Attorney Fees Five Keys to Ethical Compliance

ABA Model Rule 1.5(b) requires that the fee agreement be communicated to the client "preferably in writing" but goes on to state in Rule 1 .5(c) that a contingent fee agreement must be in writing. California goes further and requires by statute that both contingent fee agreements and most other fee agreements be in writing (CaI. Bus. & Prof. Code § 6147 and 6148, respectively). In California, the informed consent of the client is also a factor in determining whether a fee is unconscionable. California's proposed version, Rule 1.16(e), is almost identical but adds the concept of the "true retainer," that is, "a fee paid solely for the purpose of ensuring the availability of the lawyer for the matter" that need not be refunded on termination of employment. Few concepts in the ethics of attorney fees have caused as much consternation as the "true retainer." Many lawyers would love to avoid having to return unearned fees on termination of employment and not always out of bad motives. Flat fees provide certainty for clients who want to know what their legal problem will cost them. Flat fees also provide advantages for lawyers, but only if the lawyer can predict with confidence how much work will need to be done on a particular matter. If the work consists of "cookie-cutter" cases, such as unlawful detainer prosecution, or cases that can be done in volume with a high degree of automation and delegation of much of the work to relatively inexpensive nonattorney staff, flat fees can be extremely lucrative. If the cases are not "cookie cutter" in character, a flat fee can be a financial disaster if the amount of work necessary turns out to be much greater than anticipated when the amount of the flat fee was agreed to. In these cases, lawyers end up working for a small fraction of their usual hourly rate, sometimes far less than the amount of their overhead expense. a lawyer may charge a flat fee for specified legal services, which constitutes complete payment for those services and may be paid in whole or in part in advance of the lawyer providing the services. If agreed to in advance in a writing signed by the client, a flat fee is the lawyer's property on receipt. The written fee agreement shall, in a manner that can easily be understood by the client, include the following: (i) the scope of the services to be provided; (ii) the total amount of the fee and the terms of payment; (iii) that the fee is the lawyer's property immediately on receipt; (iv) that the fee a