20072007““Earning, Collecting & KeepingEarning, Collecting & Keeping

Attorney’s Fees”Attorney’s Fees” byby

Daniel D. Horowitz, IIIDaniel D. Horowitz, III

Abraham, Watkins, Nichols, Sorrels, Abraham, Watkins, Nichols, Sorrels, Matthews & FriendMatthews & Friend

First things FirstFirst things FirstTerms of the ContractTerms of the Contract

More information the betterMore information the better Scope of the engagementScope of the engagement Waiver of conflictWaiver of conflict Hourly rate & billing incrementsHourly rate & billing increments Permission to withdraw for Permission to withdraw for

nonpaymentnonpayment Arbitration agreementsArbitration agreements Non-refundable retainerNon-refundable retainer

Waiver of ConflictWaiver 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 Hourly Rate: How much is too much?much?

Does it pass the smell test?Does it pass the smell test? Time & labor requiredTime & labor required Difficulty of questions/skill requiredDifficulty of questions/skill required Fee customarily charged in locality for similar Fee customarily charged in locality for similar

legal serviceslegal services Amount involvedAmount involved Time limitations imposed by ClientTime limitations imposed by Client Nature & length of professional relationship with Nature & length of professional relationship with

ClientClient Experience of lawyer performing the servicesExperience of lawyer performing the services

Billing IncrementsBilling Increments .1.1

.25.25

.50 (Is it still used?).50 (Is it still used?)

Permission to WithdrawPermission to Withdraw Put paragraph in the contract Put paragraph in the contract

regarding permission to withdraw if regarding permission to withdraw if fees are not paidfees are not paid

Bold language in contractBold language in contract Have client initial the paragraphHave client initial the paragraph Does not relieve attorney’s obligation Does not relieve attorney’s obligation

under Rule 1.15 or Court’s procedureunder Rule 1.15 or Court’s procedure

Arbitration AgreementsArbitration Agreements Are they enforceableAre they enforceable Do you want itDo you want it Henry v. Gonzalez, 18 S.W.3d 684 Henry v. Gonzalez, 18 S.W.3d 684

(Tex. App.-San Antonio 2000), pet. (Tex. App.-San Antonio 2000), pet. dism'd by agr.dism'd by agr.

Noticeable, Sufficiently Conspicuous, Noticeable, Sufficiently Conspicuous, and Prominently Displayedand Prominently Displayed

Can’t limit liability of lawyerCan’t limit liability of lawyer

Non-Refundable RetainersNon-Refundable Retainers Subject to reasonableness standardSubject to reasonableness standard Texas ethics opinion 431Texas ethics opinion 431 ““A fee is not earned simply because it is A fee is not earned simply because it is

designated as non-refundable”designated as non-refundable” ““Not inherently unethical, but must be Not inherently unethical, but must be

utilized with caution”utilized with caution” Preclusion of other employment; Preclusion of other employment;

experience, reputation & ability of lawyerexperience, reputation & ability of lawyer Make very clear in the contractMake very clear in the contract Bill against the retainerBill against the retainer

You Do the Work & Don’t Get You Do the Work & Don’t Get Paid!Paid!

Withdraw from caseWithdraw from case Sue your clientSue your client Intervene in pending litigationIntervene in pending litigation Arbitration/MediationArbitration/Mediation HBA Fee Dispute CenterHBA Fee Dispute Center

Motion to WithdrawMotion 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 CaseStatus 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 ClientNotice to ClientYou 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 ClientSue Your Client Breach of contract = attorney’s feesBreach of contract = attorney’s fees Is it worth it? Counterclaim by client Is it worth it? Counterclaim by client

for malpractice, or excessive feesfor malpractice, or excessive fees Be prepared and have your own Be prepared and have your own

house in orderhouse in order Is it collectibleIs it collectible Do you have the timeDo you have the time

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

HBA Fee Dispute CenterHBA Fee Dispute Center Arbitration process and binding on Arbitration process and binding on

both partiesboth parties Panel consists of two attorneys & one Panel consists of two attorneys & one

lay personlay person www.hba.orgwww.hba.org for more information for more information 713-759-1133713-759-1133

Can you still receive referral Can you still receive referral fees?fees?

October 9, 2003 – Texas October 9, 2003 – Texas Supreme Court Proposes Supreme Court Proposes TRCP 8aTRCP 8a

June 4, 2004 -- Final report is June 4, 2004 -- Final report is presented to the SBOT presented to the SBOT Board, which votes and Board, which votes and asks the Supreme Court to asks the Supreme Court to hold a referendumhold a referendum

Brief Timeline of Events

Proposed Rule 8a included a cap on Proposed Rule 8a included a cap on the amount of referral feesthe amount of referral fees

Required public disclosure of all fee Required public disclosure of all fee arrangements by way of court filingsarrangements by way of court filings

Required a court hearing whenever a Required a court hearing whenever a party questions the validity of a fee party questions the validity of a fee arrangement arrangement

Why Not Rule 8a?

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

LESSLESS

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

Note: Only Florida has a Note: Only Florida has a cap regarding referral cap regarding referral fees similar to what was fees similar to what was proposed in Texas in proposed in Texas in 2003.2003.

