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Spring Cleaning Your Legal Closet

Posted By Administration, Tuesday, May 10, 2011
Updated: Tuesday, May 13, 2014

By Shannon Stein, President 

‘Tis the spring time. The birds are singing. The birds are chirping. The sun is in the air. The air is cool not too hot and not too cold.  The days are longer and the nights shorter.  Exercise that took place inside is now taking place outside.  Baseball season is in full swing.

This time of year is known for “Spring Cleaning.”   Spring Cleaning means different things for different people. For some it is cleaning out your closet or the garage. (I admit I need to do both!) For others it is a time of reflection to think about where you are in your life and to contemplate where you are going.  For others, it begins the countdown to summer vacation.  (Though for most of us we still work through the summer.)  
As lawyers we are busy thinking about our clients, running our offices, dealing with opposing counsel and of course managing our personal lives as well.  We often do not “Spring Clean” things that are most important to our practice such as our retainer agreements.

When was the last time you read your retainer agreement? Is it up to date, meaning do you still follow the terms in it?  The following are some requirements that each retainer agreement should have.

In non-contingent matters, Section 6148 of the Business and Professions Code requires California attorneys to have written fee agreements with their clients whenever the client’s total expense, including fees, will foreseeably exceed $1,000 and to provide a duplicate copy of the fully executed agreement to the client.

The fee agreement must state:
(a)    Any basis for compensation including, but not limited to, hourly rates, statutory or flat fees, and other standard rates, fees and charges;  

(b)    The general nature of the legal services to be provided to the client;

(c)    The responsibilities of attorney and client under the agreement. 
Section 6148(b) requires attorneys to provide their clients with written billing statements. A client may request such statements at minimum intervals of 30 days. The attorney must provide a statement within 10 days after demand. All statements, whether requested by the client or not, must state "...the amount, rate and basis for calculation or other method of determination of the attorneys fees and costs." (subd.(b)).  (On a side note, this is also a good time, to insure that your bills are going out timely.  In my practice, I send out bills the first week of the preceding month of work. I am sad to say that I have taken over many cases from other lawyers where the lawyer took a client’s retainer agreement and yet never provided the client with a bill.)

In contingency fee agreements, Section 6147 of the Business and Professions Code contains the same requirements as non-contingency fee agreements (discussed above), including the requirement of a written fee agreement and a duplicate copy of the executed agreement being provided to the client.

There are additional requirements for contingency fee agreements. The agreement must include:
(a)    A statement of the contingency fee percentage amount.  
(b)    A statement as to how disbursements and costs will affect the contingency fee and the client’s recovery.  
(c)    A statement as to what extent, if any, the client could be required to pay any compensation to the attorney for related matters that arise out of their relationship not covered by their contingency fee agreement.  This may include any amounts collected for the client by the attorney.
(d)    Unless the claim is subject to the provisions of Business and Professions Code Section 6146 (Claim Against Health Care Provider), a statement that the fee is not set by law but is negotiable between attorney and client.  
(e)    If the claim is subject to Section 6146, a statement that the rates set forth in that section are the maximum limits for the contingency fee and that the attorney and client may negotiate a lower rate. If the matter involves a claim for injury or damage against a health care provider based upon negligence, the attorney should carefully review Business and Professions Code Section 6146.1.

    Another important aspect of your retainer agreement is making sure that if you do not carry malpractice insurance that you include that in your retainer agreement. California Rule of Professional Conduct 3-410 requires that California attorneys who know or should know that they do not have professional liability insurance must inform a client in writing, at the time the client engages the attorney, that the attorney does not have professional liability insurance whenever it is reasonably foreseeable that the total amount of legal representation in the client’s matter will exceed four hours.

    It is also important that the agreement be signed by both you and your client to make it enforceable.

    The State Bar website has sample retainer agreements for you to view. There also are attorneys in the area who specialize in attorney conduct who are willing to review your retainer agreement.  You can contact the SCCBA Lawyer Referral Service for names of attorneys. 
I hope that you all enjoy the May sunshine and have fun with your “spring cleaning.”

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