Starting your client relationships off right can minimize your risk of liability. Your engagement agreement should set the tone and act as a road map. The sample hourly and contingent fee agreements published by the State Bar of California can be used as guides for your own agreement. However, these samples do not identify provisions that would violate California’s Rules of Professional Conduct (CRPC) and the law. Improper provisions frequently used by California lawyers include but are not limited to those that contravene the following principles:
- Advance fees paid for the performance of legal services are never non-refundable. Legal fees are refundable by law if not earned. CRPC 1.5, Comment ; CRPC 1.16(e)(2). Only true retainers paid to secure a lawyer’s availability are permitted to be non-refundable. CRPC 1.5(d). True retainers are rare and require the client’s informed written consent. No matter the creative language used in a fee agreement, treatment of the fees will determine the purpose and validity.
- A lawyer cannot require payment of the full contingency fee if discharged prior to obtaining recovery. The amount involved and result obtained are significant to the determination of a reasonable fee. CRPC 1.5(b). Premature termination does not give counsel any greater right to fees than would have been available if representation continued through resolution. Fracasse v. Brent (1972) 6 Cal.3d 784, 791.
- A lawyer shall abide by a client’s decision whether to settle a matter and cannot impair a client’s “substantive rights or the client’s claim itself.” CRPC 1.2(a), Comment ; Lemmer v. Charney (2011) 195 Cal.App.4th 99, 103-104. Lawyers are required to communicate settlement offers to their clients so the client can accept or reject the offer. CRPC 1.4; 1.4.1. A provision that states the client may not settle without counsel’s consent is void and unenforceable. Matter of Van Sickle (Rev. Dept. 2006) 4 Cal. State Bar Ct. Rptr. 980, 989; Lemmer at 105.
- A client can terminate the attorney-client relationship at any time without cause, but a lawyer cannot. It is improper to state that a lawyer may “automatically withdraw” from the matter, even if the client fails to pay fees and costs. Lawyers must adhere to CRPC 1.16. Prohibiting a client from substituting another lawyer without cause also violates public policy because the client’s power to discharge a lawyer with or without cause is absolute. Matter of Van Sickle at 989.
- The client’s papers and property belong to the client. Rose v. State Bar (1989) 49 Cal.3d 646, 655. The client is entitled to the original file at the end of the representation at the client’s request. CRPC 1.16(e)(1). A client can agree to pay for costs of copying the files in the fee agreement, but a lawyer cannot withhold the client’s files or property until costs or fees are paid. See CRPC 1.16(e)(1); Academy of California Optometrists, Inc. v. Superior Court (1975) 51 Cal.App.3d 999, 1005-06; CA Bar Formal Opn. Nos. 1994-134, 2001-157, and 2020-201.
About the Author:
Kendra Basner is an experienced litigator and certified specialist in legal malpractice law. She devotes her practice to counseling and advising lawyers, law firms, in-house corporate counsel, legal service providers and related businesses concerning legal ethics, risk management, and law practice planning and compliance with the unique perspective gained through advocating on behalf of lawyers in civil cases and State Bar discipline matters.