Nonrefundable Retainers

Getting your fees, keeping them, and staying out of jail.

But no more than minimal fee is truly “nonrefundable”

Rules of Professional ConductRules of Professional Conduct

All state and provincial rules available at All state and provincial rules available at www.LawofCriminalDefense.comwww.LawofCriminalDefense.com, the , the website for the 3d ed. of website for the 3d ed. of Professional Professional Responsibility in Criminal Defense Responsibility in Criminal Defense PracticePractice (3d. ed. 2005) (3d. ed. 2005)

Note that the title changes to add Note that the title changes to add “Defense Practice” – Public Defenders “Defense Practice” – Public Defenders will benefit from the book, too.will benefit from the book, too.

Setting And Collecting Attorneys’ Fees In Criminal Cases

• Modified from its original format in The Champion (in two parts in 2003)

• Originally called “The Ten Commandments of Setting and Collecting Attorneys’ Fees in Criminal Cases” by Lionel Barrett in the Aug. 83 The Champion

• Barrett had 13 Ten Commandments (maybe he couldn’t count)

• Probably so because he ultimately surrendered his license for taking fees and not doing the work.

Rule of Prof. Conduct 1.5(a)

• “A lawyer's fee shall be reasonable. A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.” (2002 ABA proposed Rule, now being adopted)

• (A firm grasp of the obvious.)

8 standards of “reasonableness”

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particularemployment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(5) the time limitations imposed by the client or by the circumstances;

(4) the amount involved [and the results obtained];

(6) the nature and length of the professional relationship with the client;

(8) whether the fee is fixed [or contingent].

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

Rule 1.5(b)

• “When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.”

• Always try to have a writing. It will save your ass in a pinch.

1. Never underestimate the value of your representation in a serious criminal case.

(this is important)

• Your representation. • What are you worth? Can you say that your just

showing up has value? (It takes a while to learn that. See No. 8)

• What do you think you are worth? (see Nos.4-5)• What is at stake in the case?• What will the “traffic bear”?

2. Charge significantly higher fees to clients able to pay such fees to

order to offset the inevitable representation of clients who cannot

pay an appropriate fee.

• Can you charge more in drug cases so you can take other more interesting cases?

• Yes you can.

3. Always avoid any case that cannot be financially rewarding or that cannot

otherwise substantially advance your career or reputation as a criminal

attorney.

• Should you take appointed cases?

• What about the appointed federal death penalty cases? Can you take the time? Will it be worth your while?

4. Discuss the amount of fees as soon as possible and explain to the client, or the person responsible for his fees why the amount of the fee is

necessary to insure proper

representation.

• Writing should be required• Make sure that the person paying the fee knows

that they don’t control the case.• Don’t apologize for your fees.

5. Remember that if you set a low fee, the client may feel this is a reflection of

your ability and may chose to be represented by another less competent attorney simply thinking that if the other attorney charges a much higher fee, that

he must be a better attorney. • People still believe “you get what you pay for”• Think about others in your community and what

they charge. Are they worth it what they charge?

6. Set a single fixed fee as opposed to

a stairstep or graduated fee schedule.

• If this cannot be done with sufficient certainty, require an advance deposit for placement in a trust account with provisions for periodic withdrawal for documented costs and fees. (What about advance fees?)

• Normally avoid hourly rates, unless you have a corporate client capable of paying it.

7. Do not overlook the fact that the amount of time you will have to expend on the case must be the

focal point of any fee determination. • “A lawyer’s time and advice are his stock in trade.”

–A. Lincoln• Once you’ve done it for a while, you know about how

much time will be required for most cases.• Except murder and sex cases, so add a multiplier.• Consider yourself lucky if you can quote a fee within

25% of the actual time that could be expended.

8. Get the fee in advance, or as soon thereafter as possible.

• Always collect the entire fee or as much as you possibility can at the very outset of the representation, or as some commentators point out, while the tears are flowing.

• Keep in mind that people cannot always come up with $25,000 overnight.

There are four caveats to No. 8• First, the client must understand that by making an

appearance and committing to work on the case, the court considers you obligated to follow through, and failure to complete the fee arrangements allows you to withdraw.

• Second, do not underestimate your value by just appearing. – The best trial lawyers get the best plea bargains– The prosecutor works harder against you because

you work hard.• Third, at least get enough in advance to cover your ass

and overhead if the client ends up stiffing you.• Fourth, when they say “I’ve never failed to pay a bill

before,” don’t be afraid to say that “95% of the people who’ve told me that before failed to pay once the case was over.” (see no. 12)

9. Create in the client a sense of obligation and mutual commitment by recognizing that a substantial fee has been fully paid, there is a strong link

between the attorney and client.

