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 services. 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. CRPC 4-100.
  • 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.