By Michael L. Crowley
The new California Rules of Professional Conduct necessitate changes from the customary business arrangement by criminal defense attorneys with their clients.
It may be argued that the new rules merely codify what was already the law. However, in practice, the criminal defense custom was that a price was quoted to the potential client to “handle the case.” Often the fee agreement contained a clause stating money paid was not refundable for any reason. Such a clause is likely not endorsable now nor in the past.
For example, should a case be dismissed early in the process (before the attorney has expended much time) the attorney would point to the “no refund” portion of the agreement. They would then argue if it weren’t for the fear the defense attorney had engendered to the prosecutor by his mere presence in the case, it would not have resolved so early and favorably. Often, the client was so happy with the result they didn’t question the right of the attorney to keep the entire fee.
If a client did demand a refund, however, the case law would be on their side. In Baranowski v. State Bar, (1979) 24 Cal.3d 153, the Court held, a fee agreement purporting to provide for what has been called a “true” or “classic” retainer, which characterizes a payment as a “non-refundable” fee or one “earned upon receipt,” is enforceable only if the client has agreed that the amount was paid “solely for the purpose of ensuring the availability of the member.” Only Perry Mason gets those types of retainers.
A flat-fee arrangement to “handle the case,” is a dicey proposition under the new rules. The rules, however, do allow for a flat-fee contract. Rule 1.5(e) states:
A lawyer may make an agreement for charge, or collect a flat fee for specified legal services. A flat fee is a fixed amount that constitutes complete payment for the performance of described services regardless of the amount of work ultimately involved, and which may be paid in whole or in part in advance of the lawyer providing those services.
However, a flat fee arrangement is subject to Rules 1.5(a) and (b) regarding an unconscionable fee. Section b lists the factors that determine an unconscionable fee. Number 3 of the factors is “the amount of the fee in proportion to the value of the services performed.” Thus, if you take a large fee for a case and it settles without much work you could be subject to a finding that you have violated Rule 1.5.
There are other factors that could be argued in this scenario. These include taking into account the relative sophistication of the lawyer along with the experience, reputation and ability of the lawyer; the novelty and difficulty of the questions involved; that the acceptance of the employment would preclude other employment “if apparent to the client”; and whether the client gave informed consent to the fee. See, Rule 1.5(b) for all the factors.
As a practical matter, therefore, the attorney should break up what the flat fee represents. For example, there could be a flat fee for resolution of the case if there is no preliminary hearing, trial or extensive evidentiary hearing. Additional fees may include a separate fee should the case proceed to a preliminary hearing and another fee for trial. This has been called the milestone approach.
Additionally, the defense practitioner may want to specify what the normal hourly fee is for the attorney and those working under the attorney’s representation. Should there be a dispute over the refund of a fee, keeping contemporaneous records of the hours worked would be good evidence of having earned the full fee.
Finally, the fee for future work must be placed in the lawyer’s trust account, unless, in the flat fee situation, the lawyer discloses in writing that the client has the right to have it placed in the trust account until it is earned and that the client is entitled to a refund of any amount not earned. Most criminal defense practitioners need to revise their retainer agreements.
Michael L. Crowley is a Certified Specialist in Criminal Law and would like to give special thanks to David Carr for his help on some of the issues in article.