Sorted by Commenter - Ethics - State of California

May 25, 2010 Martinez E-mail to Sondheim, cc RRC:
RRC – Rule 1.5 [4-200]
E-mails, etc. – Revised (6/1/2010)
Harry, under your proposed version of (iii) the fee isn't earned until the services are performed.
This means the fee is still the client's property until the services are performed and can be
seized by third parties. Under my version, the fee is earned on receipt "subject to" a refund.
Perhaps the fix is to add the words "on receipt" after "earned in full" in you version.
May 25, 2010 Melchior E-mail to RRC:
I am quite sure that I dissented from our treatment of advance fees but do not have the time to
get involved in this argument at the moment.
I had a case recently in which the lawyer wrote an engagement letter which stated as clearly as
possible that the fee was an availability fee, earned upon engagement. But he then added that
he would not charge for some hours of time because of the availability payment, and the OCTC
charged that it was NOT an availability fee despite its language. I had to study the field, and I
concluded that the Review Department had undermined what I read as the Supreme Court's
intent in the Baranowsky case, and that now, in California, there were availability fees in the
abstract only -- i.e., if the client paid the lawyer ONLY for availability and NO work would be
credited against that payment. Of course, in real life that doesn't happen.
I think that anything short of going back to Baranowsky undermines the positions which
bankruptcy and criminal defense lawyers MUST take, and that we are engaging in (or in any
event supporting) a destructive enterprise if we don't straighten this out. But I don't think that
my views have a chance.
My apologies for not being able to get more involved; but client work comes first. This debate
explains one more reason why our work is not helpful, though we have all certainly tried.
May 25, 2010 Martinez E-mail to Sondheim, cc RRC:
Harry, I'm fine with it but, I think we need a comment indicating that the rule is not intended to
address all circumstances under which the client may be entitled to a refund. After all, this is a
matter of contract law and there are other circumstances where the client might be entitled to a
refund, such as where the lawyer performs the services negligently-- i.e., a failure of
consideration. We are not overruling traditional contract defenses. Either way, I don't think it will
appease Tarlow and others who insist there be no rule that prohibits non-refundable fees.
May 25, 2010 Sondheim e-mail to Martinez, cc RRC:
Then how about this:
"(iii) that, the fee is earned in full upon receipt and, unless the lawyer withdraws before the
completion of the services or otherwise fails to perform services contemplated under this
Agreement, no portion of it will be refunded."
While this is a variation of the Sample Fee agreement, I believe it is defensible as based upon
the "gold standard" supported by Tarlow and others.
RRC - 4-200 [1-5] - E-mails, etc. - REV (06-01-10).doc -142-
Printed: June 2, 2010