Thursday, October 8, 2009

A Disturbing Trend: Old Clients Seeking Cash

In the last couple months I've noticed some disturbing Bar complaints. Former clients, and I mean really former clients have been filing Bar complaints seeking the return of fees paid to the lawyer.

This isn't about any real ethical violation of the lawyer, but the sign of the economic times.

The complaints are similar: Client hires lawyer. Client fires lawyer, or case is closed. Client, desperate for cash, asks lawyer to return a portion of the NON-REFUNDABLE fee. Sometimes the reason is disturbingly candid: "I need money to pay my bills."

Lawyer politely, or impolitely says "no."

Client files Bar complaint making specious allegations that the "lawyer did nothing" and money should be returned.

The lawyer sometimes relents prior to the complaint and writes a check, or when the complaint comes, agrees to return funds not due the client.

Here's some news:

Bar associations are not collection agencies.

As the Florida Bar states: "Disagreements about whether the lawyer charged too much are generally not handled by The Florida Bar's discipline system because of restrictions placed on the Bar by decisions of the United States Supreme Court related to antitrust. The Florida Bar may only consider a fee-related inquiry as a disciplinary matter when the fees are clearly excessive, prohibited by ethical rules, or illegal."

The first way to find yourself in a dispute with a client is not to follow this good advice from the North Carolina Bar:

..it is incumbent upon the lawyer to explain the nature of his or her fees to the client. Flat fees and true retainers may only be treated as earned upon receipt if the lawyer clearly explains this arrangement to the client and the client agrees.1 Otherwise, the payment is (by default) an advance: It is presumed to be a “deposit securing the payment of a fee which is yet to be earned.” (RPC 158) Fee arrangements may provide for more than one type of fee, but “[t]here should be a clear agreement between the lawyer and client as to which portion of the payment is a true general retainer, or a flat fee, and which portion of the payment is an advance. Absent such an agreement, the entire payment must be deposited into the trust account and will be considered client funds until earned.”

Regardless, some clients don't care about the contract they signed. They believe the threat to file a Bar complaint trumps that and will result in a refund. Sadly, some lawyers relent and pay the extortionist's demands.

When I said Bar associations are not collection agencies, I was referring to ABA Model Rule 1.5, which is part of all state Bar association's rules:

It's a long rule, but here's the important part:

Rule 1.5 Fees

(a) A lawyer's fee shall be reasonable.

Then there's this:

II. ABA MODEL CODE OF PROFESSIONAL RESPONSIBILITY

DR 2-106 Fees for Legal Services.

(A) A lawyer shall not enter into an agreement for, charge, or collect
an illegal or clearly excessive fee.

(b) A fee is clearly excessive when, after a review of the facts, a
lawyer of ordinary prudence would be left with a definite and firm
conviction that the fee is in excess of a reasonable fee. Factors to be
considered as guides in determining the reasonableness of a fee include
the following:

(1) The time and labor required, the novelty and difficulty of the
questions involved, and the skill requisite to perform the legal service
properly.

(2) The likelihood, if apparent to the client, that the acceptance of
the particular employment will preclude other employment by the lawyer.

(3) The fee customarily charged in the locality for similar legal
services.

(4) The amount involved and the results obtained.

(5) The time limitations imposed by the client or the circumstances.

(6) The nature and length of the professional relationship with the
client.

(7) The experience, reputation, and ability of the lawyer or lawyers
performing the services;

(8) Whether the fee is fixed or contingent.

(C) A lawyer shall not enter into an arrangement for, charge, or
collect a contingent fee for representing a defendant in a criminal
case.

So was your fee clearly excessive?

If not, take the pen away from the check.

Located in Miami, Florida, Brian Tannebaum practices Bar Admission and Discipline and Criminal Defense. Read his free ebook The Truth About Hiring A Criminal Defense Lawyer. Please visit www.tannebaumweiss.com

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1 comment:

geeklawyer said...

I've had exactly this situation recently on this side of the pond.

Yes, it's easier to write the cheque but, frankly?, Fuck 'em. I did a good job & they got what they paid for.

My response is to pre-empt the disciplinary hearing by initiating a case against the complainant for breach of contract and declaratory relief.