• The A-C relationship is bound by a duty of honest and commitment to each other.

• Confidentiality will always be honored• You will work hard for the money.• You don’t want to even have a subconscious

desire to slack off because the client welched on the deal to pay.

10. Use a written contract in all cases

• Include an automatic withdrawal of counsel clause should the client fail to honor the terms set forth in the contract

• Any ambiguity in a contract (oral or written) is construed against the lawyer

11. If the fee is not fully collected in advance, utilize regular billing

procedures, and never allow the fee to

lag behind work already performed.

• This is a corollary of the rule to keep the client informed.

• An informed client will pay more readily

• An informed client will be far less likely to file an ethics or IAC complaint against you.

12. Do not expect to collect any unpaid fees after the case has been completed,

regardless of the outcome.

• Forget about it as a lesson learned

13. When it is obvious the client cannot or will not pay, write it off

• AND tell the client you wrote it off

• AND tell the client that you hope he’ll use you again if the need arises– You don’t want the client ashamed to come

to you later just because he owes you money when he has a REAL case.

Ethically dealing with advance fees

• A few states have old ethics opinion that recognizes flat fees, but the devil is in the details of those opinions.

• By default, the leading case is In re Sather, 3 P.3d 403 (Colo. 2000)– Written by Michael Bender, former NACDL

member and Heeney Award winner– Will automatically command respect of all

courts.

Sather at 405:

• Under Rule 1.15, “an attorney cannot treat advance fees as property of the attorney and must segregate all advance fees by placing them into a trust account until such time as the fees are earned. An attorney cannot label advance fees ‘non-refundable’ because it misleads the client and risks impermissibly burdening the client’s right to discharge his attorney, in violation of Colo. RPC 8.4(c) and 1.16(d).”

But,

• fn1: “We note that in some narrow circumstances, discussed in greater detail in section III.C., infra, an attorney and client may agree to allow the attorney to treat unearned advance fees as property of the attorney.”

And,

• Sather’s year and a day suspension was reduced to six months because the court had never been clear about nonrefundable retainers.

• Liability was instead found under Rule 1.16 for not protecting the client’s funds on withdrawal or discharge. Id. at 406.

Vice of the fee agreement

• Under the contract, the client could fire the lawyer anytime, but the flat fee remained the property of the lawyer. Sather, however, said that he did not consider it completely nonrefundable. Id. at 406.

• After being discharged because of an unrelated suspension, Sather couldn’t pay any money back and declared bankruptcy.

Important points in Sather

• Part III.A. of the opinion:– Nonrefundable retainers interfere with the

client’s right to freedom of choice in firing the lawyer. [Lawyers can be fired for any reason and without cause.]

– Therefore, unearned fees must stay in trust until earned. Id. at 410.

• Part III.B.:– An attorney earns fees by conferring a benefit on or

providing a service for the client– “Funds given by clients to attorneys as advance fees

or retainers benefit attorneys and clients. Some forms of advance fees or retainers appropriately compensate an attorney when the fee is paid because the attorney makes commitments to the client that benefit the client immediately. Such an arrangement is termed a ‘general retainer’ or ‘engagement retainer,’ and these retainers typically compensate an attorney for agreeing to take a case, which requires the attorney to commit his time to the client's case and causes the attorney to forego other potential employment opportunities as a result of time commitments or conflicts.” Id. at 410.

• Attorney can earn the fee simply by making the client’s work a priority

• A client may pay an attorney to create a conflict or keep the attorney available.

• In all these situations, the client has been conferred a benefit.

• BUT, the client has a right to know in the contract why it is deemed earned. Id. at 410-11.

• Flat fees benefit both client and attorney– The client knows the full cost of the

representation – The attorney is covered because the money is

in the trust account.– “With respect to fees mutually agreed to be

‘earned on receipt,’ an attorney must describe in writing the nature of the benefit being provided to a specific client in order to claim some portion or all of an engagement retainer as earned when paid.” Id. at 412.

• Part III.C.—Non-refundable retainers– “A fee labeled ‘non-refundable’ misinforms the client

about the nature of the fee and interferes with the client's basic rights in the attorney-client relationship. Attorney fees are always subject to refund if they are excessive or unearned.” Id. at 413.

