Chapter Six Fees and Client Funds In this chapter, you will learn about: How fee arrangements are made with clients, including fixed fees, contingency fees, and hourly fees Alternative fee arrangements Factors in determining if a fee is unethically excessive Unethical billing practices Communication of fee agreements with clients Terms included in fee arrangements Page 1 of 2

Chapter Six Fees and Client Funds (continued) Award of attorney’s fees under fee-shifting statutes Inclusion of paralegal fees in fee awards Fee-splitting and referral fees Partnerships between lawyers and non-lawyers and trends in this area Client funds and client trust accounts Page 2 of 2

Types of Fees Fixed fees: Fee for legal services based on a set amount Contingency fees: Fee depends on the successful outcome of a case and is based on a percentage of the recovery Hourly fees: Fee based on hourly rates and the amount of time actually expended

Ethics Rules about Fees Factors to determine whether a fee is unethically high: ◦ the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly ◦ the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer ◦ the fee customarily charged in the locality for similar legal services ◦ the amount involved and the results obtained ◦ the time limitations imposed by the client or by the circumstances Page 1 of 2

Ethics Rules about Fees ◦ the nature and length of the professional relationship with the client ◦ the experience, reputation, and ability of the lawyer or lawyers performing the services, and ◦ whether the fee is fixed or contingent Slide 2 of 2

Fee Shifting Award of the attorney’s fees to the prevailing party

What a Fee Agreement Covers The scope of the firm’s services Responsibilities of the client and the firm The method of determining the fee Rates for different professionals if services are billed hourly Costs the client is obligated to pay and when Termination rights for both parties Disposition of client files at the end of the matter The method and time of fee payment The procedure for and frequency of billings

Retainer A retainer is a fee paid at the commencement of agreed-upon work, to assure the availability of the lawyer to handle specified matters

Documentation for Court to Award Paralegal Fees Credentials and experience of paralegals Detailed descriptions of the work performed, including the number of hours spent on each discrete task Information on paralegal compensation, overhead allocated to paralegals, and hourly rates Market data on practices and rates in the legal community

Commingling Commingling is the mixing of client funds with lawyers’ funds.