Sorted by Commenter - Ethics - State of California
Sorted by Commenter - Ethics - State of California
Sorted by Commenter - Ethics - State of California
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May 23, 2010 Sondheim E-mail to KEM, cc RRC:<br />
In an effort to clarify my views, I <strong>of</strong>fer these additional comments.<br />
RRC – Rule 1.5 [4-200]<br />
E-mails, etc. – Revised (6/1/2010)<br />
1. For me the basic reason for 1.5(e) was to (a) clarify what constitutes a true retainer and (b)<br />
prohibit clients from being deceived <strong>by</strong> an attorney stating that a fee is "non-refundable."<br />
Attorneys should not be permitted to do the latter. Thus the lawyer cannot term a fee as "nonrefundable,"<br />
but can call it a flat fee which becomes the lawyer's property upon receipt. This<br />
purpose is accomplished <strong>by</strong> the first two sentence <strong>of</strong> (e)(2) regardless <strong>of</strong> what is required in<br />
(e)(2), items i-v. Thus, contrary to what you deem the "heart <strong>of</strong> the protection afforded to<br />
clients," I deem the "heart <strong>of</strong> the protection" to be prohibiting a deceptive designation <strong>of</strong> the fee.<br />
Indeed, some parts <strong>of</strong> i-v might be appropriate for all written fee agreements, whether for a flat<br />
fee or other type <strong>of</strong> fee, but they are not essential. Items i-v may, in the view <strong>of</strong> some, be<br />
additional protections which it might be nice to have, but are not necessary to what needs to be<br />
accomplished, any more than having screening in a number <strong>of</strong> our confidentiality rules.<br />
Screening might be helpful, but, in the view <strong>of</strong> some persons, was not essential to the<br />
underlying principle <strong>of</strong> imputation. While I can live with items i-iv, I believe v needs to be<br />
removed.<br />
2. My suggestion to remove item v is not to <strong>of</strong>fer "an olive branch to the criminal defense bar,"<br />
which is how you view it. Indeed the comments received regarding this rule do not just come<br />
from the criminal defense bar, but also include comments from bar associations (L.A. and San<br />
Diego County bar associations). Rather than <strong>of</strong>fering an olive branch, I think we need to assess<br />
whether this item has either inherent flaws or creates issues which need to be avoided.<br />
3. As pointed out in the comment received from Charles Sevilla, (e) (2) "adds uncertainty to the<br />
rules." On the one hand, this provision says the flat fee is the property <strong>of</strong> the lawyer and, on the<br />
other hand, it may not be the property <strong>of</strong> the lawyer if, as indicated <strong>by</strong> Mr. Sevilla's comment, it<br />
may be "subject to a client right <strong>of</strong> refund." There is a tension between these two concepts<br />
which I think should be avoided in the rule itself because it does not tell the client the whole<br />
story which is dependent upon the applicability <strong>of</strong> other rules. Leaving out the aspect <strong>of</strong> refund<br />
makes the rule neutral on this issue and leaves the client in the same position as he or she<br />
would be in under the current rules, except that the client would not have been told that the fee<br />
is non-refundable. It may or may not be refundable and there is no need to raise this possibility<br />
at the outset <strong>of</strong> an attorney-client relationship because it can lead to other serious problems<br />
which I discuss below. Indeed, the Sample Fee Agreement provision set forth <strong>by</strong> the <strong>State</strong> Bar<br />
(see Tarlow, p. 6, fn. 3 for the cite) suggests that, instead <strong>of</strong> being neutral, the fee agreement<br />
might provide that "unless the attorney withdraws before the completion <strong>of</strong> the services or<br />
otherwise fails to perform services contemplated under this Agreement, the fee will be earned in<br />
full and no portion <strong>of</strong> it will be refunded once the agreed-upon legal services have been<br />
performed." (Slight changes made to the provision to reflect our language.)<br />
4. Although you seem comfortable with the idea that " it is still the lawyer's money and not<br />
subject to seizure unless and until it can be shown that the lawyer's services fell short <strong>of</strong> what<br />
the client and lawyer agreed to at the beginning <strong>of</strong> the representation," I do not have the same<br />
comfort level. By putting v in the rule we are raising the level <strong>of</strong> controversy between lawyers<br />
and the IRS, the SEC, bankruptcy proceedings, etc. (Incidentally, I did not raise the issue <strong>of</strong><br />
bankruptcy because <strong>of</strong> a concern that the bankruptcy bar would find the provision objectionable,<br />
but because the fee paid to a non-bankruptcy lawyer may be impacted in bankruptcy<br />
proceedings <strong>by</strong> being deemed assets <strong>of</strong> the client who ends up in bankruptcy.) The language <strong>of</strong><br />
v raises the risk <strong>of</strong> the fee being subject to arguments for its seizure or forfeiture, irrespective <strong>of</strong><br />
whether these arguments will ultimately prevail. (See the comments <strong>of</strong> Mr. Gordon regarding<br />
RRC - 4-200 [1-5] - E-mails, etc. - REV (06-01-10).doc -139-<br />
Printed: June 2, 2010