Sorted by Commenter - Ethics - State of California

http://community.lawyers.com/forums/t/92422.aspx
This is precisely the kind of situation that paragraph (e) is intended to avoid.
RRC – Rule 1.5 [4-200]
E-mails, etc. – Revised (6/1/2010)
3. As to Harry's item #3, I recommend against moving (e)(2)(v) into the Comment. Paragraph
(e)(2) provides:
(2) 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 agreement does not alter the
client’s right to terminate the client-lawyer relationship; and (v) that the client may be
entitled to a refund of a portion of the fee if the agreed-upon legal services have not
been completed. (Emphasis added).
There is no reason to remove (e)(2)(v), which is at the heart of the protection afforded clients
under the provision, except as an attempt to offer an olive branch to the criminal defense bar.
However, it will have as much effect on their opposition to the provision as the Commission's
attempt to revise the notice requirement in 1.11(e)(2) had on the position of George Cardona's
office. Our whole point is that the fee is not non-refundable until it is earned. Requiring lawyers
to state in the fee agreement that the client might be entitled to a refund is the only provision
that will catch a client's attention. The other four subparagraphs are fine, but the only one that
will have any meaning to the client is item (v). More important, I don't think that moving (v) into
the Comment will have any effect on the opposition; they don't want to be regulated in this
regard, period. We've been told by the public commenters that honorable criminal defense
lawyers will naturally return any part of a fee that is not earned. However, it is not the honorable
lawyers for whom the rules are written.
Attached:
RRC - [1-5] - Missouri Formal Ethics Op. 128 (Nonrefund Fees) (05-18-10).doc
May 21, 2010 Sondheim E-mail to KEM, cc RRC:
The problem with the Missouri Opinion is that it goes to far. It requires the fee to be placed in
the trust account, a requirement that the Commission rejected. We need language used in
states where the fee cannot be called "non-refundable," but need not be placed in the trust
account.
With regard to your reference to 1.11(e)(2), as I recall RAC removed this provision entirely. I
would not want to have the same thing happen to 1.5 (e)(2)(v). I think one of the concerns with
(e)(2)(v) is that the language permits an argument that the fee is subject to seizure for
bankruptcy and by IRS because it may be deemed to still be property of the client. We need to
deal with this issue in some way to make it clear that we are not changing the status of such
fees under current law and current rules, other than prohibiting them being called "nonrefundable."
RRC - 4-200 [1-5] - E-mails, etc. - REV (06-01-10).doc -136-
Printed: May 26, 2010
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