– “We acknowledge that in some instances a client may agree with an attorney to allow the attorney to treat funds paid in advance of legal services or other consideration as property of the attorney and thus not subject to the trust account requirements. Although we do not address the exact contours of such an arrangement in this opinion and recognize that narrow exceptions to this rule may exist, we caution that at minimum such arrangements will be construed against the attorney and in favor of the client.” Id.

• Earned on receipt retainers (all or part) must be explained in writing to the client why and how the fee is treated as earned. Id. at 413-14.

• “an attorney's fees are always subject to refund if excessive or unearned, and an attorney cannot communicate otherwise to a client.” Id. at 414.

• Without a specific existing rule, Sather was not disciplined under 1.15, but he was under 1.16 for not protecting the client’s interest in the client’s funds on discharge.

Importance of keeping timesheets

• United States v. Brumer, 420 F. Supp. 2d 206 (S.D. N.Y. 2005) (in materials)

• Lawyer charged a $250,000 flat rate fee in an organized crime case. Client pled and sought a refund.

• Lawyer produced time sheets showing $393,000 in time in case, without trial, and the court refused to order any fee refund.

Our fee agreement

• In Word, with highlighting

Shameless self-promotionShameless self promotion

http://west.thomson.com/product/13516342/product.asp

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““Appearance of Impropriety”Appearance of Impropriety”

Not in the Rules of Professional Not in the Rules of Professional ConductConduct

Was Canon 9 of the Code of Was Canon 9 of the Code of Professional ResponsibilityProfessional Responsibility

WHY is it not in the RPC?WHY is it not in the RPC?

““Appearance of Impropriety”Appearance of Impropriety”

Import it into your state law by judicial Import it into your state law by judicial decision:decision:

First American Carriers, Inc. v. Kroger Co., First American Carriers, Inc. v. Kroger Co., 787 787 S.W.2d 669, 670-71 (Ark. 1990): the S.W.2d 669, 670-71 (Ark. 1990): the appearance of impropriety standard is so appearance of impropriety standard is so fundamental to the practice of law and the fundamental to the practice of law and the fiduciary duty to clients that it must be fiduciary duty to clients that it must be retained by case law under the RPC, despite retained by case law under the RPC, despite its omissionits omission Arkansas has also used the rule to disqualify Arkansas has also used the rule to disqualify

members of a constitutionally independent members of a constitutionally independent administrative agency from hearing an administrative agency from hearing an administrative action. administrative action. Acme Brick Co. v. Missouri Acme Brick Co. v. Missouri Pac. RR,Pac. RR, 821 S.W.2d 7, 10 (1991) (AHTD). 821 S.W.2d 7, 10 (1991) (AHTD).

Case examples, Case examples, see, e.g.see, e.g.::

Criminal cases:Criminal cases:People v. Witty,People v. Witty, 36 P.3d 69, 73 (Colo.App. 2001) 36 P.3d 69, 73 (Colo.App. 2001)

(disqualifying a prosecuting attorney) (disqualifying a prosecuting attorney) State v. Loyal, State v. Loyal, 753 A.2d 1073 (N.J. 2000) (public 753 A.2d 1073 (N.J. 2000) (public

defender’s prior representation of significant defender’s prior representation of significant prosecution witness in drug related homicide prosecution witness in drug related homicide case created appearance of impropriety case created appearance of impropriety mandating a mistrial (not subject to double mandating a mistrial (not subject to double jeopardy), even though neither the witness jeopardy), even though neither the witness nor the lawyer remembered the lawyer nor the lawyer remembered the lawyer handled the prior case two years earlier; a handled the prior case two years earlier; a per per sese rule) rule)

More civil cases:More civil cases:In re Rules of Professional Conduct and In re Rules of Professional Conduct and

Insurer Imposed Billing Rules and Insurer Imposed Billing Rules and Procedures, Procedures, 2 P.3d 806, 808 (Mont. 2000)2 P.3d 806, 808 (Mont. 2000)

Stowell v. Bennett,Stowell v. Bennett, 739 A.2d 1210, 1212 (Vt. 739 A.2d 1210, 1212 (Vt. 1999)1999)

Lowell v. Winchester,Lowell v. Winchester, 941 S.W.2d 466, 468- 941 S.W.2d 466, 468-69 (Ky. 1997)69 (Ky. 1997)

Heringer v. Haskell,Heringer v. Haskell, 536 N.W.2d 362, 366 536 N.W.2d 362, 366 (N.D. 1995)(N.D. 1995)

• Also perhaps:– dying declarations made to non-police officers (may be classified

as non-“testimonial” even if dying declarations to police officers are categorized as “testimonial”)

– excited utterances made to police officers, although that’s not altogether clear – see Scalia’s reference to White v. Illinois in footnote 8. But excited utterances made to someone other than a police officer or other public official presumably would not be considered “testimonial.”

