Fees and Property Flashcards
Fee Amount
ABA: A lawyer must not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.
CA: Prohibits illegal or unconscionable fees.
COMMUNICATION OF FEE AGREEMENT
ABA: A lawyer must communicate the basis or rate of the fee and the expenses for which the client will be responsible. Not required if the lawyer regularly represents the client and fee/base is the same. Don’t need to be in writing.
CA: If it is reasonably foreseeable that the total expense to the client (including legal fees) will exceed $1,000, the fee agreement must be in writing to be enforceable. Writing not required if (1) client is a corp, (2) client states in writing that they do not want a fee agreement, (3) legal services are same as previously done for the client, (4) lawyer acted in an emergency to protect the client’s rights (5) writing is otherwise impracticable
ADVANCE PAYMENTS AND REFUNDABILITY
ABA: A lawyer may require an advance payment (including a flat fee), but the lawyer must refund the unearned portion of the fee if the client fires the lawyer or the lawyer does not perform the services. Not required to refund a true retainer fee.
CA: Same as ABA but also prohibits a lawyer from denominating any fee as “nonrefundable,” “earned on receipt,” etc., unless: (1) the fee is a true retainer, and (2) the client agrees in writing after disclosure that they will not be entitled to any refund.
PROPERTY FOR SERVICES
ABA: may accept property in return for services if it does’t involve a proprietary interest in the cause of action or subject of litigation. The arrangement is subject to scrutiny as a conflict of interest because it may constitute a business transaction/adverse pecuniary interest between the lawyer and the client.
CA: A California lawyer may accept property for services. However, a lawyer’s acceptance of property as payment for legal services should still be analyzed under the conflict rule for business transactions and other pecuniary interests adverse to a client.
CONTINGENT FEES: AMOUNT
ABA: must be reasonable
CA: must be reasonable and specific caps for medmal cases
CONTINGENT FEES: WRITING AND DISCLOSURE REQUIREMENTS
ABA: Must be in writing and signed by the client. Must disclose: (1) how fee is calculated, (2) what expenses will be deducted from the recovery, (3) whether expenses will be deducted before or after the contingent fee is calculated, (4) what expenses the client must pay regardless of the outcome
CA: Same as ABA but also requires disclosure that (1) the lawyers percentage is not set by law and can be negotiated, and (2) how the client will be charged for work not covered by the cntingency
DISCHARGE OF LAWYER ON CONTINGENCY
Discharged lawyer can recover in quantum meruit for the reasonable value of their services performed up to the time of the discharge.
Doesn’t apply if claim is settled or lawyer was discharged for egregious ethical misconduct
CONTINGENT FEES: WHEN PROHIBITED
(1) Criminal Cases
(2) Domestic Relations Cases
SEPARATION OF LAWYER’S AND CLIENT’S FUNDS
ABA: All money that a lawyer receives in connection with a representation must promptly be placed in a client trust account, separate from the lawyer’s own personal and business accounts. The lawyer must never place their own money or their firm’s money into the client trust account, except for the sole purpose of paying bank service charges.
CA: Same but also makes it a legal duty
PLACEMENT OF ADVANCE PAYMENTS
ABA: Must be put into the client trust account, to be withdrawn by the lawyer only as fees are earned or expenses incurred. Lawyer must refund to the client any unearned, prepaid legal fees at the close of the representation.
CA: Same but a flat fee can be deposited into firm’s operating account if lawyer discloses to the client that the client (1) has a right to require that the flat fee be placed in the client trust account instead; and (2) is entitled to a refund of any unearned amount.
SAFEKEEPING AND DELIVERY OF PROPERTY
(1) Upon receiving funds or property in which a client or third party has an interest, must promptly notify the client or third party.
(2) Must promptly deliver funds or property to which the client or third person is entitled.
(3) Must identify and label securities and properties and put them in a place of safekeeping as soon as practicable.
(4) Must keep records of client account funds and other property for at least five years after final distribution of the property.
DISPUTED FUNDS AND PROPERTY
If a lawyer possesses property in which at least two persons claim interests, the lawyer must keep the disputed portion separate until resolution of the dispute. However, the lawyer must promptly distribute the undisputed portion.
SPLITTING LEGAL FEES WITH OUTSIDE LAWYERS
ABA: Can share legal fees without outside lawyer if: (1) fee is reasonable, (2) client agrees to the split in writing and (3) split is in proportion to services performed OR split equally and both lawyers assume joint responsibility
CA: true referral fees are allowed (split doesn’t need to be proportionate to services). Requires:
(1) The agreement between the lawyers to divide the fees must be in writing;
(2) The total fee must not be increased solely by reason of the agreement to divide fees (more specific than ABA); and
(3) The client must provide written consent to the division and its terms (same as ABA).
SPLITTING LEGAL FEES WITH NONLAWYERS
Generally not allowed unless:
(1) Paying a death benefit to a dead lawyer’s estate or other designated persons.
(2) Purchasing a law practice of a dead, disabled, or disappeared lawyer and paying the purchase price to the estate or nonlawyer representatives.
(3) Including nonlawyer employees in a compensation or retirement plan, even if the plan is funded by legal fees.
(4) Sharing court-awarded legal fees with a nonprofit organization that employed or recommended the lawyer in the matter.
