Changing the Flat Fee – Oops
Fees are a difficult issue for lawyers, how much to charge and how to get paid are on the lawyer’s mind in nearly every engagement. More flat fees are being used, as objections to the scope and nature of an hourly fee basis are growing. Indiana’s rule on increasing a firm fee that is to be charged to a client is the minority rule. But it is the rule.
It appears the purpose of Indiana’s rule is to protect the client during a change in the relationship, and in theory it does just that. Changing a relationship and fee during the midst of a matter could lead to overreaching or abuse. The rule attempts to alert the client to that possibility.
The lawyer needs to know how to protect herself as well as the client, and while the fees are governed by Rule 1.5 of the Rules of Professional Conduct, the change in relationship rule is in Rule 1.8 of the RPC.
The lawyer is to tell the client, in writing: “You are advised of the desireability of seeking, and be given a reasonable opportunity to seek, the advice of independent legal counsel on the change in our legal fee transaction; and you (the client) are to give informed consent, in a writing signed by the client, to the essential terms of the transaction, and to the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.”
How often a client will seek an independent opinion in a timely way is doubtful. But the file must have these two written documents.
Indiana and at least two other states consider a modification of the fee agreement to be a new business arrangement with the client, and so the Rule 1.8 business warnings are required. Prominent Indianapolis lawyer Bob Hammerle found out the hard way.
Hammerle took on defense of a criminal case for Ed Blinn Jr., and they agreed on a flat fee plus an hourly fee after five days of trial. So far, so good. As the case went on, the outcome must have looked grim for getting paid after the case was over for the hourly part of his fee. That is for the part billed after the services were rendered, and Blinn might be jailed. The client was refusing to negotiate for a plea. So, Hammerle orally offered to change the hourly billing portion to a flat fee, no matter how long the trial took. He forgot to check the rule on the change in the fee. Blinn verbally agreed, paid the fee (which is considered earned when paid, as a flat fee), then changed his mind, took a plea and wanted his extra fee back.
After Blinn sued and the courts decided that case Hammerle’s way (statute of limitations was missed by Blinn, but in addition the Court of Appeals went out of its way to say that no malpractice or unjust enrichment occurred), the Supreme Court Disciplinary Commission took over. The parties agreed to a Public Reprimand, for violation of Rule 1.5(a) charging an unreasonable fee, and Rule 1.8(a) entering a business transaction with a client without giving written notice of the desirability of seeking the advice of independent counsel on the change, and securing a written consent to the essential terms of the transaction.
Lawyers — changes to your fee agreements that could be considered to favor you, the lawyer, instead of your client, will be subject to the double whammy of 1.5/1.8. The Supreme Court said that the fee charged to Blinn was not unreasonable, if properly vetted by the Rule 1.8(a) standards. Without the 1.8 warnings, it was unreasonable (per se?).
Indiana, New York and New Hampshire have this 1.8 rule interpretation, no other reports are in the ABA Annotated Model Rules (6th Ed.). Is this the future of Rule 1.8 around the nation, or a misstatement of what the law ought to be? I think the later, but I give written 1.8 warnings, and get written consents anyway. You should too.
Calling the judge a pedophile cannot be a good thing
Outbursts at judges make you eligible for a contempt citation, and some deserve the action. Carlos Romious apparently missed the “civility day” lessons in law school. After one session where Romious asked sitting judge Mountjoy “if the proceeding is a joke” and stating that the judge was “corrupting and stinking up the case” and “corrupting the system” Romious was told to appear to answer to Contempt of Court charges. Normally the smarter lawyer cools off, apologizes to the court and to the judge, and hopes for a fine. Not Romious.
He appeared ready to fight. As reported in the Wall Street Journal law blog, he worked himself up to the point where he finally asked Judge Mountjoy: “Are you a pedophile?”
A four month sentence is a pretty long time to spend in jail for a lawyer trying to keep an office open. I think it would crimp the style, and cause some clients grave concern. But here it sounds about right. When in the heat of battle, a suggestion: Do not accuse the judge of anything, much less being a pedophile.
Dope Should Remain in the Pocket
More than one type of dope showed up in Court in New Orleans. The assistant city attorney for New Orleans had a bit of dope in his pocket when he appeared in court. That was a dopey thing to do, and he was the dope when a joint of marijuana fell on the floor in front of the two police officers he was chatting with, and who arrested him there. Not a serious crime, but Jason Cantrell lost his job and was publicly criticized by his wife, a candidate for city council. Lawyers, don’t be a dope.