Fees, Billing, and Client Property
This domain tests the intersection of fee agreements, trust accounting, and the duty to deliver client property. The recurring exam question is: whose money is it, and where must it sit right now?
Fees: Rule 1.5
Reasonableness is judged by factors including time and labor, novelty and difficulty, skill required, preclusion of other employment, customary fees, the amount at stake, time limits, the lawyer's experience, and whether the fee is fixed or contingent. The basis and rate should be communicated, preferably in writing, before or within a reasonable time after representation begins; changes require notice. Contingent fees must be in a writing signed by the client stating the percentage, expenses, and whether expenses are deducted before or after the fee is computed, with a written statement of the outcome at the end. Contingent fees are barred in criminal cases and domestic-relations matters.
Client property: Rule 1.15
Client and third-party funds go into a trust account, separate from the lawyer's own money; commingling is prohibited except for funds needed to cover bank charges. Earned fees may be withdrawn when earned, with an accounting. On receipt, the lawyer must promptly notify the client and deliver funds or property the client is entitled to receive. Disputed portions stay in trust until the dispute is resolved; undisputed portions go out promptly. Advances that are unearned must be refunded.
Worked example
A $60,000 settlement arrives. The agreement says the lawyer receives 40 percent of the gross recovery, and the client argues costs should come out first. The writing controls if unambiguous; if ambiguous, it is construed against the drafter and tested for reasonableness under Rule 1.5(a). Either way, the entire $60,000 goes into trust, the undisputed net is paid promptly, and the disputed amount remains in trust. Retaining the whole check violates Rule 1.15.
Traps
- Using trust funds for firm expenses or to cover another client's shortfall.
- Treating a flat fee as fully earned on receipt without addressing refundability.
- Billing clerical or secretarial time at lawyer rates.
- Failing to define 'costs' and whether they are deducted before or after the percentage.
- Adding interest or late charges that were never disclosed to the client.