1. John Steele (Steele Ethics LLC) www.johnsteelelaw.com

2. John Steele Steele Ethics LLC California CLE Provider 14306 www.johnsteelelaw.com john.steele@johnsteelelaw.com 650-320-7662 (USA) © John Steele 2012

3. Topics 1. What law governs? 2. Types of fees 3. Life-cycle of fee agreements a) Formalities b) Enforcement mechanisms c) Modification d) Disputes/Arbitration 4. Sharing Fees

4. 1 What Law Governs?

5. ABA Model Rules Approach MR 1.5 MR 1.8 MR 1.16 MR 1.7, 5.4, 7.2

6. Rules Unique to States e.g., California Quirky and statutory Little in the rules

7. State Statutes MICRA (medical malpractice)

8. Federal Statutes & Courts

9. 2 Types of Fees

10. Hourly  Dominant approach  Basis for lodestar calculations

11. Hourly  Usually the basis for statutory awards  Perdue v. Kenny A., 130 S.Ct. 1662 (2010)

12. Hourly Usually the basis when commercial contract provides attorneys fees

13. Contingency Fees Heavily regulated ABA 1.5 State statutes

14. Flat Family law & criminal defense Increasingly, corporate matters Lots of confusion!

15. Stock in client Permitted but heavily regulated! ABA MR 1.8(a) ABA Op. 00-418

16. Quantum Meruit “Off contract” recoveries Often similar to lodestar Look at 8 factors of 1.5

17. 3 Lifecycle of Fee Agreements

18. Lifecycle 1. Initial negotiation 2. Formalization 3. Enforcement mechanisms 4. Re-negotiation 5. Withdrawal for nonpayment 6. Satisfaction 7. Disputes/Arbitration

19. Initial Negotiation 1. “Arms length” 2. Regulations set limitations

20. Formalities: Hourly & Flat Must communicate the basis “Preferably in writing” “Desirable” to have written explanation Client knows and agrees? Reasonable? (8 factors of 1.5)

21. Formalities: Contingency Two writings; one signed by client Details Gross or net Disbursement disclosure

22. Formalities: Contingency No contingency for:  Criminal defense  Domestic relations (securing divorce, support, property) Permitted for collecting support or property following divorce

23. We – Us - You Ambiguous pronouns “Attorney” “Firm” “Client” “Acme”

24. Define Client – One Client Clause Exclude: Founders Inventors Officers Agents

25. Define Client – One Client Clause Exclude: Affiliates Parents Subsidiaries

26. Limiting the Scope of Work e.g., Tax, Appeals, Insurance

27. Enforcement Mechanisms: Liens Liens (charging; possessory) Writing required? Possessory lien permitted on client file? (ABA says no) ABA Op 02-427 & Inf. Op 593 Writing signed by client; advise client in writing of desirability of independent legal counsel Applies to taking stock in client

28. Enforcement Mechanisms: Retainers General Retainers  Availability  Earned on receipt Special Retainers:  Advance fees  Replenishing  Security Deposit  Pre-trial Douglas R. Richmond, Understanding Retainers and Flat Fees, 34 J. Legal Prof. 113 (2009)

29. Enforcement Mechanisms: Flat Fees Non-refundable? (In re Cooperman, 633 N.E.2d 1069 (N.Y. 1994)) Where to keep the flat fee while work is done? In re Mance, 980 A.2d 1196 (D.C. 2009); DC Op. 355 Contractual “milestones”?

30. Enforcement Mechanisms: 3 rd Party Payers Need client’s “informed consent” (1.8(f)) Don’t let them interfere! Don’t share client confidences! MR 1.7, 1.8, 5.4

31. Modification ABA Op 11-458 Be fair! State your case in the modification WSC? AIWDSILC?

32. Withdrawal MR 1.16 Give a warning! Did you have a writing? Judge can make you stay on the job Return unearned fees!

33. Disputes/Arbitration Does your state have MFA? Good idea? Lose legal defenses? Gain privacy, speed?

34. 4 Sharing Fees

35. Fee Sharing Sharing fees with non-lawyers:  Forbidden  Salary ok  Profit-sharing ok In-house lawyer (ABA Op. 95-329)

36. Fee Sharing Division of fees with lawyer at other firm Permitted, if:  In proportion to services rendered; or  If both lawyers assume joint responsibility; and  Client consent is confirmed in writing

37. Fee Sharing: Referral Fees ABA: Forbidden under 7.2(b)(anything of value Many states ok

38. Fee Sharing with Non-profits MR 5.4

39. Topics 1. What law governs? 2. Types of fees 3. Life-cycle of fee agreements a) Formalities b) Enforcement mechanisms c) Modification d) Disputes/Arbitration 4. Sharing Fees

40. John Steele Steele Ethics LLC California CLE Provider 14306 www.johnsteelelaw.com john.steele@johnsteelelaw.com 650-320-7662 (USA) © John Steele 2012