounts

Question 14

what does 1.15a say about safegaruding a clients property

Answer 14

“ Other property shall be identified as such and appropriately safeguarded.”

Question 15

what does 1.15(c) say about advance payments

Answer 15

“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.”

Question 16

what is the main question to ask when we are talking about fees

Answer 16

what bucket does the cost fall under

Fee- is it reasonable?
Overhead – not allowed
Expense – is it the actual cost?

Question 17

When is a flat fee earned?
what can you do with a fee that is earned?

Answer 17

If it’s earned at beginning its the attys and they can put in operating account

its also a jurisdiction

Question 18

what is the south Carolina rule on flat fees

Answer 18

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]”

Question 19

what does 1.15(e) disputed amounts say about the amounts in dispute and the ones not in dispute

Answer 19

disputed? the money should be kept seperate by the lawyer until the dispute is resovled

undisputed – need to dispense it promptly

Question 20

whats the difference between fee splitting and referrals

Answer 20

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

Question 21

can attys in the same firm can share fees

Answer 21

yes

Question 22

when can attys in different firms share

Answer 22

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

Question 23

one of the 1.5e requirements for attys at diff firms splitting fees is joint responbilty – what does this mean

Answer 23

comm 7

“Entails financial and ethical responsibility for the rep as if the lawyers were associated in a partnership”

Question 24

what is the rule on referral fees? what about its exceptions?

see rule 7.2(b)

Answer 24

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)

Question 25

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

Answer 25

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

Question 26

can you fee split with non lawyers?

see 5.4(a)

Answer 26

prohibits fee sharing with non-lawyers

Question 27

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.

Answer 27

yes; cant do this because the freind is not a lawyer and the moeny is tied to a specfic case/rep

Question 28

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.

Answer 28

nope! the salary isnt tied to a specific case or representation

Question 29

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

Answer 29

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

Question 30

what is a Contingency fee

Answer 30

Fee based on outcome of the matter
Usually percentage of the recovery (usually 33% of gross recovery)

Question 31

when can expenses be deducted?

Answer 31

may be deducted before or after the attys fee is taken out

Question 32

the expenses totald 5000 dollars

how would this be deducted before the atty fee? what about if it was after

Answer 32

Post fee deduction: 33% of 100k= 67k
67K minus 5k= 62k

Pre fee deduction: 100k minus 5k= 95k
67% of $95k = $63,650

Question 33

the contengecy fee is the only fee that requires a writing 1.5(c)

what must that writing contain?

Answer 33

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

Question 34

what are some pros of a contingency fee

Answer 34

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

Question 35

cons to the contingency fee

Answer 35

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

Question 36

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

Answer 36

aquire a lein to secure the lawyer’s fees or

contract w a client for a reaosnble conteingent fee in civil cases

Question 37

1.5d limits what a lawyer can charage a contegnecy fee on. what are they?

Answer 37

No contingency fee for
Domestic relation matters (divorce, alimony)

defendants in a criminal case

Question 38

what is the exception to no contengecy fees for domestic relation matters

Answer 38

you can have them on post judgment balances – see comment six

Question 39

quick recap – when are referal fees ok if youre an atty vs a non atty

Answer 39

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