FORMAL OPINION 1
DEDUCTION OF EXPENSES FROM RECOVERY ISDEPENDENT UPON ATTORNEY'S PORTION BEINGREASONABLE FOR SERVICES RENDERED.
FORMAL OPINION 20
GROSS SETTLEMENT FOR SEVERAL CLIENTS WHENPERMITTED
QUESTION: A lawyer represents a number of separate claimantshaving similar causes of action against the same defendant. May the lawyerproperly negotiate a gross settlement for all claims that he is handling andthen negotiate separate settlements with his clients?
ANSWER: The Advisory Committee is of the opinion that if thelawyer before making a gross settlement has consulted his clients andsecured their consent to make a gross settlement of all pending claims, withthe agreement that such gross sum shall be apportioned among the clientsin an equitable manner, then such a settlement would be proper; but unlesshis clients have first authorized the same, such manner of settlement wouldbe improper.
Canon 5 DR5-106(A) [Rule 4 1.5]
FORMAL OPINION 26
ATTORNEYS ADVANCEMENT OF EXPENSES PROCUREMENT OFBOND FOR COSTS.
ATTORNEYS MAY ADVANCE COSTS AND EXPENSES FORCLIENT OR OBTAIN BOND FOR PAYMENT OF COSTS INCOURT WHEN
QUESTION: (a) Is it proper for a lawyer to advance money for aclient to pay the expenses of litigation, such as court costs, obtainingattendance of witnesses, traveling expenses, and other necessary expensesof litigation?
(b) Is it proper for a lawyer to furnish collateral to secure a bond forthe payment of costs in court?
(c) Does it make any difference that the lawyer at the time headvances the expenses, or obtains the cost bond, believes that the onlyprospect he has of being repaid or protected depends upon the successfultermination of the litigation for his client?
ANSWER: (a) Section (B), DR5-103 of Rule 4 permits a lawyer topay or bear the expenses of litigation under certain circumstances.DR5-103(B) is as follows:
"While representing a client in connection with contemplated orpending litigation, a lawyer shall not advance or guarantee financialassistance to his client, except that the lawyer may advance or guaranteethe expenses of litigation, including court costs, expenses of investigation,expenses of medical examination, and costs of obtaining and presentingevidence, provided the client remains ultimately liable for such expenses."
The Advisory Committee is of the opinion that it is not improper fora lawyer to advance money to and bear the expense of litigation for a clientif done in good faith as a matter of convenience and subject toreimbursement. Within the "expense of litigation" which a lawyer mayadvance are court costs, money to obtain a tentative attendance ofwitnesses, traveling expenses and other necessary expenditures. Thequestion assumes that the lawyer has made no promise, as a condition ofemployment, to advance the expenses of litigation. Good faith requires thata lawyer shall not represent or signify that he will advance expenses oflitigation prior to or as a condition of employment, and to show merely thatno formal promise to do so existed, is not sufficient to establish good faith.It is the opinion of the Advisory Committee that it would be unethical fora lawyer to represent or signify that he would advance expenses of litigationprior to, as a condition of, or as an inducement to employment.
(b) While Section (B) of DR5-103 of Rule 4 is silent upon thefurnishing of collateral to secure a bond for the payment of costs in thecourt, the Advisory Committee is of the opinion that such furnishing ofcollateral is subject to the same rule as the advancement of expenses oflitigation.
(c) The Advisory Committee is of the opinion that the expenses oflitigation may be advanced by the lawyer or collateral furnished to securea cost bond even though the lawyer believes at the time of advancing themoney or furnishing the collateral that the only prospect he has of beingrepaid or protected depends upon the successful termination of litigation forhis client.
Canon 5 DR5-103(B) [Rule 4 1.8(e)]
FORMAL OPINION 29
FEES ATTORNEY ELECTED TO BENCH
MAY, UPON SETTLEMENT OF CASE AFTER HIS GOING ONTHE BENCH, COLLECT HIS PORTION OF CONTINGENT FEEEARNED BEFORE HIS ELECTION AND RETIREMENT FROMCASE.
QUESTION: A Missouri attorney accepted employment on acontingent fee to file suit for a client. Afterwards, and while the suit waspending, the attorney was elected and qualified as judge of the CircuitCourt in which the suit was pending. After his election and prior toqualifying as judge he withdrew as counsel in the cause and other counselwas selected to try the cause on a contingent fee basis. After taking thebench the attorney originally employed made an order transferring the caseon change of venue to an adjoining circuit. The case was finally disposed of.Is it proper for the attorney first employed to accept a part of the fee ascompensation for services rendered by him prior to his election to thebench?
ANSWER. The Advisory Committee is or the opinion that it isproper for the attorney first retained who afterwards was elected to thebench to accept a portion of the contingent fee received by the attorneyswho were afterwards selected to handle the case. The attorney who waselected to the bench was entitled to be paid for the services that herendered up to the time of his withdrawal from the case. If he had beenemployed on a fixed fee to be paid in cash regardless of the outcome of thelitigation he would have been entitled to that portion of the fee that heearned prior to his withdrawal. The fact the fee was contingent does notaffect his right to that portion of the contingent compensation earned byhim up to the time he became disqualified to further represent his client.
[Rule 4 1.5(e)]
FORMAL OPINION 30
COLLECTIONS ATTORNEY EMPLOYING CONSTABLE IMPROPERFOR ATTORNEY HANDLING COLLECTIONS TO PAY CONSTABLEFOR SENDING OUT NOTICES ON ACCOUNTS OR BEFOREEXECUTION
QUESTION: Is it proper for an attorney handling collection haveconstables send out notices on delinquent accounts and then have the sameconstables send out notices before execution? The constables receive asmall percentage for their services.