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

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

There was an unresolved conflict There was an unresolved conflict inherent with the proposed TRCP inherent with the proposed TRCP Rule 8a between TRCP & TDRPCRule 8a between TRCP & TDRPC

Specifically, Rule 8a would not have Specifically, Rule 8a would not have applied to Federal Court casesapplied to Federal Court cases

Would not have applied to cases settled Would not have applied to cases settled without suit being filedwithout suit being filed

Would not have clearly given jurisdiction Would not have clearly given jurisdiction of rule violations to the SBOTof rule violations to the SBOT

QUESTIONS ADDRESSED BY QUESTIONS ADDRESSED BY SUPREME COURTSUPREME COURT

Will restrictions on Referral Fees impair Will restrictions on Referral Fees impair what has been viewed as their beneficial what has been viewed as their beneficial purpose of obtaining the best purpose of obtaining the best representation for clients?representation for clients?

Do Referral Fees harm clients?Do Referral Fees harm clients? Do Referral Fees adversely affect the Do Referral Fees adversely affect the

Profession?Profession? Should Referral Fees be capped by rule?Should Referral Fees be capped by rule? Should Referral Fees be disclosed to the Should Referral Fees be disclosed to the

client & public?client & public?

Mar. 1, 2005Mar. 1, 2005

New referral fee rules New referral fee rules become effective.become effective.

Modified Rule 1.04Modified Rule 1.04 Eliminates the “Pure” forwarding fee Eliminates the “Pure” forwarding fee

for attorneys who do not work on a for attorneys who do not work on a case but refer it to another attorneycase but refer it to another attorney

Requires written consent by client Requires written consent by client disclosing division of fees arrangementdisclosing division of fees arrangement

Lawyer Referral Programs are exemptLawyer Referral Programs are exempt TDRPC Rule 1.04:TDRPC Rule 1.04:

YOU HAVE 2 OPTIONSYOU HAVE 2 OPTIONS Proportion of Services PerformedProportion of Services Performed

Joint ResponsibilityJoint Responsibility

Each lawyer performed substantial legal Each lawyer performed substantial legal services on the matter.services on the matter.

Each lawyer performed services beyond initially Each lawyer performed services beyond initially acquiring and signing up the client.acquiring and signing up the client.

There must be a reasonable correlation between There must be a reasonable correlation between services performed and the split of the fee.services performed and the split of the fee.

Proportion of Services Proportion of Services PerformedPerformed

Joint ResponsibilityJoint Responsibility Joint responsibility involves ethical, and Joint responsibility involves ethical, and

possibly financial responsibility for the possibly financial responsibility for the representation.representation.

The referring attorney must make sure the The referring attorney must make sure the lawyer handling the matter is competent lawyer handling the matter is competent to handle it.to handle it.

Require that an arrangement for division of fees be Require that an arrangement for division of fees be acknowledged in writing by the client when he or acknowledged in writing by the client when he or she enters into an agreement for representation.she enters into an agreement for representation.

The agreement should reflect how fees and The agreement should reflect how fees and representation will be divided among the attorneys.representation will be divided among the attorneys.

Must disclose whether fees are being divided based Must disclose whether fees are being divided based on joint responsibility or proportion of services on joint responsibility or proportion of services rendered.rendered.

Client ConsentClient Consent

Sample POA Language: Joint Sample POA Language: Joint ResponsibilityResponsibility

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…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…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 PerformedFee 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…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…Continued… Although it is unknown precisely the Although it is unknown precisely the

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

Continued…Continued… Accordingly, it is anticipated that the Accordingly, it is anticipated that the

attorneys fees will be divided in the same attorneys fees will be divided in the same proportion. In any event, the Referring proportion. In any event, the Referring Attorney will receive no more than 50% of Attorney will receive no more than 50% of the total attorneys fees recovered under the total attorneys fees recovered under this agreement. 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 –Now You Have It –Make Sure You Keep It!Make Sure You Keep It!

Fee forfeitureFee forfeiture Burrow v. Arce, 997 S.W. 2d 229 Burrow v. Arce, 997 S.W. 2d 229

(Tex. 1999)(Tex. 1999)

Fee ForfeitureFee Forfeiture Equitable remedy in breach of Equitable remedy in breach of

fiduciary duty casefiduciary duty case Plaintiff/former client not required to Plaintiff/former client not required to

prove actual damagesprove actual damages The Court determines if and how The Court determines if and how

much of the fee will be forfeitedmuch of the fee will be forfeited

Factors Court ConsidersFactors Court Considers Gravity & timing of violationGravity & timing of violation Willfulness of violationWillfulness of violation Effect of violation on the value of Effect of violation on the value of

lawyer’s work for the clientlawyer’s work for the client Adequacy of other remediesAdequacy of other remedies Public interest in maintaining the Public interest in maintaining the

integrity of attorney-client integrity of attorney-client relationshiprelationship

THE ENDTHE END

Daniel D. Horowitz, IIIDaniel D. Horowitz, III

Abraham, Watkins, Nichols, Sorrels, Abraham, Watkins, Nichols, Sorrels, Matthews & FriendMatthews & Friend

800 Commerce Street800 Commerce Street

Houston, Texas 77002Houston, Texas 77002

713-222-7211713-222-7211

dhorowitz@abrahamwatkins.comdhorowitz@abrahamwatkins.com