Legal Ethics for Getting Paid - Michael Downey July 2021 2021 Downey Law Group LLC. For educational purposes only - Ethics of Getting Paid ...

Legal Ethics for Getting
                              Paid

                                            Michael Downey
                                                  July 2021

© 2021 Downey Law Group LLC. For educational purposes only.

Introductory Matters
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•   Watch the Slides -- https://join.freeconferencecall.com/dlg721

•   Technical Problems – contact Paige Tungate at ptungate@DowneyLawGroup.com

•   Questions – Please submit questions during the program using the CHAT function, or email Paige Tungate
    at ptungate@DowneyLawGroup.com

•   Post-Program Survey – A survey will be emailed to you about 30 minutes after program. Also, there is a
    link to the survey at the end of these slides

•   Certificate of Completion – Available through the Post-Program Survey

•   Kansas Credit – If you are seeking Kansas credit, you will need to enter the two Attendance Verification
    Words and your Kansas information into the Post-Program Survey. Please complete this information in
    the survey within 3 days of the program, so we can ensure you receive proper credit

                                                                                                          2

Rule 4-1.5(a)
A lawyer shall not make an agreement for,
charge, or collect an unreasonable fee or
an unreasonable amount for expenses

                                            3

“If I had eight hours to chop down a tree, I'd
spend six sharpening my axe.”

                 -- Abraham Lincoln (or someone else)

                                                        4

Take Care Vetting Clients

                            5

Client Intake
• Does client understand representation and
  likely outcomes?
• Do you still want to represent client?
• Does client have the desire and ability to pay?

                                                    6

Assessing Creditworthiness
• Credit check
• Prior litigation

                                   7

Explain Engagement

                     8

Key Information
• How long will it take
• How much will it cost
• What are likely outcomes

• Consider “value” of representation – does
  client understand cost and potential benefits?

                                                   9

Rule 1.5 comment [2] directs lawyers that
an “understanding as to fees and
expenses must be promptly established.”

                                            10

Consider Alternative Fees

                            11

Types of Alternative Fees
•   Time-based (Hourly)
•   Contingency
•   Fixed or flat
•   Asset-based
•   "Value"

                                    12

Assessment for AFA
     Uncertain

                                      Risk-Sharing

Outcome

                  Fixed

      Certain
                                              Uncertain
                           Effort

                                                     13

Consider Limited Scope Engagements

                                14

Rule 4-1.2(c)
A lawyer may limit the scope of representation if the client gives informed
consent in a writing signed by the client to the essential terms of the
representation and the lawyer's limited role. Use of a written notice and
consent form substantially similar to that contained in the comment to this
Rule 4-1.2 creates the presumptions:
(1) the representation is limited to the lawyer and the services described in
    the form, and
(2) the lawyer does not represent the client generally or in any matters
    other than those identified in the form.

                                                                              15

Rule 1.5 comment [2] warns lawyers against
entering “an agreement whereby services are to
be provided only up to a stated amount when it
is foreseeable that more extensive services
probably will be required, unless the situation is
adequately explained to the client.”

                                                 16

Limits to Consider
• Stages of engagement – decision to continue
  at certain stages
• Specifying the work that will be done for a
  particular fee

                                                17

Document Your Fee Agreement

                          18

Rule 1.5 comment [2]
Generally, it is desirable to furnish the client with at least a
simple memorandum or copy of the lawyer's customary fee
arrangements that states the general nature of the legal services
to be provided, the basis, rate or total amount of the fee and
whether and to what extent the client will be responsible for any
costs, expenses or disbursements during the representation. A
written statement concerning the terms of the engagement
reduces the possibility of misunderstanding.

                                                                19

Provisions Helping Payment
• (Reasonable) interest on unpaid fees
• Possible withdrawal
• Fee dispute resolution

                                         20

Get Commitment to Pay

                        21

Facilitate Payment
• When does client pay bills
• How will client pay?
  – Credit cards – use lawyer specific-processing
    system

                                                    22

Classic retainer – pay for availability
 Example – "You pay me X, and I am your lawyer for the month/year.”
   Earned when received

Security retainer
  Charge against retainer on a monthly basis, and ask for additional funds as needed
  ("Evergreen Retainer")
  Hold to ensure final payment ("Security Deposit Retainer")
  Must hold until earned (trust account)

                                                                                   23

Missouri Formal Opinion 128 discourages
the use of “retainer” noting that the term
“has taken on many meanings which are
inconsistent with one another and which
are confusing to clients.”

