Category: Ethics

BillingClient relationsEthicsFinancial Management

New Amendments to Oregon Rules of Professional Conduct

JEL23652-Blackford, Sheila P3 (2)   by Sheila Blackford   ©2010   I just learned that the Oregon Supreme Court approved changes to Oregon RPC 1.5 and 1.15-1 regarding earned on receipt fees and RPC 3.3 relating to a lawyer’s responsibilities when a client or witness offers false evidence.

Let me say that “Earned on Receipt” fees have been troubling legal fees because many lawyers want to designate them as “Nonrefundable.” If you didn’t do the work bargained for, then to hang onto the fee would be collecting a ‘clearly excessive fee,” putting you in violation of Rule 1.5. Now the rule has been amended and if you charge earned on receipt fees you will want to review this amendment so that you can comply:
Rule 1.5 Fees

“…(c) A lawyer shall not enter into an arrangement for, charge or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of spousal or child support or a property settlement;
(2) a contingent fee for representing a defendant in a criminal case;
(3) a fee denominated as “earned on receipt,” “nonrefundable” or in similar terms unless it is pursuant to a written agreement signed by the client which explains that:
(i) the funds will not be deposited into the lawyer trust account, and
(ii) the client may discharge the lawyer at any time and in that event may be entitled to a refund of all or part of the fee if the services for which the fee was paid are not completed.”

Make certain that you following the guidelines and have a written agreement signed by your client that properly explains this type of fee arrangement. Be prudent: use the actual language of the rule in your written agreement.

Rule 1.15-1 Safekeeping Property
“…(c) A lawyer shall deposit into a lawyer trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred, unless the fee is denominated as “earned on receipt,” “nonrefundable” or similar terms and complies with Rule 1.5(c) (3).

Make certain that you put fees that are designated “earned on receipt,” or “nonrefundanble” or other similar terms into your general account – not into your trust account.

Rule 3.3 Candor Toward the Tribunal
“(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;
(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel;
(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer’s client, or a witness called by the lawyer, has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including if [necessary] permitted, disclosure to the tribunal. A lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false;
(4) conceal or fail to disclose to a tribunal that which the lawyer is required by law to reveal; or
(5) engage in other illegal conduct or conduct contrary to these Rules.
(b) A lawyer who represents a client in an adjudicative proceeding and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures, including, if [ necessary ] permitted, disclosure to the tribunal.
(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding, [unless compliance ] but in no event require[s] disclosure of information otherwise protected by Rule 1.6.
(d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse. ”

Be careful when reading the Rules. When in doubt, be sure to call the Oregon State Bar General Counsel, Helen Hierschbiel for help with interpreting the application of our Rules to your situation and for any ethics advice at extension # 361 at the OSB (503) 620-0222 or toll free in Oregon at 1-(800)-452-8260. If you can’t reach Helen, you can call Chris Mullmann, Assistant General General Counsel and Client Assistance Officer Manager at extension # 392.

BillingClient relationsCommunicationEthicsLaw Practice Management

Managing Your Client’s Expectations

JEL23652-Blackford, Sheila P3 (2)    by Sheila Blackford   ©2010   For many clients, the decision to get a lawyer is a scary one. How much will it cost me? When do I have to pay? Will the lawyer be able to help me? What will the lawyer do to fix my problem? How long will this take? All questions that run through your client’s mind but may not be asked for a combination of reasons you might find surprising including, because your client is not thinking clearly, is nervous to be in your office, or is afraid you won’t want to help if you are asked these questions.

I spoke to one lawyer who shared that his elderly client would listen thoughtfully, stroking his chin and say, “hmmm, that’s a good point.” The gentleman turned out to have dementia and didn’t understand what the lawyer was talking about but wanted to appear to understand to be polite. Hopefully, your client does not suffer from dementia and will understand if you explain things simply and slowly. Here are some tips for managing your client’s expections.

Start with clarity up front. Discuss key things at the initial client meeting:
1. the client’s objective in getting a lawyer for the situation;
2. the legal process you will need to go through;
3. the range of possible outcomes with any risks affecting success;
4. the information that still needs to be gathered;
5. the method of charging and billing for your services; and
6. your realistic estimate of how long the process and how much the legal fees and costs based upon the present facts as you understand them.

