Alternative fees – proportionate refund

An interesting question was raised recently in the discussion about alternative fees. What happens in either of two scenarios:  i) When the client terminates the relationship before the legal services are concluded and ii) When the fee is challenged in a dispute between attorney and client.

In the former case, how do you apportion work already done versus work yet to be done, especially when the fee agreement is silent on the subject? This question is set against the backdrop that a lawyer refund any advance payment of fee that has not yet been earned. And, though a fixed fee, the fee must be placed into the client trust account until earned. Does one have to refer back to the time spent (hourly billing)? And if the subject is covered in the fee agreement, are we building into the relationship all kinds of negative vibes between attorney and client?

And, though fixed fees/alternative fees are designed to reduce conflict between attorney and client, should a dispute arise, how do we test the reasonableness of the fee?  Again, usually by reference to the hourly billing rate and time spent.

This subject once again points to the need for good client relations and effective, frequent communication between attorney and client to make sure such disputes don’t arise and/or are settled quickly.

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