Fees and Property Flashcards
Fee Amount
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.
Double Billing
ABA: unreasonable and dishonest
CA: ok if
1) the fee charged to each client is NOT UNCONSIONABLE and
2) the lawyer clearly DISCLOSED the practice at the outset and
3) BOTH clients CONSENTED
Fee Agreements - General Rule
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 1000 dollars. 5 exceptions:
1) Client is CORP
2) Client states in WRITING that they DON’T WANT WRITTEN fee agreement
3) Client receiving SAME SERVICES (legal) as before
4) Emergency
5) Impractical
Difference between “Advance” and a “True Retainer”
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
Contingent Fee
Contingent fee = fee that is dependent on the outcome of the matter
NOT ALLOWED in 1) crim 2) domestic
Fee percentages capped in medical malpractice cases.
Contingent Fees - Writing and Disclosure Requirements
Must be in WRITTEN and SIGNED by client, and disclose:
1) How fee will be CALCULATED
2) EXPENSES that will be DEDUCTED from the recovery
3) 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)
4) EXPENSES client will pay REGARDLESS of outcome
- CA: explain HOW client will be CHARGED for work NOT COVERED by the contingency
- CA: that lawyer’s amount is NEGOTIABLE and not set by law
Hypo: if you get fired before your client wins on contingency, you could still get paid later if he wins
Contingent Fees Prohibited When
Prohibited in:
- Criminal cases
- Domestic relations cases (but not prohibited if just trying to collect money)
Separation of Funds
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
Safekeeping and Delivery
Safekeeping Rules:
1) Label non-monetary property and
2) put it in safe place.
3) Keep records of funds and property.
Delivery Rules:
1) Notify client or 3rd person upon receipt of property, and
2) promptly deliver property they are entitled to
Disputed Property
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
