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Chapter Six Fees and Client Funds

Chapter Six Fees and Client Funds. In this chapter, you will learn about: How fee arrangements are made with clients, including fixed fees, contingency fees, and hourly fees Alternative fee arrangements Factors in determining if a fee is unethically excessive Unethical billing practices

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Chapter Six Fees and Client Funds

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  1. Chapter SixFees and Client Funds In this chapter, you will learn about: • How fee arrangements are made with clients, including fixed fees, contingency fees, and hourly fees • Alternative fee arrangements • Factors in determining if a fee is unethically excessive • Unethical billing practices • Communication of fee agreements with clients • Terms included in fee arrangements Page 1 of 2

  2. Chapter SixFees and Client Funds (continued) • Award of attorney’s fees under fee-shifting statutes • Inclusion of paralegal fees in fee awards • Fee-splitting and referral fees • Partnerships between lawyers and non-lawyers and trends in this area • Client funds and client trust accounts Page 2 of 2

  3. Types of Fees • Fixed fees: Fee for legal services based on a set amount • Contingency fees: Fee depends on the successful outcome of a case and is based on a percentage of the recovery • Hourly fees: Fee based on hourly rates and the amount of time actually expended

  4. Ethics Rules about Fees Factors to determine whether a fee is unethically high: • the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly • the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer • the fee customarily charged in the locality for similar legal services • the amount involved and the results obtained • the time limitations imposed by the client or by the circumstances Page 1 of 2

  5. Ethics Rules about Fees • the nature and length of the professional relationship with the client • the experience, reputation, and ability of the lawyer or lawyers performing the services, and • whether the fee is fixed or contingent Slide 2 of 2

  6. Fee Shifting • Award of the attorney’s fees to the prevailing party

  7. What a Fee Agreement Covers • The scope of the firm’s services • Responsibilities of the client and the firm • The method of determining the fee • Rates for different professionals if services are billed hourly • Costs the client is obligated to pay and when • Termination rights for both parties • Disposition of client files at the end of the matter • The method and time of fee payment • The procedure for and frequency of billings

  8. Retainer • A retainer is a fee paid at the commencement of agreed-upon work, to assure the availability of the lawyer to handle specified matters

  9. Documentation for Court to Award Paralegal Fees • Credentials and experience of paralegals • Detailed descriptions of the work performed, including the number of hours spent on each discrete task • Information on paralegal compensation, overhead allocated to paralegals, and hourly rates • Market data on practices and rates in the legal community

  10. Commingling • Commingling is the mixing of client funds with lawyers’ funds.

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