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Focus on Ethics & Civility Archives

July 10, 2012

Fee Basics

by Keith A. Call

Turn to the “Attorney Discipline” section of this or almost any other issue of the Utah Bar Journal, and chances are high you will see one or more cases involving violations of Utah Rule of Professional Conduct 1.5, which deals with fees. In fact, ethical violations involving fee issues comprise a large percentage of complaints lodged with the Bar’s Office of Professional Conduct. See, e.g., Utah State Bar Office of Prof’l Conduct, 2011 Annual Report, available at http://www.utahbar.org/assets/ANNUAL Report2010-2011.pdf (last visited May 31, 2012). Based on my casual review of the “Attorney Discipline” section of recent issues of the Bar Journal, many lawyers seem to be getting into trouble for violating some simple fee basics. Here are some ideas to help keep you safe.

When to Get It in Writing
Rule 1.5(c) requires a written fee agreement for any contingent fee case. The written agreement must be signed by the client and must explain details of how the fee will be calculated. It must spell out any costs that will be deducted from the recovery, how they will be determined, and whether the client will be responsible for them if there is no recovery. At the conclusion of a contingent fee case, the lawyer must provide a written accounting to the client that shows how the remittance to the client is calculated.

Rule 1.5(e)(2) requires a written agreement if lawyers in different firms will be sharing fees. The share each lawyer will receive must be part of the written agreement.

In non-contingent fee situations, Rule 1.5(b) requires the lawyer to communicate the basis or rate of the fee and expenses to the client, “preferably in writing.” This must be done before or within a reasonable time after commencing the representation. There is an exception if you will charge a “regularly represented client” the same rate as you have customarily done in the past.

Don’t forget to clearly communicate any rate changes to your client. Simply increasing your hourly rate on your January invoice each year may not be sufficient, especially if the invoice does not clearly state your hourly rate. See Severson & Werson v. Bolinger, 235 Cal. App. 3d 1569, 1571-72 (Cal. Ct. App. 1991).

Prohibited Contingent Fee Cases
Rule 1.5(d)(2) prohibits contingent fees in criminal defense cases. This rule reflects a concern for conflicts of interest that could arise in a contingent criminal defense case. For example, a lawyer may seek to avoid a plea bargain in order to try to get an acquittal at trial.

Rule 1.5(d)(1) also prohibits contingent fees in most domestic relations matters, reflecting a public policy favoring marital reconciliation and a desire to prevent overreaching in emotionally-charged situations. The comment to the rule clarifies, however, that contingent fees are allowed in connection with post-judgment balances due under child support, alimony, or other financial orders.

Division of Fees
Rules 5.4(a) and 7.2(b) prohibit sharing legal fees with non-lawyers in most situations. In the case of lawyers who are not in the same law firm, Rule 1.5(e)(1) allows fee sharing, but only in proportion to the services performed by each lawyer or in cases where each lawyer assumes joint responsibility for the representation. Rule 7.2(b) prohibits referral fees in most cases.

Make Sure You Earn It and Communicate It
Lawyers’ fees must always be reasonable. Rule 1.5(a) provides a non-exclusive list of factors to be used to determine whether a fee is reasonable. These factors include such things as the time and labor required, the difficulty of the issues involved, fees customarily charged for similar services, results obtained, and the experience, reputation and ability of the lawyer. Many of these factors are very subjective and hard to precisely measure.

Perhaps the most common fee-related complaint lodged against lawyers is that the fee was not earned or was unreasonable. A neighbor of mine recently complained to me about paying a $1000 fee to an immigration lawyer who allegedly did nothing, but kept the fee. My guess is that the breakdown was one of communication more than it was one of dishonesty. A lawyer whose only communication about fees is in the form of an invoice is setting him or herself up for potential problems. Make sure you frequently invite open discussion about your fees and most disputes can be avoided.

