Duties Owed to Client: Financial, Competence & Other Duties

Question 1

Financial Duties to the Client

Answer 1

1. Attorneys Fees
2. Client Trust Accounts

Question 2

Attorneys Fees in Non-Contingent Cases under ABA + what does CA add?

Answer 2

ABA - agreements must include:

• how the fee is calculated;
• what services are covered,
• and the lawyer and client’s duties.

CA requires the agreements must be in writing; unless:

Question 3

CA Exceptions to Attorney fees needing to be in writing in Non-Contingency Cases (when doesn’t the agreement need to be in writing?

Answer 3

CA requires the agreements must be in writing; unless:

• the fee is $1000 or less,
• with a corporate client,
• for routine services for a regular client, or
• it’s an emergency or impractical.

Question 4

ABA on Attorneys fees in Contingency Cases + what does CA add?

Answer 4

ABA - Fee agreements must be:

1. written,
2. signed by the client; and contain:
3. your percent, and
4. what expenses will be deducted from the recovery; and
5. Whether your percent is taken before or after expenses

CA also requires that agreements state:

1. How work not covered by the contingency fee will be paid, and
2. That lawyers’ fees are

Question 5

Limits on contingent fees: ABA & CA

Answer 5

The ABA prohibits contingent fees in:

• Domestic Relations; and
• Criminal Cases

CA:

• *CA rules are silent, and its case law allows contingent fees in domestic cases if they don’t “promote dissolution” of a savable marriage.

Question 6

What can a lawyer recover in the event the client terminates the representation in a coningency?

Answer 6

The lawyer can recover in proportion to the work he did

Question 7

When are fees to high? CA v ABA

Answer 7

ABA Rule:

• Fees must be reasonable taking into account the labor, novelty, difficulty, skill and timing required, result obtained, the experience of and other demands on the attorney, fee arrangement, etc.

CA Rule:

• Fees must not be unconscionably high

Question 8

“Double Billing” ABA v CA

Answer 8

ABA considers it Unreasonable & Dishonest

CA allows if:

1. The fee charged to each is “not unconscionable”;
2. the attorney clearly disclosed the billing practice at the outset of the relationship; and
3. obtained all of the client’s consent

Question 9

Fee Arbritration: CA v ABA

Answer 9

• ABA encourages arbitration
• CA requires a lawyer to participate in fee arbitration if the client sues and requests it.

Question 10

What to focus on for fee splitting?

Answer 10

Focus on the party/entity with whom you will share fees

Question 11

Fee Splitting with Lawyers in a Law Firm

Answer 11

It is generally OK to split fees with lawyers in your law firm

Question 12

Fee Splitting with Lawyers Outside your Firm: ABA & CA

Answer 12

• You may split fees with lawyers outside of your firm only if the total fee is ethical and there is written disclosure and client consent.
• The ABA further requires the division be proportional to the work done by each attorney, unless each is jointly responsible for the action.
• CA: OK if the total fee isn’t unconscionable, and the client consents.

Question 13

Fee Splitting with Non-Lawyers

Answer 13

generally not allowed (protects your judgment and prevents the unauthorized practice of law).

Question 14

Exceptions for when Fee Splitting with Non-Lawyers is allowed

Answer 14

1. death benefits paid to a deceased lawyer’s firm or heirs for his work;
2. salaries paid to non-lawyer employees, and
3. sharing of court-awarded legal fees with a non-profit organization that employed or recommended the lawyer.

A lawyer may pay the usual charges of a qualified Lawyer referral service

Question 15

Partnerships with Non-Lawyers

Answer 15

Partnership with non-lawyers in providing legal services is prohibited for any practicing lawyer. Non-Lawyers cannot be partners, shareholders, officers, or control or direct your professional judgment.

Question 16

Reciprocal referrals

Answer 16

Reciprocal referrals with other professionals are OK if they are not exclusive and you explain the arrangement to the client.

Question 17

What to do with client’s property & Money?

Answer 17

• You have a duty to safeguard your client’s property by labeling and storing it in a safe place.
• Put money held for the client in a client trust account

Question 18

Besides money, what else goes into a client trust account?

Answer 18

• money received on his behalf,
• and his advances for costs,
• expenses and
• unearned fees.

