Legal Fees Flashcards
rule for communication
o (b) communication: the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate
any changes in the basis or rate of the fee or expenses shall also be communicated to the client – any agreement modifying an initial contract is enforceable if it is fair and equitable in view of the circumstances not anticipated by the parties when the contract was made
rule for contingent fees
o (c) contingent fees: a fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law
a contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including:
• the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal;
• litigation and other expenses to be deducted from the recovery; and
• whether such expenses are to be deducted before or after the contingent fee is calculated
the agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party
upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination
contingent fee exceptions
o (d) contingent fee exceptions: a lawyer shall not enter into an arrangement for, charge, or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or
• **this provision does not preclude a contract for a contingent fee for legal rep in connection with the recovery of post-judgement balances due under support, alimony, or other financial orders (b/c at that point the divorce is already final)
(2) a contingent fee for representing a defendant in a criminal case
when can lawyers divvy up fees?
o (e) a division of a fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
• “joint responsibility entails financial and ethical responsibility for the rep as if the lawyers were associated in a partnership
(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
(3) the total fee is reasonable
rule on sharing fees with a nonlawyer (4 exceptions)
o (a) a lawyer or law firm shall not share legal fees with a nonlawyer, except that:
(1) death benefit exception: an agreement by a lawyer with the lawyer’s firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer’s death, to the lawyer’s estate or to one or more specified persons;
(2) a lawyer who purchases the practice of a deceased, disabled, or disappeared lawyer may, pursuant to the provisions of R1.17, pay to the estate or other representative of that lawyer the agreed-upon purchase price;
(3) a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; and
• **you can pay nonlawyer employees salary/hourly, but you cannot give them a cut of what is being brought in
(4) a lawyer may share court-awarded legal fees with a nonprofit organization that employed, retained or recommended employment of the lawyer in the matter
3 rules regarding practice with nonlawyers
o (b) a lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law
o (c) a lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services
o (d) a lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:
(1) a nonlawyer owns any interest therein, except that a fiduciary representative of the estate of a lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;
(2) a nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation ; OR
(3) a nonlawyer has the right to direct or control the professional judgment of a lawyer
**i.e. you can only partner with other attorneys in the practice of law
rule for safekeeping of ppty
o (a) a lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property
**one of the most important PR Rules
funds shall be kept in a separate account maintained in the state where the lawyer’s office is situated, or elsewhere with the consent of the client or third person
• so typically, the lawyer or his practice will have a “client funds account” and a “firm account”
• separate accounts may also be warranted when administering estates or acting in similar fiduciary capacities
other property shall be identified as such and appropriately safeguarded
• like putting a priceless necklace in a safe-deposit box
complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of [five years] after termination of the representation
4 ancillary rules regarding safekeeping of client funds
o (b) a lawyer may deposit the lawyer’s own funds in a client trust account for the sole purpose of paying bank service charges on that account, but only in an amount necessary for that purpose
o (c) a lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred
o (d) upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person
except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property
o (e) when in the course of representation a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved
the lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute
when can a lawyer provide financial assistance?
o (e) a lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter;
(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client; and
(3) humanitarian exception: a lawyer representing an indigent client pro bono, a lawyer representing an indigent client pro bono through a nonprofit legal services or public interest organization and a lawyer representing an indigent client pro bono through a law school clinical or pro bono program may provide modest gifts to the client for food, rent, transportation, medicine and other basic living expenses. The lawyer:
• (i) may not promise, assure or imply the availability of such gifts prior to retention or as an inducement to continue the client-lawyer relationship after retention;
• (ii) may not seek or accept reimbursement from the client, a relative of the client or anyone affiliated with the client; and
• (iii) may not publicize or advertise a willingness to provide such gifts to prospective clients.
when can a lawyer accept comp from a 3p
o (f) a lawyer shall not accept compensation for representing a client from one other than the client unless:
(1) the client gives informed consent;
(2) there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required by R1.6