Clarity up front. Use a written fee agreement that includes the scope of representation signed by you and your client.
Your client will always be in favor of being well informed. Many lawyers think that their client does not want to have a multi-page written fee agreement that includes the scope of representation, the procedure and frequency of communication, along with the procedure and frequency of billing statements and payment.

Communication goes both ways. Be sure to include the responsibilities of the client to inform the lawyer promptly about new facts, new contact information, or upcoming periods of unavailability. Otherwise you may find your client’s phone has been changed with no new number or discover your client’s plan to visit family in another country is an unwelcome 11th hour discovery as you prepare for an imminent deposition, court appearance or decision to be made.

Clarity up front. Use a scope of representation letter signed by you and your client if not incorporated into your fee agreement.
This is for your protection against misunderstandings which can lead to a very poor lawyer-client relationship, resulting in an ethics complaint or malpractice claim.

Clarity throughout your representation. Provide adequate written communication about what is happening and how it affects the outcome: result, time, and cost.
Status updates are woefully underutilized and easy to provide. The number one complaint clients have about their lawyers is a lack of communication: I don’t know what’s going on with my case! This is a complaint that is avoidable. Have form letter status updates that you can quickly customize to provide personal information. For example, personal injury cases require request for medical records. A status update letter can inform the client of which records have been received and which are still necessary. When clients find out which medical provided hasn’t responded or provided requested records, these clients frequently call to express how important it is to them, prompting the office to get the records out by the end of the day to avoid losing a patient.

Managing your client’s expectations requires communicating needed information at the beginning and throughout representation. It also requires understanding that if you provide your client with a range of time for returning phone calls or delivering documents, your client will focus on the earliest time. The payment should come in two or four days. Anyone who has ever called the pediatrician worried about a sick child, upon being told the doctor will call you right back usually waited by the phone.

It is human nature to focus intently on our problems and needs and believe that those we pay to help us with these problems do too. We hear and remember what we wanted to hear. If you start with these premises, you will naturally know how to respond to your client.

It is better to under promise and over perform.
A good adage to adopt as your client-service orientation. Tell your client you will call back by 5 p.m. and plan to call by 4 p.m.; that you will have the will done by next Friday and plan to have it done by Wednesday. If something comes up delaying you, you will still meet the deadline given to your client. Your client will be very pleased. No client ever complained about a lawyer who called back sooner or who delivered work before deadlines. Happy clients have their expectations met. By managing your client’s expectations, you will find them easier to meet.

EthicsLaw Practice ManagementProfessionalism

Lawyers Leaving Firms – Happy or Otherwise

JEL23652-Blackford, Sheila P3 (2)  by Sheila Blackford   ©2010   Lawyers leaving their firms are on my mind today. Seems like stressful conditions financially are big contributor. There is more movement of lawyers from firm to firm. This raises issues of ethics and professionalism.

1. The Client is not property. The client gets to decide whether to leave the firm following the lawyer who has been doing the work or to leave the firm for a different firm or to stay. The implications of this are sometimes bitter: you have to let the client know that the lawyer who has been doing the work and being in contact with the client is leaving. Here in Oregon, following the ABA Model Rules, see ORPC Rule 1.4 Communication. Click here for a PDF of them which you might want to print them out to keep in a folder or save it on your computer for future frequent reference. It certainly is reasonable to keep your client informed about the status of his or her matter: “your attorney is leaving our firm at the end of the month.” Is the lawyer leaving to move to another state? Is the lawyer leaving to take a position practicing in a different area of law and will be unable to do this type of law? Is the lawyer leaving anyone behind at the firm who could competently continue to work on the client’s behalf? This seems eminently important information to be shared with a client “to permit the client to make informed decisions regarding the representation.”

