Financial Duties to Your Client

Question 1

In non-contingent fee cases, you must explain the amount, basis, or rate of your…

Answer 1

fee, within a reasonable time of taking on a client, preferably in writing.

Question 2

In contingent fee cases, fee agreements must be written, signed by the client, and contain:

Answer 2

1. Your percent
2. What expenses will be deducted from the recovery, and
3. Whether your percent is taken before or after expenses.

Question 3

At the end of a contingent fee matter, you must give the client a written statement of:

Answer 3

1. the outcome of the case
2. how it was determined, and
3. the remittance made.

Question 4

You cannot agree to or collect contingent fees in these types of cases.

Answer 4

Any criminal case and most domestic relations cases.

Question 5

In domestic relations cases, you may collect contingent fees when:

Answer 5

1. adequate counsel would not otherwise be available
2. there are no prospects for reconciliation, and
3. any children are older.

The fee is typically to collect child support, alimony, or a determined property award.

Question 6

Defendant signs an hourly fee agreement with you for his defense on criminal charges but offers a bonus if he is acquitted. Ethical?

Answer 6

No, this violates the ban on contingent fees in criminal cases. You cannot contract to live outside of the Rules.

Question 7

If a contingent fee may not be in the client’s best interest, you should…

Answer 7

explain other fee arrangements and let the client make an informed choice.

Question 8

After a year of work, Bud fires his lawyer Vinny before the case is tried or settled. If they had a contingent fee agreement, can Vinny recover any fees?

Answer 8

Yes. If and when Bud wins, Vinny can recover the reasonable value of his work done before discharge.

Question 9

Fees must be reasonable, taking into account:

Answer 9

the labor, novelty, difficulty, skill and timing required, result obtained, the experience of and other demands on the attorney, fee arrangement, etc.

Question 10

Bud hires Vinny to represent him in a later malpractice case. Vinny drafts a contract providing that Vinny will receive 1/3 of the recovery as a contingent fee, and that if Bud fires Vinny or refuses a settlement offer that Vinny believes is “fair and reasonable,” then Bud will immediately pay Vinny $600 per hour for all work done to date. Is this okay?

Answer 10

Yes to all, if the $600/hr payment is a reasonable valuation of his service. If it’s functionally a penalty or forfeiture, then it is not enforceable.

Question 11

You have a duty to safeguard your client’s property by…

Answer 11

promptly storing it in a safe place, such a safe deposit box.

Question 12

You mut put money held for a client or third party in a…

Answer 12

client trust account.

Question 13

The client trust account must be in…

Answer 13

financial institution that is approved by the VA Bar or by your client in writing.

Question 14

The client trust account should include money received…

Answer 14

on your client’s behalf, and his advances to you for costs, expenses and unearned fees.

Question 15

A retainer is earned for being available, but advance deposits of fees (often called retainers) are not earned until work is done or expenses are incurred. Thus, advances deposits are..

Answer 15

thus refundable to the client if unspent and must be in a client trust accout.

Question 16

NEVER do this with client funds.

Answer 16

Borrow or commingle with your own money.

(You may deposit money for bank service charges or to maintain a minimum balance)

Question 17

Once you bill for money in a client’s advance account, you must

Answer 17

withdraw it promptly.

Question 18

You can pay third parties with your client’s money, if you have…

Answer 18

client consent or on court order.

Question 19

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…

Answer 19

withhold the disputed portion in the client trust account until resolution of the claim.

Question 20

As it pertains to proper recordkeeping, you have a duty to:

Answer 20

1. Keep individual client records
2. render accountings
3. notify your client of moneys received on his behalf, and
4. pay promptly money due to him.

Question 21

Virginia requires you keep records of client property for ____________ after representation or fiduciary responsibility ends.

Answer 21

5 years

Question 22

It is generally okay to split fees with…

Answer 22

lawyers in your law firm.

Question 23

You may split fees with lawyers outside your firm, but only if:

Answer 23

1. the total fee is reasonable
2. you disclose the division to the client before rendering services, and
3. the client consents, preferably in writing.

Question 24

When fee splitting with lawyers outside your firm Virginia does not require the fee division to be…

Answer 24

proportional to work done, or even that all attorneys remain responsible for the case.

Question 25

Jacob gets a great personal injury case, but it’s based in Langley, which spooks him out. He introduces lawyer Meyer to the client, who approves in writing an arrangement for Meyer to lead the litigation and keep 90% of the total fees, which are set at a reasonable rate. Meyer does all the work and wins a million bucks. Can Jacob ethically collect?

Answer 25

Yes, because the joint arrangement meets all 3 conditions for sharing.

Question 26

Although referral fees between lawyers are unethical, Virginia’s rules indirectly allow them, if…

Answer 26

the referring lawyer stays in the case and the client agrees to a joint fee arrangement.

Question 27

A lawyer (may/may not) pay for purchase of a law practice.

Answer 27

May

Question 28

Fee splitting with __________________ in a business related to the practice of law is generally not allowed. This protects your judgment and prevents the unauthorized practice of law.

Answer 28

non-lawyers

Question 29

A tax lawyer and a certified public accountant create a business partnership to provide financial and legal counseling to sole proprietorships, agreeing to split all proceeds 50-50. Is the lawyer subject to discipline?

Answer 29

Yes. She is splitting fees with a non-lawyer.

Question 30

Contracts to split fees with non-lawyers are…

Answer 30

Against public policy and voidable.

Question 31

What are the exceptions to the non-lawyer fee splitting ban?

Answer 31

1. Death benefits paid to a deceased lawyer’s firm or heirs for his work, and
2. Salaries and benefits paid to non-lawyer employees.

Question 32

Payment for referrals is not allowed, but you may..

Answer 32

1. Pay the usual charges of a qualified lawyer referral service,
2. Pay expenses for advertising, and
3. give normal gifts of gratitude that are not intended or expected to be compensation to a person who refers clients to you.

Question 33

Partnership with non-lawyers in providing legal services is…

Answer 33

prohibited for any practicing lawyer.

Question 34

Non-lawyers cannot be…

Answer 34

partners, shareholders, directors, officers, or control or direct your professional judgment.

Question 35

You can associate with a legal services organization or insurance plan, but cannot

Answer 35

Allow it to interfere with your independent judgement in how to handle a matter.

Question 36

“Foreclosure Fixes” employs non-lawyers to counsel homeowners about loan renegotiations and fill out boilerplate pleadings to delay foreclosure. Lou Lawyer partners with Foreclosure for $150 per case to revise and file the boilerplate pleadings and sign boilerplate letters suggesting owners consider bankruptcy. Violations?

Answer 36

Lou:

1. provided incompetent legal services,
2. formed a partnership with non-lawyers,
3. aided their unauthorized practice of law, and
4. split fees with them.

Question 37

To avoid violations, Lou should…

Answer 37

do the work himself, review each case for appropriate legal action, and control and supervise the non-lawyers’ work.