Avoiding Malpractice in Times of Economic Turmoil

By Patrick T. Barone, author of Defending Drinking Drivers

With the economy continuing to falter and legal malpractice lawsuits on the rise, it is more important than ever to carefully draft your fee agreements.  In §321 of Defending Drinking Drivers (James Publishing) I discuss the various fees available to criminal law practitioners as follows: “The model rules of professional conduct provide three ways to bill for professional services: (i) an hourly rate; (ii) a fixed or “flat” fee; and (iii) a contingency fee. MRPC 1.5. However, contingency fees are not permitted in criminal cases. MRPC 1.5(d)(2).

Regarding the remaining two fee structures, there are potential advantages and disadvantages to both the hourly fee and fixed flat fee, and they should be considered in determining which fee to use. For example, the hourly fee is a better option for an attorney that does not have enough experience to be able to determine the number of hours that it will take to appropriately complete the representation.  The most common fee for DUI defense lawyers is the flat fee.

Flat fees are particularly appealing in tough economic times because they allow the client to better anticipate and budget for the legal services purchased.  Flat fees can be further catagorized to either refundable, partially refundable or non-refundable.  To further complicate the matter, fees are sometimes characterized as a “general retainer” or “advance fee.”  Each of these fees are discussed and defined supra at §322.

Of the different flat fees available, the type that causes the most problems are those labeled “non-refundable.”  Most commonly, the problems arise from a client’s decision to terminate the attorney/client relationship before the entire task originally contemplated has been completed.  In these instances, the question is always whether or not the entire flat fee has been earned, and if not, whether or not any portion of the fee should or must be returned.

In Grievance Adm’r, Attorney Grievance Com’n v.Cooper, 757 NW2d 867 (2008), the Michigan Supreme Court ruled that an attorney’s fee agreement, which had a nonrefundable fee of $4000 upon execution of the agreement, did not violate MRPC 1.16(d), which requires refunding to the client fees “any advance payment of fee that has not been earned.”  Additionally, the Court held that such an agreement does not violate MRPC 1.5(a) (excessive fees) or MRPC 1.15(b) (promptly paying client funds or property to which client is entitled).

In finding that the agreement was enforceable, the Court held:

As written, the agreement clearly and unambiguously provided that the respondent was retained to represent the client and that the minimum fee was incurred upon execution of the agreement, regardless of whether the representation was terminated by the client before the billings at the stated hourly rate exceeded the minimum.  So understood, neither the agreement nor the respondent’s retention of the minimum fee after the client terminated the representation violated existing MRPC 1.5(a), MPRC 1.15(b) or MRPC 1.16(d).

Id.

While most states have used the model rules as guide, the specific rules of professional conduct vary from state to state.  It is always a good idea to check with your specific state bar regarding the use of non-refundable fee agreements.  It appears however, that so long as the agreement is in writing, and the client clearly understands that the fee paid will be non-refundable under any circumstances, they may be allowed.  A well-written fee agreement is a great way to start a relationship that will not later foster a possible malpractice claim.

Patrick Barone, author of Defending Drinking Drivers is the principal and founding member of The Barone Defense Firm, whose practice is limited exclusively to defending drinking drivers. The Firm is headquartered in Birmingham, Michigan.


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Defending Drinking Drivers
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