A Co-Counsel Must Receive Notice When Shared Fee Is Received

The American Bar Association’s Standing Committee on Ethics and Professionalism issued Formal Opinion 475, which discusses the issue of safeguarding attorneys’ fees that are subject to splitting with co-counsel. According to Model Rule 1.5(e), a lawyer may divide a reasonable fee with another lawyer as long as the lawyers are not in the same firm, the client provided consent to the arrangement, and the fees ar proportionate to each lawyer’s performed services or each of the lawyers assumed joint responsibility in writing.

As per Model Rule 1.15(a), a lawyer needs to separate held property of third persons from the lawyer’s own property. The Committee determined that when one lawyer receives fees on behalf of multiple lawyers providing services in a matter, the additional lawyers count as third persons under the Rule. Therefore, the lawyer needs to keep the funds divided in a separate account—typically a trust account—within the state that the lawyer’s office is located. Additionally, the lawyer needs to keep complete records of the separate account and preserve it for five years after the representation is terminated.

Finally, the lawyer must promptly notify the other lawyers involved in receiving the funds and promptly deliver the funds that the other lawyers are entitled to receive. If there is any dispute about fee division, Model Rule 1.15(e) requires that the lawyer receiving the funds must keep them separate from the lawyer’s property until the resolution of the dispute.

Click here to read the opinion in its entirety.

California Releases Final Advisory Opinion on Lawyer Blogs

Recently, the California Standing Committee on Professional Responsibility and Conduct finalized its opinion that analyzes whether attorney-authored blogs should be governed by the advertising regulations. The Committee concluded that blogs should be governed as attorney advertising if the blog directly or indirectly expresses the attorney’s availability for professional employment. Thus, a blog that is a part of an attorney’s professional website or a firm’s professional website is governed by the advertising guidelines.

However, the opinion distinguishes “stand-alone” blogs, which it defines as “a blog that exists independently of any website an attorney maintains or uses for professional marketing purposes.” An attorney may maintain a stand-alone blog that discusses legal topics “within or outside the authoring attorney’s area of practice.” The blog will not be subject to the advertising rules unless the blog “directly or implicitly expresses the attorney’s availability for professional employment.”

Interestingly, a stand-alone blog that discusses non-legal topics (e.g. travel and cooking) is not subject to the advertising rules, even if the blog provides a link to the lawyer’s professional website. “However, extensive and/or detailed professional identification information announcing the attorney’s availability for professional employment will itself be a communication subject to the rules and statutes.”

To access the final opinion, click here.

Attorneys Entitled to Fees Despite Allegations of Rate Increases and Estimate Overruns

In August, the Connecticut Superior Court held that a law firm accused of failing to notify its litigation clients of rate increases and estimate overruns may still recover its legal fees. The law firm represented two clients who wanted their brother removed as executor of their father’s estate. During the course of the representation, the firm increased its hourly billing rate. After the clients complained about the difference in the rates from the initial retainer agreement, the clients and the firm reached an agreement to adjust the hourly billing rates.

Over the course of the matter, the firm provided fee estimates of future work as the clients fell behind on their invoice payments. The attorney-client relationship concluded when the clients terminated the firm’s representation with an overdue balance of over $184,000. When the firm commenced an action to collect their legal fees, the clients argued that the firm’s fees were unreasonable because the actual fees exceeded the fee estimates. Additionally, the clients argued that the firm should not be allowed to recover its fees because the firm violated Rule 1.5 of the Rules of Professional Conduct.

Ultimately, the court found that the estimates that the firm provided were not contractual agreements to limit the fees. The fees charged were reasonable under the relevant circumstances. Additionally, the court concluded that the firm did not violate Rule 1.5 because the version of the rule that the clients were relying on came into effect over three years after the firm’s representation of the clients ceased. Moreover, after the clients learned of the increase in fees, they reached an agreement with the firm thereby waiving their right to allege a violation of the rules. The court noted that even if there was a violation of Rule 1.5, it does not “create a presumption that a legal duty has been breached or that the attorney is precluded from collecting otherwise payable fees and disbursements.”

For more information, read the Opinion here.