Fees and Property

Question 1

Fee Amount

Answer 1

Must be reasonable!

Reasonable = factor test involving time and skill, customary fees, if fixed or contingent, opportunity cost, time constraint, results obtained, etc

CA rule is phrased in the negative: can’t be illegal or unconscionable fee

Hypo 6A: 1/3 of recovery as contingent fee. But if client fires lawyer or rejects reasonable settlement, client will start paying lawyer per hour. That dollar payment is ok if it’s a good-faith valuation of the service. But if it’s functionally a penalty or forfeiture, can’t do that.

Question 2

Double Billing

Answer 2

ABA: unreasonable and dishonest

CA: ok if the fee charged to each client is not unconscionable and the lawyer clearly disclosed the practice at the outset and both clients consented

Question 3

Fee Agreements - General Rule

Answer 3

Before or within reasonable time after starting representation, must communicate basis or rate
- Exception: regularly represented client

CA: requires written fee agreement if fee will exceed 1k, unless
- Client is corporation
- Client states in writing that they don’t want written fee agreement
- Client receiving same legal services as before
- Emergency
- Impractical

Question 4

Difference between “Advance” and a “True Retainer”

Answer 4

Advance = payment for legal services that haven’t been rendered yet; must be refunded if unearned

True Retainer: payment to ensure lawyer is available; need not be refunded

Nonrefundable Fee: in CA, can’t call fee “nonrefundable” unless it’s a true retainer and client agrees to that in writing

Use the business transactions rules if accepting property

Question 5

Contingent Fee

Answer 5

Contingent fee = fee that is dependent on the outcome of the matter

Fee percentages capped in medical malpractice cases.

Question 6

Contingent Fees - Writing and Disclosure Requirements

Answer 6

Must be in writing and signed by client, and disclose:
- How fee will be calculated
- CA: that lawyer’s amount is negotiable and not set by law
- Expenses that will be deducted from the recovery
- Whether expenses will be deducted before or after fee (if you’re repping client on contingency and supposed to get 1/3, do you get that right off the top or deduct the 500k in expenses first? that’s why you gotta clarify this in the writing/disclosure)
- Expenses client will pay regardless of outcome
- CA: explain how client will be charged for work not covered by the contingency

Hypo: if you get fired before your client wins on contingency, you could still get paid later if he wins

Question 7

Contingent Fees Prohibited When

Answer 7

Prohibited in:
- Criminal cases
- Domestic relations cases (but not prohibited if just trying to collect money)

Question 8

Separation of Funds

Answer 8

Client money goes into trust account

Commingling prohibited, but lawyer can pay bank service charges

You can’t take any of the client’s money out for yourself until you’ve earned it unless it’s a TRUE retainer.

Interest from these trusts goes to client, or to State Bar from pooled client trust account

Question 9

Safekeeping and Delivery

Answer 9

Label non-monetary property and put it in safe place.

Notify client or 3rd person upon receipt of property, and promptly deliver property they are entitled to

Keep records of funds and property

Question 10

Disputed Property

Answer 10

If dispute arises over property in your possession, must be kept separate until dispute is resolved. Treat like escrow.

The procedure for resolving a fee dispute is follow whatever the State Bar procedures are.

In CA, client can force you into arbitration, but you can’t force them into arbitration