Tag Archives: nonrefundable fees

Florida Supreme Court adopts Bar Rules defining retainer, flat fee and advance fees and clarifying deposits of fees

 

Hello and welcome to this Ethics Alert which will discuss the recent opinion of the Supreme Court of Florida which adopted Bar Rules which define retainer, flat fee and advance fees and clarifying deposit of fees.  The opinion is In Re: Amendments to Rules Regulating The Florida Bar 4-1.5—Fees and Costs for Legal Services, No. SC14-2112 (September 17, 2015) and the opinion is here: http://www.floridasupremecourt.org/decisions/2015/sc14-2112.pdf  The amendments will become effective on October 1, 2015.

The opinion adopted amendments filed by The Florida Bar adding subdivision (2) to Florida Bar Rule 4-1.5, which defines the terms retainer, flat fee and advance fee.  The amendment also adds language to the Comment under “Terms of payment” stating that nonrefundable flat fees and nonrefundable retainers should not be deposited into the lawyer’s trust account; however, advance fees must be held in trust until earned.  The Comment also states that nonrefundable fees can still be excessive.

The amendment also moves the language in the Comment regarding contingent fees in criminal and domestic relations cases under the header “Prohibited contingent fees.”

Bottom line: these amendments to Rule 4-1.6 resulted from recommendations made by the ABA Ethics Commission 20/20.  As I pointed out in a previous Ethics Alert, the current amendments were drafted after an earlier attempt by The Florida Bar to place definitions in the Comment to Rule 4-1.5 was rejected by the Florida Supreme Court in an opinion stating that any definitions should be in the rule.

Be careful out there.

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

 

 

 

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Filed under Attorney Ethics, Excessive fee, Florida lawyer trust accounts, joe corsmeier, Joseph Corsmeier, Lawyer escrow accounts, Lawyer ethics, Lawyer Ethics and Professionalism, lawyer excessive fee, Lawyer nonrefundable fees, Lawyer trust accounts, Lawyer unreasonable fee

The Florida Bar’s Board of Governors considers revisions to confidentiality, trust account and fee rules and include definitions of retainers, flat fees, and advance fees

Hello and welcome to this Ethics Alert blog which will discuss the recent Notice of the Florida Bar’s Board of Governors of its intent to consider changes to the Rules Regulating The Florida Bar. The Notice is in the February 15, 2014 Florida Bar News and is on the Bar’s website here: http://www.floridabar.org/DIVCOM/JN/jnnews01.nsf/8c9f13012b96736985256aa900624829/d77053b5698a70ef85257c7b004b3384!OpenDocument

The most significant of the proposed revisions would amend Rule 4-1.6 to permit lawyers and law firms to reveal some confidential client information when a lawyer is changing law firms or law firms are merging if the confidential information will not injure the client. The proposed change to Rule 4-1.6 would add subsection (c)(6) to provide for limited disclosure of information “to detect and resolve conflicts of interest between lawyers in different firms arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.” Language would also be added subsection (e) to provide that, “A lawyer must make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”

Another proposed revision would amend Rule 4-1.5 stating that nonrefundable fees are considered earned on receipt and must not be placed in lawyers’ trust accounts and also providing a definition for retainers, flat fees, and advance fees. The Comment to Rule 4-1.5 would also provide, “A nonrefundable retainer or nonrefundable flat fee is the property of the lawyer and should not be held in trust. If a client gives the lawyer a negotiable instrument that represents both an advance on costs plus either a nonrefundable retainer or a nonrefundable flat fee, the entire amount should be deposited into the lawyer’s trust account, then the portion representing the earned nonrefundable retainer or nonrefundable flat fee should be withdrawn within a reasonable time. An advance fee must be held in trust until it is earned. Nonrefundable fees are, as all fees, subject to the prohibition against excessive fees.”

The proposed revisions would also amend Rule 5-1.1 and create an exception within subdivision (a)(1) related to commingling to permit a lawyer to deposit sufficient funds into the lawyer’s trust account to make up a shortfall in the trust account caused by misappropriation, bank error, bank charge or a bounced check.

The amendments to Rule 4-1.6 resulted from recommendations made by the ABA Ethics Commission 20/20 and, as I pointed out in a previous Ethics Alert, the amendments to Rule 4-1.5 resulted from an earlier attempt by The Florida Bar to amend the Comment to Rule 4-1.5 which was rejected by the Florida Supreme Court in an opinion stating that any definitions should be in the rule, not the comment. According to the Notice, if you would like a copy of the text of any of the proposed amendment, you can e-mail jgreen@flabar.org or call Janellen Green at (850) 561-5751. You should refer to the title or item number and the date of publication (2/15/14).

Bottom line: If approved by the BOG and implemented by the Florida Supreme Court, these rule revisions would clarify issues related to confidentiality when a lawyer leaves a law firm and/or the law firm is purchased, prevent lawyers who place funds into a trust account to reduce shortages from being charged with commingling, clarify the nature of a non-refundable fee, and provide definitions for retainers, flat fees, and advance fees.

