ATTORNEY FEE ETHICS - Some Basic Things to Watch For Regarding Family Case Fees and Billings
Red Flags To Watch for in Retaining Your Family Law Attorney
Here are some useful pointers about attorney fee arrangements that most
divorce clients aren't aware of, and which many attorneys ignore.
Attorneys are required to have a written fee agreement for all clients
whose cases are reasonably expected to exceed $1,000 in costs for legal
Business & Professions Code section 6148. Don't trust any attorney who doesn't present you with a retainer
that discusses how you will be billed.
Attorneys must render a billing statement to a client within 10 days following
a client's request, unless the attorney has submitted a bill within
the past 31 days.B & P, section 6148.
- Attorneys cannot hold your files hostage in payment of fees, nor can they
charge you to copy a set for their own records. If you terminate the relationship,
you are the "owner" of the files. Ten days is a reasonable time
for them to get their files to you.
Attorneys must segregate out unearned fees by utilizing a trust account
into which these funds are deposited and maintained.
Attorneys cannot spend your money until they've earned it, only at
which time it becomes theirs. I personally know a half dozen attorneys
who rarely use their trust accounts for client fee deposits, and who write
their retainer fee agreements using sentences like "these fees are
considered earned upon receipt." The attorney's purpose in doing
this is to make the client believe that the attorney is entitled to access
the retainer deposit immediately (which means even though the fees are
as yet "unearned"), so that they can move the monies into their
general, office accounts, at once.
This is prohibited by the State Bar. In my opinion, the only reason why an attorney would attempt to create
such a contract is because they are in cash-short positions and
need to take possession of your funds to pay their own bills. Such conduct
is a red flag for future troubles for you with that attorney. First, an
attorney who is spending unearned fees has financial problems that could
affect or infect your case, and certainly they can't manage their
own budgets. Second, if you decide to fire that attorney you may find
that they don't have the ability to quickly repay the unearned fees
because - they've already spent your money and have to wait to do
this again to the next client - it is like checking-kiting, or a Ponzi
scheme. Third, attorneys who are that desperate for cash infusions tend
to over bill their clients. Fourth, an attorney who does this not only
exercises bad judgment, but is evidencing ethical lapses that may plague
your case and your relationship with them in other regards.
- Alternatively, attorneys may attempt to disguise their fee arrangements
as a "flat-fee" retainer. California does not recognize such
agreement as being legally enforceable. However, flat-fee agreements are
nonetheless not uncommon. One problem with them is the "what have
you done for me lately" syndrome, where an attorney feels he or she
has no financial incentive to finish the case diligently, particularly
where it turns out they under-estimated the flat fee and so find themselves
with more work to do than expected.
If attorneys don't carry malpractice insurance, they must disclose
this fact to the client in the retainer fee agreement. Failure to make
this disclosure makes the retainer agreement voidable at the option of
the client, but the attorney is still entitled to collect a "reasonable
fee" rather than the amount that is set forth in the retainer agreement.
CRPC, rule 3-410.
The take-away is this: Competent legal professionals practice according
to the rules. Lawyers who ignore or circumvent the rules are likely to
cost you more and give you less.