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| HIRSHMAN’S 39 TIPS FOR AVOIDING GRIEVANCES BASED ON FEES The Maryland Bar Counsel, Mel Hirshman, has given numerous seminars on how to avoid grievances based on fees. Mel shared the following 39 tips: 1. Regardless of rules, always have a written fee agreement. Do you want to go to court on “he said, I said, She said”? 2. Remember that a Court can always modify an agreement between an attorney and client – it is a fiduciary arrangement. (e.g., cases in which Court gives less in class action litigation). 3. It is an arms length transaction only in the beginning. Any changes made after the attorney-client relationship has been established are suspect. 4. The literature suggests that if there is a quick large settlement in a case involving mass disaster, a normal contingent fee is too high. 5. You must be specific on when an attorney’s fee will be paid in a structured settlement. 6. If you decide to reduce your fee to client when client disputes it, you may be suggesting that you overcharged in the first place. 7. Keep detailed records of your work to justify your fee. The charges have to be fair (e.g., not as one attorney who charged every file a fee every two weeks to review the matter even if there was nothing going on). 8. Fees received for work to be performed must be placed in escrow and withdrawn only when earned and the client agrees. 9. If you charge a set fee understand that if discharged, your client is entitled to a refund of the amount not earned. You should have the money to return, and not ask the client to wait until you someday have the money. 10. Take a fee, do not get into business with a client 11. Settling a fee dispute by mediation or arbitration is better than going to court. 12. Read your fee agreement. It should be in plain English, understandable, and not too detailed. 13. Know the rules of professional conduct dealing with fees. 14. Do not have a power of attorney in your agreement absent unusual circumstances. 15. Generally, it is a good idea to give the client the agreement to take home and think about, unless there is a reason to have an agreement quickly. 16. Have, when necessary, a “speaking retainer agreement,” i.e., in a criminal case the penalty, options, what rights client waives if pleading guilty; in family law case what happens if the other spouse contests. 17. If more than one client wants to retain you, know about real and potential conflicts which may require you to disgorge the entire fee. 18. Make sure the client understands if another attorney in your firm, or one with whom you will associate, will be used, and obtain the client’s consent. 19. Although the rules provide for consideration to be given for a result achieved, an attorney cannot so charge unless there is an agreement in advance for that to be considered. See the recent case of May v. Sessums & Mason, Florida, Aug. 22, 1997. 20. If you undertake a matter for a fee which turns out to be too little, complete the matter as a learning experience unless you are permitted to withdraw because of a financial drain on you. A client matter which you undertake for $100 is entitled to the same competent representation and diligence as the one for which you are paid $10,000. 21. Be selective in undertaking client representation. Do not let your need for money compel you to grab a fee which will only cause you aggravation later because of the unreasonable and demanding client of the extra amount of work you did not expect. 22. Do not be stupid and greedy (e.g., lawyer who charged time for negotiating the fee agreement with the client). 23. Be specific about the expenses you will charge to the client and the minimum time for letters, phone calls, copying charges, etc. 24. Do not charge for things which are personal (e.g., lawyer charged for a new shirt for a deposition out of town). 25. Be aware that there are outside firms today whose sole task is to audit attorney billings. 26. If you use “rent-a-lawyer” or outside research or brief writer, charge only out of pocket expense, do not add a premium to review the matter. 27. A New York court found confessed judgment note in fee agreement improper. 28. Churning by preparing for a trial not likely to take place may result in excessive fee. 29. What is proper charge for a legal document already in your computer? You should charge for the changes and your review rather than charge a second time for the same basic document already paid for by another client. 30. Know the difference between an “engagement fee” and a non-refundable retainer. In the recent case of Raymark Industries v. Butera, Beausand, Cohen & Brennan, (d.c.e. Pa. 12/1/97) the Court sustained one million dollar non-refundable retainer to sophisticated business client based on fixed fee in asbestos litigation notwithstanding client’s termination of law firm 10 weeks later. 31. You may not charge interest unless the client agrees in advance. 32. If you handle a case in another State, know the rules in that jurisdiction. Otherwise, you may be precluded from collecting any fee. (Recent Colorado case, Fasting v. LaFond decided Jan. 30, 1997) 33. Some fees are regulated by law, e.g., veterans claims, compensation claims, bankruptcy fees. Any excessive fees in these areas are per se illegal. 34. If you accept a fee by “barter” make sure a correct amount is reported as income for tax purposes. 35. Do not keep fees in escrow. It is commingling, and further, you might be accused of trying to shelter income from the internal revenue service. 36. You may not divide your fees with a non-lawyer. Think about some of the arrangements proposed to you which can lead to loss of your license. 37. Think about ethical problems in attempting to secure your fee by pledges of jewelry, mortgages on property, etc. 38. A recent case held that firm forfeited any contingent fee when they withdrew because attorney experienced in legal matter left the firm. (Cabonic Consultants v. Herzfeld & Ruben, Florida Sept. 24, 1997) 39. If your
fee is to be paid by one other than your client, remember who your
client is and the rules regarding confidentiality. |
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