Are lawyers more or less ethical than taxi companies? The rules of professional conduct in most States require that only one client be billed at one time. In other words, if your agreement with client A says that you will bill them for the time spent on their matter, and you have a similar agreement with client B, then you can bill only one client for each minute of time. (more…)
When discussing flat or fixed fees, it seems to me that the number of hours to be devoted to the matter is irrelevant. If you compute the flat fee based on the number of hours you anticipate and, further, you include that in your discussion with the client (suggesting that the fee will increase if the anticipated number of hours exceeds the estimate), the picture begins to look like hourly billing. Traditionally, hourly billing fees require deposit of retainers into the trust account first, then withdrawal and deposit into the general account once the fee has been earned.
The real issue, I believe, is when the fee is earned. Whenever earned, however you describe it, it’s yours and MUST be withdrawn from the client’s trust account. Otherwise, it’s commingling which violates the RPCs. (more…)
Question: When can a flat fee or a retainer be placed into a general account or withdrawn from a client’s trust account?
The answer generally is not found in the Rules of Professional Conduct, though some ethics opinions of local bar associations come close to helping us. The answer generally is found in your engagement agreement.
What do you provide in your agreement? Almost anything (except unconscionable or unreasonable fees) can be negotiated and approved, even with 20/20 hindsight judicial review.
Thus, if you charge a flat fee and agree that it is earned on receipt, it will probably be accepted. I think the better practice, however, would be to deposit the flat fee into a clients’ trust account and then withdraw it on the happening of an event such as a date certain, the filing of a complaint, the signing of a settlement or merger agreement or some other event specific.
Even retainer fees can be deposited into a general account if the agreement says that the retainer is not for work to be done in the future but for the lawyer being engaged (and therefore not available to another party, either an adversary or a third party unrelated to the current situation — because of the attorney’s lack of time …). In other words, there is a valid charge for engagement and therefore not being available to others. Opinions I’ve seen on the subject suggest that the retainer for this purpose must be “reasonable” …. If you were Edward Bennett Williams, famous Washington, D.C. lawyer who could get things done in the Halls of Congress with one phone call, the amount could be higher than if you were Edward Poll … Again, however, this is a matter of negotiation and detailing in the engagement agreement.
If you were to receive a retainer for future work, the better practice would seem to be to put this into your client’s trust account. However, I would suggest that the engagement agreement provides for transfer of funds to the general account on the happening of a specific event, such as the filing of a complaint, or 10 days subsequent to the date of a monthly billing statement or other event or date certain.
As with many things concerning fees, the answers are not clear. There is i) common sense; ii) open and clear negotiation with the client; and then iii) after-the-fact review. Hopefully, you don’t reach the third stage!
Check out the contract you signed with your credit card company and your merchant account organization. (more…)
Yesterday, I suggested very practical reasons why lawyers should not impose a surcharge for the use of credit cards by clients. Today, Linda N. Wisotsky, an experienced family law practitioner, suggests the legal reason why we should not impose surcharges on the use of credit cards by clients. (more…)
I think lawyers ask for trouble if they charge clients for credit card processing fees. (more…)
The Motley Fool is a great resource for understanding today’s financial world.
A current article explains the P/E ratio for investing. This is an important tool to use for valuing any business, including a law practice. I particularly like the part where this article’s author talks using “free cash flow” as an indicator of value.
Worth your reading … and taking the time to understand.
See the post on August 17th by Dennis Kennedy discussing an article about large firm lawyers converting to sole practitioners. The article, to Dennis’ surprise, suggests that 93% of large firm lawyers wouldn’t go solo, even if they were guaranteed the capital to do so.
I’m not sure what “guaranteed capital” means. To me, it means you’ve got enough to start; it doesn’t mean you’ve got enough to live the life style you want for 12 months or 36 months (or whatever) even if you’re not a great rainmaker. The uncertainty of bringing in new business may be more scary to today’s youth than we think. And, if you’re a great rainmaker, the AmLaw 200 numbers recently released seem to suggest that you will earn more in a large firm context than in your own firm.
Thee are exceptions to every rule, and this is no exception. (Pun not intended, but I like it anyway.)
Asked why I became a lawyer instead of a doctor, my response was because that was in the nature of my personality. I think the same is true for the question as to why you stay in a large firm rather than go solo. It’s the nature of our personality that governs what environment we choose in which to practice law…coupled with circumstances (such as being taken off the partnership track, etc.)
I’m not sure the result is so surprising as Dennis suggests, other than that this number varies from the statistic published in an earlier survey.
The common addage is that you shouldn’t go to a banker when you need money. That’s the time when they won’t lend you money. Sort of perverse, but that’s the reality.
When you have lots of money and don’t need them except as a depository for safe keeping, that’s when many bankers will be on your doorstep asking to be your supplier of choice to borrow money.
Mark Twain probably said it best when he said: (more…)
Some lawyers charge their clients for