2. All fees are subject to refund if the work is not performed. Avoid calling fees earned upon receipt “nonrefundable.” This designation may be misleading, if not false, a violation of ORPC 8.4 (a)(3), prohibiting conduct that involves “dishonesty, fraud, deceit, or misrepresentation that reflects adversely on the lawyer’s fitness to practice law.” Wow. This flat fee earned upon receipt becomes a problem when the client chooses to leave with the attorney or to go to another firm. If the firm holds onto that fee, and has done little or no work, ORPC Rule 1.5 Fees prohibits doing so: “[a] lawyer shall not enter into an agreement for, charge or collect an illegal or clearly excessive fee or clearly excessive amount for expenses.” How do you know it’s excessive? “A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee.” ORPC 1.5(b) goes on to innumerate eight factors to be considered as guides to determining the reasonableness. I don’t think you really need to read those factors to realize that unreasonableness of a flat fee earned upon receipt held out as “nonrefundable” to a client who want to leave with the attorney or go to another firm. This isn’t the time to try to assess fees for setting up a manila folder with a label and calling it legal work rendered. Sorry. Don’t keep money you haven’t earned.

3. Parting is not sweet sorrow. Giving notice to clients that the lawyer is leaving seems to be a big source of angst in many situations for the departing attorney and the firm. This is especially so when the separation generates hard feelings on either or both sides of the relationship. Our deputy general counsel for the Oregon State Bar, Helen Hierschbiel wrote “On the Move: Ethical duties when switching law firms” in the May 2007 issue of the Oregon State Bar Bulletin.

In a perfect world, one would do as Ms. Hierschbiel advises: “[t]he preferred method for providing notice to clients of a lawyer’s departure is by a joint letter from the managing partner and the departing lawyer to those client with whom the departing lawyer has had principal responsibility or significant contacts. The letter should provide information about the departing lawyer’s plans and indicate whether the firm is capable of and interested in continuing the representation. The letter must inform the clients that they may choose to keep their work with the firm or engage the departing lawyer. The letter should also inform clients, if they choose the latter option, what they need to do to terminate their relationship with the firm, including paying any outstanding fees or costs and how to get a copy of the file. This letter should be sent well enough in advance of the depature to give clients time to make their choices and lawyers time to take steps to effect any transfers of cases.”

However, relationships being what they are – between complicated humans who here happen to both be lawyers, a situation can develop where tempers are stoked and emotions are heated. In that event, Ms. Hierschbiel points out that “an unfriendly separation may make these best practices impossible. In such cases, separate letters may be sent. ABA Formal Op No 99-414 recommends that a letter from the departing lawyer should: 1) not urge the client to sever its relationship with the firm, but may indicate the lawyer’s willingness and ability to continue responsibility for matters upon which she currently is working; 2) make clear that the client has the ultimate right to decide who will finish the case and 3) not disparage the lawyer’s former firm. In addition, so long as the letter is sent only to those clients with whom the lawyer has a present professional relationship, the lawyer does not violate RPC 7.3(a). See OSB Formal Op No 2005-70.

“Upon separation, client files and property must be handled in accordance with the client’s direction. ABA Formal Op No 99-414; Oregon RPC 1.15(e) and 1.16(d). Generally, this means that if the client decides to go with the departing lawyer, the firm should surrender the client file [See OSB FOrmal Op No 2005-125 for discussion of what constitutes the “client file.”] to the departing lawyer and transfer any unearned advance deposits to the departing lawyer’s new trust account. Where a case is being handled on a contingent fee basis, fees will have to be apportioned. The decision on how fees will be split does not need to comply with requirements of RPC 1.5(e).”

4. A lawyer may solicit his/her former clients. “Once the lawyer is established in her new practice she may solicit the clients that she represented at the former firm. See, e.g., Oregon RPC 7.2(a)(2) (allowing a lawyer to solicit personally former clients); and Oregon RPC 7.2(c) (requirement that written solicitation of a person known to be in need of legal services in a particular matter be labeled as an “advertisement” does not apply to persons specificied in 7.2(a)).” I glad that Ms. Hieschbiel included this point in her article. If both the departing lawyer and the firm can keep this in mind, contacting the clients will be viewed in the correct perspective and it will be easier to do what is right by the client.

Hopefully, if you have read this post, you can share it with either someone who is leaving their firm or someone who is being left. I hope you can take a few minutes to read–or re-read– the article from Helen Hierschbiel linked above. Most of all, I hope that both parties can get through this transition ethically and professionally so they can get back to the business of practicing law.