                                             24

"Bad" Retainers

"Non-refundable retainers" – NOT
permitted in most states

Missouri Formal Opinion 128
 "In these situations and others, the description of the fee as
 'nonrefundable' is misleading. Rule 4-1.16(d) requires any fee
 that has not been earned to be refunded at the end of the
 representation.” MO Formal Opinion 128 (2010)

                                                              25

Proper Amount of Retainer
• Consider fees that will be earned in first 60-90
  days of matter

• Why? If work is done on January 1, when will
  the client ordinarily pay for it?

                                                 26

Deliver Value to Client

                          27

Rule 1.5 comment [5] advises lawyers against
“exploit[ing] a fee arrangement based primarily
on hourly charges by using wasteful
procedures.”

                                                  28

Assess “Win”
• Can you win for the client?
• Will client be happy with outcome?

                                       29

Communicate Value Delivery

                             30

Means of Communications
• Client communications
  – Prompt call en route from proceeding
  – Written communications – lead with most
    important information – outcome/decisions/next
    steps

• Billing statements

                                                     31

Send Regular Bills

                     32

Billing Suggestions
• Prompt bills bring prompt payment
• Regular billing helps cash flow
• Regular bills warn of problem payers

• Even where client is not paying bills, sending bills
  helps show work done (and what lawyer has
  “earned”)

                                                         33

Avoid Petty Billing

                      34

Expenses
• Consider showing non-billed work

• Legal fees generate profits

• Expenses should not generate profits
• Expense billing often irritates clients

                                            35

Take Care When Modifying Fee
        Arrangements

                               36

Rule 4-1.8(a)
A lawyer shall not enter into a business transaction with a client or
knowingly acquire an ownership, possessory, security, or other
pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the
    interest are fair and reasonable to the client and are fully
    disclosed and transmitted in writing in a manner that can be
    reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is
    given a reasonable opportunity to seek the advice of independent
    legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client,
    to the essential terms of the transaction and the lawyer's role in
    the transaction, including whether the lawyer is representing the
    client in the transaction.

                                                                        37

Suing for Unpaid Fees

                        38

Dangerous Activity
•   Failure to recover
•   Review of law firm’s work
•   Review of business operations
•   Negative publicity

• Possible loss/lack of insurance coverage

                                             39

Steps to Undertake
1. Assess what is (really) at issue
2. Exhaust non-litigation options

                                      40

Assess Potential Claims
3. Discuss potential claims with lawyers and
   staff
4. Review relevant documents
5. Assess file internally
6. Assess file externally

                                               41

Consider Self-Defense
7. Discuss claims with LPL insurer
8. Consider waiting out statute of limitations

                                                 42

Future Programs – Free Ethics CLE
Critical Race Theory and Addressing Bias - with special guest Pam Meanes – 1.0 Ethics &
Elimination of Bias CLE August 11 (Wednesday) at 12 Noon CT

Spotting & Resolving Conflicts of Interest – 1.0 Ethics CLE
August 24 (Tuesday) at 3:00 PM CT

Legal Ethics & Technology – 1.0 Ethics CLE
September 9 (Thursday) at 12 Noon CT

Protecting Client Money & Property – 1.0 Ethics CLE
September 22 (Wednesday) at 12 Noon CT

Legal Ethics & Lawyer Marketing – 1.0 Ethics CLE
October 6 (Wednesday) at 12 Noon CT

Addressing Bias in the Legal System: Cognitive Bias – 1.0 Ethics and 1.0 Elimination of Bias CLE
October 19 (Tuesday) at 3:00 PM CT

                                                        Sign up at www.DowneyEthicsCLE.com

                                                                                                   43

Conclusory Matters
•   Questions – If you have questions after the program, please email them
    to Paige Tungate at ptungate@DowneyLawGroup.com

•   Post-Program Survey – A survey will be emailed to you about 30 minutes
    after this program. Also, here is the survey link:
               https://www.surveymonkey.com/r/Judicial0721

•   Certificate of Completion – Available through the Post-Program Survey

•   Kansas Credit – If you are seeking Kansas credit, you need to enter the
    two Attendance Verification Words and your Kansas information into the
    Post-Program Survey. Please complete this information in the survey
    within 3 days of the program, so we can ensure you receive proper credit

                                                                       44

Thank you

       Michael Downey
    Downey Law Group LLC
        (314) 961-6644
    (844) 961-6644 toll free
mdowney@DowneyLawGroup.com