Be careful out there!

Disclaimer: this Ethics Alert is not an advertisement and is for informational purposes only. It does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
jcorsmeier@jac-law.com
http://www.jac-law.com

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Filed under Attorney Ethics, Attorney/client confidentiality, Attorney/client privilege and confidentiality, Confidentiality and privilege, Departing lawyer and law firm responsibilities, Florida Bar, Florida Lawyer Ethics and Professionalism, joe corsmeier, Joseph Corsmeier, Lawyer escrow accounts, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer trust accounts

Dodd-Frank unlimited lawyer IOTA funds FDIC deposit insurance provision apparently was not renewed by Congress and expired on 12/31/12 and only trust funds up to $250,000.00 per client ledger will be insured

Hello everyone and welcome to this Ethics Alert blog to advise everyone of the apparent expiration on December 31, 2012 of the Dodd-Frank Deposit FDIC Insurance provision which provided for the unlimited deposit insurance coverage for Interest on Lawyer Trust Accounts (IOLTAs) which are called IOTA trust accounts in Florida.

The federal insurance will now only cover up to $250,000.00 per client ledger within the lawyer’s trust account.  An FAQ post from the FDIC website is here: http://www.fdic.gov/deposit/deposits/unlimited/expiration.html

Bottom line:  If this affects your practice and your IOTA trust account liability, you should plan accordingly.  You can also contact your U.S. Representatives and Senators regarding reinstatement of the deposit insurance coverage.

Be careful out there!

Disclaimer: this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

 

 

 

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Florida Bar Ethics Opinion 93-3 states that fees designated as “non-refundable” may be excessive and prohibited under certain circumstances

Hello and welcome to this Ethics Alert blog which will discuss Florida Bar Ethics Opinion 93-2, which discusses, inter alia, the propriety and effect of the designation of a fee as “non-refundable”.  As I reported in a recent Ethics Alert, the Rules Committee of the Florida Bar’s Board of Governors voted not to move forward with a proposed Bar rule amendment which would have prohibited lawyers from charging non-refundable fees.  The proposed rule amendment was opposed by, among others, the Florida Association of Criminal Defense Lawyers (FACDL).  If it had been pursued, the proposed revision would have reversed the very long standing practice of permitting non-refundable fees and Florida Bar Ethics Opinion 93-2, which opines that non-refundable fees are arguably permitted, with certain caveats.

Florida Bar Ethics Opinion 93-2 was finalized on October 1, 1993, addressed 6 questions related to attorney’s fees, including non-refundable fees.  Question 5 is below:

“If a substantial nonrefundable fee is paid to the attorney and, before any services are performed by the attorney, the client dies, or discharges the attorney, or the services called for by the attorney-client employment agreement are no longer needed for some other reason, could the attorney be subject to discipline for charging a clearly excessive fee in violation of Rule 4-1.5(a) in the event of a refusal to refund any of the ‘nonrefundable fee?'”

The Professional Ethics Committee’s response and opinion is below:

“As we stated in Opinion 76-27 [since withdrawn], the lawyer might but would not necessarily be guilty of charging an excessive fee. Again, we get into definitions of terms. We interpret the question as referring to a payment by a client to a lawyer of a sum of money designated as “nonrefundable fee,” part of which is intended to compensate the lawyer for being available but not for specific services, and part of which is intended as a present payment for legal services to be performed in the future. If the lawyer performs no legal services, obtains no benefits for the client, and has not lost other employment opportunities as a result of agreeing to represent the client, we believe the lawyer might well be guilty of charging an excessive fee if no part of it was refunded.  Dealing with an abstract situation, we cannot be more precise.

On the other hand, an attorney of towering reputation just by agreeing to represent a client may cause a threatened lawsuit to vanish and thereby obtain a substantial benefit for the client and be entitled to keep the entire amount paid, particularly if other employment had been lost or declined in order to represent that particular client.

The Committee does not believe that, by designating a retainer as nonrefundable, a lawyer is automatically insulated from a claim that the fee is excessive. Whether or not the fee is excessive under the circumstances is governed by Rule 4-1.5 rather than use of the description ‘nonrefundable.'”

Bottom line:  Lawyers in Florida must be aware that the designation of a fee as “non-refundable” does not necessarily make it so.  According to Ethics Opinions 93-3, which is not binding or precedential, but may be persuasive, a lawyer who “performs no legal services, obtains no benefits for the client, and has not lost other employment opportunities as a result of agreeing to represent the client…might well be guilty of charging an excessive fee if no part of it was refunded.”

Be careful out there!

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer: this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

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Filed under Attorney discipline, Attorney Ethics, Ethics opinions fee retainers and nonrefundable fees, Florida Lawyer Ethics and Professionalism, joe corsmeier, Lawyer discipline, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer ethics opinions, Lawyer ethics opinions nonrefundable fees