– Any document falling within: 803(9), 803(11)-803(15), 803(22)-803(23): public records, private documents (church records, family records listing births, deaths, marriages, documents effecting an interest in property, etc.), and are rarely made with criminal litigation in mind. On the other hand, such records are made and kept with the purpose of providing “evidence” (albeit in a non-courtroom sense) of the events or relationships recorded therein.

What statements are clearly not “testimonial”?

• co-conspirator statements. See Part VB (text immediately preceding note 6).

• any statement made “casually” (Part III A) rather than for purposes of “going on record” with a government agent or agency. This should include most statements that fit within the following exceptions (so long as not made to a police officer or other public official): 803(1)-803(4).

• 803(6)-803(8) and 803(10), so long as the primary reason the record was not use as “evidence.” See Part VB (text immediately preceding note 6, referring to “business records”). But if the record was created with the expectation that it would be used as evidence, it should be classified as “testimonial.” (Thus, forensic reports should be considered “testimonial.”)

• Statements against interest NOT made to public officials (e.g. a “casual remark to an acquaintance”, Part III A) are not “testimonial.”

• Dying declaration which was recognized at common law.

If the statement is not “testimonial,” what then? Does the Confrontation Clause apply at all? If so, how, and what standard is used to measure whether it complies with the Clause?

In Part V, Justice Scalia notes that critics of the Ohio v. Roberts “trustworthiness” approach have proposed “that we apply the Confrontation Clause only to testimonial statements, leaving the remainder to regulation by hearsay law,” but that in “In White [ v. Illinois, 502 U.S. 346 (1992)], we considered the first proposal and rejected it. 502 U.S., at 352-353. Although our analysis in this case casts doubt on that holding, we need not definitively resolve whether it survives our decision today,...” Perhaps the Court will reconsider White and hold that non-testimonial statements are simply not subject to a Confrontation Clause objection at all.

But until the Court revisits the issue, the possibility exists that some aspects of the Roberts/Inadi approach will survive holding that non-testimonial statements that fall within firmly rooted (“FR”) exceptions which cover statements that have independent evidentiary significance (“IES”) – “FRIES” exceptions – automatically satisfy the Confrontation Clause.

It is even possible that the Court will retain some sort of the “trustworthiness” approach for at least some non-testimonial hearsay statements.

And more:And more:

www.FourthAmendment.comwww.FourthAmendment.com

A daily summary of all cases dealing A daily summary of all cases dealing with search and seizure posted on with search and seizure posted on Lexis the night before.Lexis the night before.

ETHICS ETHICS (from Merriam Webster online):(from Merriam Webster online):

Pronunciation: Pronunciation: 'e-thik'e-thikFunction: Function: nounnounEtymology: Middle English Etymology: Middle English ethik, ethik, from Middle from Middle

French French ethique, ethique, from Latin from Latin ethice, ethice, from from Greek Greek EthikE, EthikE, from from EthikosEthikosDate: 14th centuryDate: 14th century

11 plural but singular or plural in constructionplural but singular or plural in construction :: the discipline dealing with what is good the discipline dealing with what is good and bad and with moral duty and and bad and with moral duty and obligationobligation

2 a2 a :: a set of moral principles or values a set of moral principles or values bb :: a a theory or system of moral values <the theory or system of moral values <the present-day materialistic present-day materialistic ethicethic> > cc plural but plural but singular or plural in constructionsingular or plural in construction :: the the principles of conduct governing an principles of conduct governing an individual or a group <professional individual or a group <professional ethicsethics>> dd :: a guiding philosophy a guiding philosophy

3 a :3 a : what the guys making the CLE rules what the guys making the CLE rules force us to get 2-3 hours of every year force us to get 2-3 hours of every year whether we think we need it or not whether we think we need it or not b : b : as as criminal defense lawyers, we really do need criminal defense lawyers, we really do need reminding because our job of screwing with reminding because our job of screwing with the government for a living puts us at risk.the government for a living puts us at risk.