2007 “Earning, Collecting & Keeping Attorney’s Fees” by Daniel D. Horowitz, III

2007 “Earning, Collecting & Keeping Attorney’s Fees” by Daniel D. Horowitz, III Abraham, Watkins, Nichols, Sorrels, Matthews & Friend

First things FirstTerms of the Contract • More information the better • Scope of the engagement • Waiver of conflict • Hourly rate & billing increments • Permission to withdraw for nonpayment • Arbitration agreements • Non-refundable retainer

Waiver of Conflict • WAIVER OF CONFLICT OF INTEREST • RULE 1.06 • Rule 1.06 of State Bar Rules provides that a lawyer may not represent opposing parties to the same litigation except in certain circumstances. The standard fee agreement contract of this office provides that you understand and acknowledge that an attorney-client relationship does not commence until the initial fee requirements of said contract have been paid, i.e. “the retainer.” The initial consultation fee is separate from the retainer amount. If you decide not to hire the office of Divorce Lawyer and the opposing party makes an appointment and pays the initial fee requirement, you are being informed fully that any thing you say during the initial consultation, may and will be used against you and by signing below are fully informed of the nature and implications and possible adverse consequences and so consent to the subsequent representation pursuant to Rule 1.06(c)(2). • ___________________________________ _________________________________ • NAME DATE • ___________________________________ • WITNESS

Hourly Rate: How much is too much? • Does it pass the smell test? • Time & labor required • Difficulty of questions/skill required • Fee customarily charged in locality for similar legal services • Amount involved • Time limitations imposed by Client • Nature & length of professional relationship with Client • Experience of lawyer performing the services

Billing Increments • .1 • .25 • .50 (Is it still used?)

Permission to Withdraw • Put paragraph in the contract regarding permission to withdraw if fees are not paid • Bold language in contract • Have client initial the paragraph • Does not relieve attorney’s obligation under Rule 1.15 or Court’s procedure

Arbitration Agreements • Are they enforceable • Do you want it • Henry v. Gonzalez, 18 S.W.3d 684 (Tex. App.-San Antonio 2000), pet. dism'd by agr. • Noticeable, Sufficiently Conspicuous, and Prominently Displayed • Can’t limit liability of lawyer

Non-Refundable Retainers • Subject to reasonableness standard • Texas ethics opinion 431 • “A fee is not earned simply because it is designated as non-refundable” • “Not inherently unethical, but must be utilized with caution” • Preclusion of other employment; experience, reputation & ability of lawyer • Make very clear in the contract • Bill against the retainer

You Do the Work & Don’t Get Paid! • Withdraw from case • Sue your client • Intervene in pending litigation • Arbitration/Mediation • HBA Fee Dispute Center

Motion to Withdraw • Rule 1.15 of Professional Conduct Subsequent to the employment of the undersigned counsel, and after considerable effort had been expended in preparing Respondent’s case, the undersigned attorney has determined that he will be unable to effectively represent Respondent due to the uncooperative attitude of Respondent in the preparation of his case. Further, good cause exists for withdrawal of DEWY CHEATEM as counsel, in that he is unable to effectively communicate with DEAD BEAT CLIENT in a manner consistent with good attorney-client relations and for failure to fulfill his contractual obligations (nonpayment of attorney’s fees).

Status of Case A copy of this motion has been delivered to DEAD BEAT CLIENT, who has been notified in writing of his right to object to this motion. DEAD BEAT CLIENT has not consented to this motion. The last known address of DEAD BEAT CLIENT is1006 Heartbreak Hotel, Nowhereville, Texas 77520. Petitioner’s responses to Respondent’s First Set of Interrogatories to Petitioner, LYING CHEATING SPOUSE, Request for Disclosure, and Request for Production are due on February 24, 2006. There are no other pending settings or deadlines.

Notice to Client You are hereby notified that this Motion for Withdrawal of Counsel is set for hearing at the time and place stated below. You do not have to agree to this motion. If you wish to contest the withdrawal of DEWY CHEATEM as your attorney, you should appear at the hearing. If you do not oppose DEWY CHEATEM's withdrawal as your attorney, you may notify DEWY CHEATEM in writing of your consent to this motion.

Sue Your Client • Breach of contract = attorney’s fees • Is it worth it? Counterclaim by client for malpractice, or excessive fees • Be prepared and have your own house in order • Is it collectible • Do you have the time

Arbitration/Mediation • Same issues as suing your client. • Arbitration may not be any cheaper. • Again, can you collect?

HBA Fee Dispute Center • Arbitration process and binding on both parties • Panel consists of two attorneys & one lay person • www.hba.org for more information • 713-759-1133

Can you still receive referral fees?

Brief Timeline of Events October 9, 2003 – Texas Supreme Court Proposes TRCP 8a June 4, 2004 -- Final report is presented to the SBOT Board, which votes and asks the Supreme Court to hold a referendum

Why Not Rule 8a? • Proposed Rule 8a included a cap on the amount of referral fees • Required public disclosure of all fee arrangements by way of court filings • Required a court hearing whenever a party questions the validity of a fee arrangement

Rule 8a capped referral fees at 15% of the total fee or $50,000, whichever was LESS

Many individual attorneys and the SBOT objected and argued that the changes as proposed would be unconscionable.

