Harry B. Sondheim Re: Proposed changes to Model Rule 1.5 (Draft No. 1, 4/20/99) - Center for Professional Responsibility

STATE BAR OF CALIFORNIA
STANDING COMMITTEE ON
PROFESSIONAL RESPONSIBILITY AND CONDUCT

July 20, 1999

American Bar Association
Commission on the Evaluation of the
Rules of Professional Conduct
Attention: Susan Campbell
541 North Fairbanks, 14th Floor
Chicago, IL 60611

Re: Proposed changes to Model Rule 1.5 (Draft No. 1, 4/20/99)

Dear Commissioners:

I write on behalf of the State Bar of California's Standing Committee on Professional Responsibility and Conduct (COPRAC), whose activities are funded in part by the Foundation of the State Bar of California.

We offer the following comments on the above-referenced draft.

1. Scope of unconscionability standard. We were glad to see from the Commission's May minutes that the unconscionability standard will apply broadly to making an agreement for, charging or collecting an unconscionable fee.

2. Factors determining whether fee is reasonable.

(a) Subsection (a)(2) requires that it be "apparent to the client" that acceptance of the matter will preclude other employment by the lawyer. We do not understand the basis for this requirement, which seems impractical to us. Must a lawyer accepting a matter lay out and summarize the lawyer's docket to the client to invoke this factor?

(b) Subsection (a)(4) refers to the "amount involved and the results obtained." This language does not contemplate matters in which non-monetary relief is sought. With the increasing use of alternative fee arrangements, the rule should anticipate contingency fee arrangements in all types of matters.

(c) California's equivalent of Rule 1.5 includes the sophistication of the client as a factor to consider in assessing whether a fee is unconscionable. Cal. R. Prof. conduct 4-200(B)(2). The Restatement also includes this as a factor to consider, and we suggest that the Commission consider including it as well.

3. Requirement to disclose basis for fee in writing. Subsection (b) requires a written disclosure of key facts concerning the lawyer's fee. We support this requirement but see some need for fine-tuning. For instance, the rule does not explain what happens if the lawyer fails to communicate the arrangement as required by this subsection. In California, a lawyer who fails to obtain a written fee agreement when she is required to do so may recover only under quantum meruit. Also, the rule does not explain what happens if a fee estimate cannot be made or turns out to be wide of the mark. Does an inaccurate estimate act as the equivalent of giving no estimate at all? Is the standard for the estimate subjective or objective? Further, the proposed rule does not exempt de minimus or emergency situations, as we think it should.

4. Payment upon discharge of lawyer. Subsection (b) seems to condition the client's right to discharge an attorney upon payment of fees, unless the discharge is for "cause." We do not think the client's right to discharge the lawyer should be so limited. Further, if the rule is to distinguish between discharges with and without "cause," then the rule or its comments should define what that term means.

5. Contingent fees. Comment [2] seems unreasonably restrictive on contingent fees. It is very difficult to judge, in hindsight, the risk that a contingency "will not occur." If the rules are unduly restrictive on contingent fees, then people of limited means may find their access to legal services greatly reduced. Our concerns might be alleviated by focusing more on the amount of time that the lawyer can expect to spend on the matter, and on the financial risk that the lawyer will take in financing out-of-pocket costs, instead of on the chance that the contingency will not occur.

6. Paying a fee with property. Comment [3] recognizes that if a fee is paid with property other than money, it might have the essential qualities of a business transaction with the client, thus triggering Rule 1.8(a). We believe that this analysis requires further consideration, because fees and fee agreements are not areas in which a "conflict of interest" usually arises by virtue of the fee arrangement alone. Doesn't the general reasonableness standard cover this issue, if the concern is that a lawyer might obtain property that is greatly disproportionate to the value of the lawyer's work?

This comment from the State Bar of California Standing Committee on Professional Responsibility and Conduct does not constitute the position of the State Bar of California or its Board of Governors. The Board of Governors is free to submit its own comment on behalf of the State Bar of California.

Sincerely,

  

Harry B. Sondheim,
Chair

cc: Board of Governors
COPRAC members
Randall Difuntorum, Esq., COPRAC Staff Counsel

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