Question 19

Rules for Client Trust Accounts

Answer 19

• Never borrow or commingle client funds with your personal money!
• Use an interest-bearing trust account to hold client funds;
  
  • interest after bank charges are covered belongs to the client.
• If funds are too small or held for insufficient time to cover bank charges, deposit them together in a “pooled client trust account”
• The interest (IOLTA) goes to the State Bar for services for the poor.

Question 20

Can you pay 3rd parties with client’s money?

Answer 20

You can pay third parties with the client’s money with client consent.

Question 21

What do you do with client’s money if there is a fee dispute?

Answer 21

If you have a fee dispute or if a third party has a lawful claim over your client’s funds or property in your custody, you must withhold the disputed portion in the client trust
account until resolution of the claim.

Question 22

Record Retention - ABA & CA

Answer 22

• You have a duty to keep individual client ledgers, render accountings, notify your client of moneys received on his behalf, and pay promptly money due to him.
• CA requires you keep records of client property for 5 years after final distribution.

Question 23

The Duty of Competence - ABA Definition and rule

Answer 23

You have a duty to render competent service to your client. The ABA defines competence as:

• using the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.

If you don’t know the relevant law, don’t take the work unless you can learn it without undue expense or delay, or you work with a lawyer competent in the area.

Question 24

Incompetence exposes you to:

Answer 24

(a) discipline by the Bar,
(b) disqualification in a litigated matter, and
(c) civil malpractice liability.

Question 25

CA only subjects you to discipline for lack of competency if you:

Answer 25

Intentionally, recklessly or repeatedly fail to perform legal services with competence.

Question 26

Distinguish malpractice from Incompetence

Answer 26

A malpractice action is a civil case brought by a plaintiff for money damages; a disciplinary action is administrative and brought by the State Bar to protect the public. A malpractice plaintiff must prove a breach of a duty of due care

Question 27

Duty of Diligence

Answer 27

You have a duty to diligently and promptly pursue your case to completion.

Question 28

Duty to Communicate

Answer 28

You have a duty to keep your client informed about the case, answer client communications, and convey settlement offers

Question 29

If a settlement offer is made to joint clients:

Answer 29

convey the offer to all and be sure they agree on the division of the settlement before accepting.

Question 30

Accepting Representation

Answer 30

• You are free to accept or to reject any case. “A lawyer is not a bus.”
• You should accept as part of your duty to the public and profession, a fair share of pro bono work (without charge).

Question 31

When must you reject a case?

Answer 31

• If taking it would violate an ethical rule or law.
• Typical problems are if you are not in the physical or mental shape to take the case (violating the duty of competence to the client).

Question 32

Scope of Representation

Answer 32

• The client makes decisions about her substantive rights
  
  • (E.g., testifying in a criminal case, accepting a plea or settlement).
• The lawyer makes decisions on legal strategie
  
  • (E.g., choice of motions).
• If you disagree, you may limit the scope of representation, with client consent.
• Never assist a client in conduct you know is criminal or advise how to act illegally and
  get away with it!

Question 33

Duty to Withdraw from Representation Types:

Answer 33

1. Mandatory Withdrawl
2. Permissive Withdrawl

Question 34

Madatory Withdrawl: ABA & CA

Answer 34

• You must withdraw from a pending case if fired, or if continuing would violate a law or ethical rule, e.g., if your physical or mental condition impairs your competence.
• CA explicitly requires withdrawal if a client acts without probable cause and to harass or maliciously injure another.

Question 35

Permissive Withdrawal

Answer 35

• You may withdraw from a case if you convince the court there is good cause.
• Recognized causes include
  
  • your client persisting in a criminal, fraudulent, or repugnant course of action,
  • or failing to fulfill an obligation to you—e.g., a fee agreement—after reasonable warning.
  • The ABA also allows withdrawal if:
    
    • representation will unreasonably fincancially burden you,
    • if the client has used your services for a crime or fraud,
    • or anytime it won’t damage the client’s interests.

Question 36

Procedures for withdrawal. To quit, you must: (ABA & CA caveat)

Answer 36

1. Provide timely notice to the client; and
2. Promptly return:
   
   1. Any unspent fee and expense advances, and
   2. All of the client’s property and material papers
      
      • Include everything needed to pursue the case, even your work product.

• CA forbids holding your client’s materials hostage to get paid!

Question 37

Duty of Loyalty: Sex with clients - CA & ABA

Answer 37

• the ABA prohibits consentual sex with your client unless you had a preexisting sexual relationship
• CA Rule 3-120 also excuses preexisting relationships, but allows new relations, with cautions.