UNEARNED RETAINER CLAIMS

Transcription

1 UNEARNED RETAINER CLAIMS NATIONAL CLIENT PROTECTION ORGANIZATION, INC. Northeast Regional Workshop Boston, Massachusetts October 30, 1998 Prepared by: Pennsylvania Lawyers Fund for Client Security 5035 Ritter Road, Suite 900 Mechanicsburg, Pennsylvania (800)

2 1. Money Paid to Attorney - No Work Performed - No Written Fee Agreement Claimant pays Attorney $500 on February 1 for a no-fault divorce. Attorney deposits check into his business checking account. Claimant telephones Attorney on May 1 to inquire as to the status of Claimant s divorce. Claimant is advised that Attorney is not available. Claimant leaves message. Attorney does not return Claimant s calls for several months. Claimant finally writes a letter to Attorney on July 1 terminating his/her services, and demanding a refund of the $500 and the return of all documents which were given to Attorney. Attorney fails to respond to Claimants demand for a refund and fails to forward Claimant s file. 2. Retainer not deposited into escrow account 3. Nonresponse of Attorney

3 2. Money Paid to Attorney - No Work Performed - Written Fee Agreement Which Contains Non-Refundable Language Claimant pays Attorney $5,000 on June 1 for representation in a criminal matter. Claimant signs a fee agreement which contains a provision that the $5,000 retainer is non-refundable as it is the minimum charge predicated on my opening your file and undertaking your legal representation. Attorney deposits check into his business checking account. Claimant telephones Attorney June 15 to inquire as to the status of Claimant s hearings, etc. Claimant leaves message. Attorney does not return Claimant s calls. Attorney appears at Claimant s hearings on July 1 and August 1 only to request a continuance each time. Claimant is dissatisfied with the attention Attorney is giving his/her case. Claimant advises Attorney on August 3 that Attorney s representation is terminated and demands a refund of the $5,000 retainer and the return of all documents which were given to Attorney. Attorney forwards Claimant s file which contains only the documentation which Claimant provided to Attorney at the initial consultation. Attorney advises Claimant that no portion of the $5,000 will be returned as the fee agreement stated the retainer was nonrefundable. 2. Form of fee agreement 3. Amount of work performed on behalf of Claimant 4. Understanding of Claimant as to the language contained in the agreement 5. Would it matter if Attorney attended one 20-minute hearing and met with Claimant for one 15-minute conference?

4 3. Money Paid to Attorney - No Written Fee Agreement - Minimal Work Claimant pays Attorney $1,000 on December 1 for representation in a custody matter. Attorney deposits check into his business checking account. On December 20, Attorney sends a letter to opposing counsel advising of Attorney s representation of Claimant. Attorney also sends a letter to Claimant s employer requesting information. Claimant telephones Attorney January 10 to inquire as to the status of Claimant s case. Claimant is advised that Attorney is not available. Claimant leaves message. Attorney does not return Claimant s calls. Attorney has no further communication with opposing counsel or Claimant. Claimant is dissatisfied with the attention Attorney is giving his/her case. Claimant advises Attorney on March 31 that Attorney s representation is terminated and demands a refund of the $1,000. Attorney does not respond to Claimant s request for a refund. 2. Value of work performed

5 4. Money Paid to Attorney - No Written Fee Agreement Claimant States No Work Performed - Attorney States Work Performed Claimant pays Attorney $3,000 in cash on March 15 for preparing a brief to the appellate court. Attorney deposits cash into his business checking account. The deadline for filing the brief is May 10. Claimant contacts Attorney on April 10 requesting the status of the brief. Attorney is not available and does not return Claimant s communication. No brief is filed on behalf of Claimant. Claimant seeks the return of the $3,000. Attorney states that he/she researched Claimant s case and determined that there were no viable grounds for an effective appeal to be filed. Attorney claims that the $3,000 retainer was used to compensate Attorney for his/her research time. Attorney has no time records to substantiate the amount of time expended on Claimant s case. 2. Substantiation of work product 3. Burden of proof for each party

6 5. Money Paid to Attorney - No Work Performed Attorney Disbarred - Disbarment Unknown to Claimant Claimant requests Attorney to pursue a personal injury claim for a slip and fall accident at the local supermarket. (Attorney is suspended or disbarred at time of acceptance of Claimant s case.) Attorney requires Claimant to pay a retainer of $2,000 to cover the costs of pursuing the litigation. Claimant makes periodic inquiries of the attorney as to the status of the case and Attorney continually advises Claimant that everything is under control. One year after paying cost retainer, Attorney disappears. Claimant discovers that Attorney failed to file a complaint. 2. Attorney s suspension/disbarment - (i) any difference if attorney disbarred before or after acceptance of cost retainer; (ii) what if Attorney is licensed in neighboring jurisdiction, but not in Claimant s residence jurisdiction 1. Duty of Claimant to confirm Attorney s status 2. Prior attorney/client relationship

7 6. Flat Fee Paid to Attorney for Completion of a Matter Attorney Failed to Complete the Matter Claimant pays Attorney $6,500 for representation of an estate. Attorney corresponds with insurance companies and several financial institutions. Claimant keeps Attorney informed regarding the liquidation of estate assets. Claimant receives a notice from the taxing authorities indicating that a death tax return has not been filed and no taxes have been paid. Attorney subsequently prepares a draft death tax return but fails to file the return. Attorney is terminated. Claimant s new counsel must reconstruct the estate administration, prepare and file a more complete return and the estate has incurred penalties and interest on the delinquent death taxes. Attorney refuses to refund any portion of the $6,500 fee claiming work was performed on behalf of the estate. 2. Understanding of the parties as to the basis of the fee 3. Value of work performed by Attorney 4. Should credit be given for fees when the Attorney has control over the estate checking account, prepares and files the necessary return, but misappropriates all or a portion of the estate funds?

8 7. Tips and Pointers Have a fee dispute committee/arbitration panel evaluate the Attorney s work. Have Claimant s new counsel advise if any of the former attorney s work was useable. Examine claim to see if there is a point at which it is clear that the attorney stopped earning fees and should have returned the unused portion of the retainer. Is the basis for the claim a complaint about excessive fees or a complaint about the results of the matter? Has Claimant made any attempts to resolve the matter through arbitration or civil litigation before filing claim?* Notes