Fees Flashcards
What are 4 situations in which you do not need a letter of engagement?
A letter of engagement is NOT necessary when any of the following…
**1. Rep of a client is expected to cost less than $3,000
- Representation where the attorney’s services are of the same general kind as previously rendered and paid for by the client
**3. In a domestic relations matter (different, procedures necessary)
- Representation where no material portion of the services are to be rendered in New York
**NOTE: in pts 1 AND 3, you STILL have to explain the scope of the representation and the basis of the rate
What must go in a written letter of engagement?
In NEW YORK, we require written letters of engagement It must include:
- Scope of representation
- Explanation of fees and expenses
- Notice of client’s right to arbitration of fee disputes NOTE: a SIGNED retainer agmt can take the place of an engagement letter, IF it contains the items above
What special rules apply to client engagement wrt domestic relations matters?
1) Fee agreement must be signed by lawyer and client
Cf. Letter of engagement where NO sig is req’d
2) Lawyer must provide client with statement of rights and responsibilities (and a signed acknowledgment)
3) There are NO non-refundable fees in domestic matters (**OR any other matter.)
Must return unused portion
4) Cannot use contingency fee to collect unpaid alimony or child support (different frome MPRE rule!**)
5) Periodic billing must be sent out every 60 DAYS, and at the conclusion of the case, the attorney must send back any unused portion of the retainer
What is a reasonable contingent fee?
Generally 33% is reasonable
And it CAN’T be more than 33% in personal injury or wrongful death
What information goes in a contingency fee agmt?
A CONTINGENCY AGREEMENT CONTAINS:
1) The method by which the fee is to be determined including the percentage or percentages in that will accrue to the lawyer in the event of settlement, trial, or appeal
2) Litigation or other expenses to be deducted from the recover
3) Whether such expenses are to be deducted before or, if not prohibited by statute or court rule, after the contingent fee is calculate
In personal injury or wrongful death matters: the expenses must be deducted before the lawyer’s contingency fee is calculated
4) What expenses the client will be liable for REGARDLESS of the outcome of the case
What is a closing stmt?
Upon the conclusion of a contingent fee matter, the lawyer must provide the client in writing with a statement of the outcome and if there is a recovery, the amount the client gets and how it’s determined
In which matters are contingent fees prohibited?
Contingent FEES are prohibited in:
- Criminal matters (or quasi-criminal)
BUT In order to rise to an ineffective counsel claim claim, ∆ must show that the Rule violation affected the defense (unlikely)
- Domestic relations matters
NOTE: Cannot use contingency fee to collect unpaid alimony or child support (different frome MPRE rule!)
Can a lawyer fee-split or share office space with a non-lawyer?
FEES
Generally can’t do this….
….a lawyer cannot divide a legal fee w/ a non-lawyer ….Can’t be a partner with a non-lawyer if the partnership if involves practice of the law.
EXCEPTIONS:
(i) Payments for salaries, retirement plans, bonuses, profit sharing . . .
(ii) Payments to the spouse of the deceased partner or to the estate of deceased partner
A lawyer cannot give anything of value to a person or organization to recommend or obtain employment by a client ,or as a reward for having made a recommendation resulting employment by a client
This means that referral fees are not permitted
But you can split fees with lawyers under certain circumstances
OFFICE SPACE — An attorney can share space as long as it’s separate and appears so to the public
Can a lawyer fee-split with an OUTSIDE lawyer?
A lawyer shall not divide a fee for legal services with another lawyer who is not associated in the same law firm
UNLESS…The division is: (i) In proportion to the percentage of work performed; OR
(ii) In a writing given to the client that each lawyer assumes joint responsibility for the representation
(iii) The client consents to employment of another lawyer after a full disclosure that division of fees will be made (including the percentage of fees each lawyer will receive), and the client’s agreement is confirmed in writing; AND
(iv) The total fees of both lawyers combined is not excessive.
NOTE: Lawyer formerly associated can still be paid as per separation or retirement agreement
What is the rule in NY for fee disputes over CIVIL matters?
You have to allow clients to elect arbitration Clients must be informed of this right:
1) in the letter of engagement; AND
2) when a fee dispute arises
EXCEPTIONS when arbitration is not mandatory:
- Representation in criminal matters
- Amounts in dispute involving LESS than $1,000 or MORE than $50,000
- Claims involving substantial legal questions including legal malpractice
- Disputes where the fee to be paid by the client has been determined pursuant to statute or rule and allowed as of right a court
- Dispute where NO attorney’s services have been rendered for more than 2 YEARS
What are the two types of retainer?
Security Retainer = Belongs to the client and money goes into trust account
General Retainer = Belongs to attorney and money goes into attorney’s account (this money is to make sure that the lawyer will be available for the clients matter and it is earned when received)
RULES FOR CLIENT TRUST ACCOUNTS
General Rule of Client Trust Accounts:
(i) Have one,
(ii) use it,
(iii) keep records of its use, and
(iv) DO NOT mix up your client trust account with your operating account
Specific Rules of Client Trust Accounts:
(i) Account MUST be with a NY Bank
(ii) Funds to maintain the account are the only lawyer funds that can be put in a Client Trust Account
BUT – attorney cannot put her funds into the account to cover an overdraft
(iii) Funds MUST be placed in a bank that provides DISHONORED CHECK REPORTING (when this happens, A copy of the Report is mailed to the lawyer and after 10 days, the Report is sent to the Disciplinary Committee to take action)
RULE FOR SEPARATE ACCOUNTS
What are the two types of accounts that every lawyer must have?
Two types of accounts every lawyer must have:
- OPERATING: Firm’s Account
- CLIENT TRUST: ONLY Client’s money allowed