May 10, 2012

Helping Clients Talk

by Keith A. Call

Suppose you and your client believe an obstreperous opposing counsel is standing in the way of achieving a fair settlement. Your client tells you he wants to meet with the opposing party in a private client-to-client meeting, and he wants your guidance. What kind of advice can you ethically provide?

Rule 4.2(a) states, “[A] lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter.…” Utah R. Prof’l Conduct 4.2(a). Rule 8.4(a) deems it professional misconduct to attempt to violate the rules through the acts of another. See id. R. 8.4(a). On their face, these rules appear to be fairly restrictive on your ability to proceed.

Comment [6] to Rule 4.2 provides a little guidance. “Parties to a matter may communicate directly with each other, and a lawyer is not prohibited from advising a client concerning a communication that the client is legally entitled to make.” Id. R. 4.2, cmt. 6. Beyond these statements in the rules and comments, there is little Utah authority on the issue. And cases and opinions from other states express a wide disparity of views on how far a lawyer may go in orchestrating client-to-client communications.

May a lawyer originate the idea and encourage the client to speak directly to a represented adverse party?
Even on this simple question, ethics committees around the country are split. Some decisions and opinions appear to conclude that it is unethical for a lawyer to encourage a client to speak directly to an adverse party. One opinion even seems to conclude that the lawyer must discourage the client from direct communications. See, e.g., Massachusetts Bar Op. 82-8 (1982) (stating that a lawyer should discourage the client from discussing settlement with the opposing party without the opposing lawyer’s consent). Other opinions conclude that it is okay to invite or encourage the client to speak directly with the other party. See, e.g., Oregon Ethics Op. 2005-147 (2005).

How much direction may the lawyer provide?
Some cases and opinions would preclude the lawyer from directing the content of client-to-client communications, and especially from “scripting” the conversation. Words, specific questions, or specific thoughts originating from the lawyer are often prohibited. And some opinions hold that the lawyer may not draft documents for the client to sign or deliver. See, e.g., California Comm. on Prof’l Responsibility & Conduct, Formal Ethics Op. 1993-131 (1993); Massachusetts Bar Op. 11-03 (2011).

A recent opinion from the American Bar Association would liberalize these standards. The opinion reasons that an overly stringent standard would “unduly inhibit permissible and proper advice to the client regarding the content of the communication, greatly restricting the assistance the lawyer may appropriately give to a client.” ABA Standing Comm. on Ethics & Prof’l Responsibility, Formal Opinion 11-461 (2011).

Drawing liberally from the Restatement (Third) of the Law Governing Lawyers, the new ABA opinion would allow lawyers to give substantial guidance regarding a client’s substantive communications with the adverse party. See id.; Restatement (Third) of the Law Governing Lawyers § 99 cmt (k) (2000). For example, the lawyer could provide advice on the subjects to be addressed, issues to be raised, and strategies to be used. See ABA Standing Comm. on Ethics & Prof’l Responsibility, Formal Op. 11-461. A lawyer may also review, redraft, and approve a letter or set of talking points prepared by the client. See id. At the client’s request and with certain conditions, the lawyer may even draft the basic terms of a proposed settlement agreement. See id.

Be conservative and play fair.
The bottom line for Utah lawyers is that the applicable standards remain unsettled. Utah’s Rule 4.2 differs substantially from the ABA model rule, and it is unclear whether our Office of Professional Conduct or our courts would follow the ABA opinion or some other view. Utah lawyers should therefore play it conservatively.

Whether directly applicable in Utah or not, the recent ABA opinion teaches an important principle. In advising a client about direct party communications, every lawyer should use common playground fairness. Avoid giving any advice that would subvert the purposes of Rule 4.2, which include lawyer overreaching, uncounseled disclosure of information by the opposing party, and lawyer interference with the attorney-client relationship. In other words, don’t coach your client to obtain disclosures of confidential information. Don’t coach your client to try to get admissions hurtful to your adversary. And don’t try to subvert the opposing party’s attorney-client relationship.

In areas like this one where the law is unsettled, a little dose of conservatism and a big dose of simple fairness will help you stay out of trouble in most situations.

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