Note: Only Florida has a cap regarding referral fees similar to what was proposed in Texas in 2003.

Public disclosures under Rule 8a required attorneys to file referral fee distributions and or agreements with the court, thus creating a public record

Note: Texas would have been the ONLY state with this kind of rule.

There was an unresolved conflict inherent with the proposed TRCP Rule 8a between TRCP & TDRPC • Specifically, Rule 8a would not have applied to Federal Court cases • Would not have applied to cases settled without suit being filed • Would not have clearly given jurisdiction of rule violations to the SBOT

QUESTIONS ADDRESSED BY SUPREME COURT • Will restrictions on Referral Fees impair what has been viewed as their beneficial purpose of obtaining the best representation for clients? • Do Referral Fees harm clients? • Do Referral Fees adversely affect the Profession? • Should Referral Fees be capped by rule? • Should Referral Fees be disclosed to the client & public?

Mar. 1, 2005 New referral fee rules become effective.

Modified Rule 1.04 • Eliminates the “Pure” forwarding fee for attorneys who do not work on a case but refer it to another attorney • Requires written consent by client disclosing division of fees arrangement • Lawyer Referral Programs are exempt • TDRPC Rule 1.04:

YOU HAVE 2 OPTIONS • Proportion of Services Performed • Joint Responsibility

Proportion of Services Performed • Each lawyer performed substantial legal services on the matter. • Each lawyer performed services beyond initially acquiring and signing up the client. • There must be a reasonable correlation between services performed and the split of the fee.

Joint Responsibility • Joint responsibility involves ethical, and possibly financial responsibility for the representation. • The referring attorney must make sure the lawyer handling the matter is competent to handle it.

Client Consent • Require that an arrangement for division of fees be acknowledged in writing by the client when he or she enters into an agreement for representation. • The agreement should reflect how fees and representation will be divided among the attorneys. • Must disclose whether fees are being divided based on joint responsibility or proportion of services rendered.

Sample POA Language: Joint Responsibility • Client understands and is advised that this case has been referred to Abraham, Watkins, Nichols, Sorrels, Matthews & Friend and specifically consents to the association of Abraham, Watkins, Nichols, Sorrels, Matthews & Friend and ___________________________ (“Referring Attorney”) in the handling of this case. Client agrees, consents and understands that the law firm of Abraham, Watkins,

Continued… • Nichols, Sorrels, Matthews & Friend and __________________ (“Referring Attorney”) are assuming joint responsibility for the representation of Client in the above described incident. At the conclusion of the case, if a recovery is made on behalf of Client, of the total fee paid, (___%) will be paid to Associated Counsel and (___%) will be paid to Referring Attorney. The referral fee to be paid will not increase the total fee owed by Client.

Continued… • Client’s signature at the end of this Agreement indicates his/her understanding and consent to the division of fees and the referral fee which will be paid.

Fee for Services Performed • Client understands and is advised that this case has been referred to Abraham, Watkins, Nichols, Sorrels, Matthews & Friend and specifically consents to the association of Abraham, Watkins, Nichols, Sorrels, Matthews & Friend and ___________________________ (“Referring Attorney”) in the handling of this case. Client agrees, consents and understands that the law firm of Abraham, Watkins,

Continued… • Nichols, Sorrels, Matthews & Friend and __________________ (“Referring Attorney”) are assuming joint responsibility for the case and attorneys fees will be divided based on a proportion of the work services performed by them. The division of fees will correlate to the services performed by the Referring Attorney and Associated Counsel.

Continued… • Although it is unknown precisely the proportion of the work to be performed by the attorneys at this time, it is anticipated that the services performed by the Referring Attorney and Associated Counsel will be proportioned (___%) and (___%) between Referring Attorney and Associated Counsel.

Continued… • Accordingly, it is anticipated that the attorneys fees will be divided in the same proportion. In any event, the Referring Attorney will receive no more than 50% of the total attorneys fees recovered under this agreement. The referral fee to be paid will not increase the total fee owed by Client. Client’s signature at the end of this Agreement indicates his/her understanding and consent to the division of fees and the referral fee which will be paid.

Now You Have It –Make Sure You Keep It! • Fee forfeiture • Burrow v. Arce, 997 S.W. 2d 229 (Tex. 1999)

Fee Forfeiture • Equitable remedy in breach of fiduciary duty case • Plaintiff/former client not required to prove actual damages • The Court determines if and how much of the fee will be forfeited

Factors Court Considers • Gravity & timing of violation • Willfulness of violation • Effect of violation on the value of lawyer’s work for the client • Adequacy of other remedies • Public interest in maintaining the integrity of attorney-client relationship

THE END Daniel D. Horowitz, III Abraham, Watkins, Nichols, Sorrels, Matthews & Friend 800 Commerce Street Houston, Texas 77002 713-222-7211 dhorowitz@abrahamwatkins.com

2007 “Earning, Collecting & Keeping Attorney’s Fees” by Daniel D. Horowitz, III