ANSWER: The Advisory Committee is of the opinion that it isimproper for an attorney handling collections to give a part or percentageof his collection fees to a constable to send out notices on delinquentaccounts or to send out notices before execution is issued where a judgmentis obtained. The attorney in such case is dividing fees with a layman and ifthe notice contains a threat of suit or threat of levy of execution he iscooperating with a layman in the unauthorized practice of law.
Canon 3DR3-102(A) [Rule 4 5.4; 5.5]
FORMAL OPINION 42
ATTORNEY EMPLOYED BY CORPORATION ON SALARYBASIS CANNOT REQUEST ALLOWANCE OF ATTORNEY'SFEES TO BE RETAINED BY CORPORATION.
QUESTION: Is it permissible for an attorney employed by acorporation on a salary basis, in appearing in Court as attorney for thecorporation in a note case, to request the allowance of attorney fee, it beingunderstood that the corporation desires the attorney fee for its own use asthe corporation pays the attorney a stipulated regular salary?
ANSWER: No, it is not permissible.
[Rule 4 5.4]
FORMAL OPINION 43
PROBATE JUDGE MAGISTRATE
ATTORNEY PROBATE JUDGE-MAGISTRATE PROHIBITEDFROM PRACTICING LAW MAY NOT FORWARD LEGALBUSINESS AND PARTICIPATE IN FEE.
QUESTION: Can a lawyer Probate Judge-Magistrate, who isprohibited from practicing law by our new Constitution and the Statutes,forward legal business and participate in the fee resulting therefrom?
[Rule 4 1.5(e); 5.4]
FORMAL OPINION 45
AMOUNT OF ATTORNEY'S CONTINGENT FEE IN SETTLINGCLAIM WHEREIN CLIENT HAS RECEIVED WORKMEN'SCOMPENSATION FROM EMPLOYER.
QUESTION: "A" is employed by a milling company. He was injuredby attempting to stop a car operated by a railroad company, not connectedwith the milling company. "A" made the usual fifty percent contingentcontract with "X" lawyer who sued the railroad company and is settling theclaim for $10,000.00.
"A" made a claim for compensation against the milling company.Compensation was started without the efforts of "X" attorney, andcompensation in the amount of $1,300.00 was paid and doctors' bills andincidental medical bills in the amount of $750.00, a total of $2,000.00.
The milling company was subrogated to the amount of $2,050.00,the amount of compensation and medical services, "X" attorney secured thereduction of the subrogated compensation claim from $2,050.00 to$1,300.00. "X" attorney has now received the $10,000.00, $1,300.00 of whichgoes to the milling company to repay it for its expenditure of $2,050.00.
"X's" question: is "X's" fee (a) fifty percent of $10,000.00; (b) fiftypercent of $9,450.00 ($8,700.00 plus $750.00); (c) fifty percent of $8,700.00?
ANSWER: "X's" fee is (a) fifty percent of the $10,000.00.
[Rule 4 1.5(e)]
FORMAL OPINION 50
ATTORNEY EMPLOYED BY CORPORATION ON SALARYBASIS CAN REQUEST THE ALLOWANCE OF FEE INREPRESENTING EMPLOYER SO LONG AS FEE IS NOTTURNED OVER TO EMPLOYER BUT RETAINED BYATTORNEY.
QUESTION: Is it permissible for an attorney employed by aninsurance company on a salary basis, in appearing as attorney for theinsurance company in an interpleader suit, to request the allowance of anattorney's fee, it being understood that any fee allowed by the Court wouldbelong to the attorney individually and would not be turned over to theinsurance company? The insurance company permitting such, in spite of thefact that the attorney is on regular salary.
ANSWER: Yes. Canon 3 DR3-102(A)
[Rule 4 5.4]
FORMAL OPINION 60
IMPROPER FEES IN REPRESENTING FINANCE COMPANIESIN CERTAIN TYPES OF LITIGATION.
QUESTION: An automobile finance company in replevin andrepossession cases tells their lawyers that attorney's fees earned by themin such cases must be collected from the owner of the automobile and allcosts and expenses must be paid by such owner as a condition to recover hiscar.
(a) Is it ethical for the lawyer representing the finance company toforce the automobile owner to pay attorney's fees and expenses as elementsof damage, in addition to the amount due, before the car is surrendered tothe owner?
(b) Is it ethical for the lawyer to make such an arrangement withthe finance company and agree not to charge the finance companyattorney's fees but to have his fees and expenses contingent on collectingthem from the owner?
ANSWER: The answer to both questions so far as attorney's feesare concerned is "No". (See Mix v. Kepner, 81 Mo. 93; Wright v. Broome, 61Mo. App. 32; Hodkinson v. Machinery Co., 161 Mo. App. 87.)
The Committee's answer is based upon the assumption that thereis no contractual obligation by the automobile owner to pay attorney's fees.[See cases cited within opinion]
FORMAL OPINION 63
NOT IMPROPER TO CHARGE ADDITIONAL FEE TO DEFENDCOUNTERCLAIM WHERE A COUNTERCLAIM WAS NOTANTICIPATED IN ORIGINAL EMPLOYMENT.
QUESTION: A client employs an attorney to institute actionagainst another on an account for $200.00. For this service the attorneycharges him $35.00. When service is had, defendant files a counterclaim for$1,400.00, which makes the case rather complicated. Under suchcircumstances would it be ethical to charge the plaintiff an additional fee todefend him on the counterclaim, the client not explaining anything aboutcounterclaim at the time of employment?
[Rule 4 1.5]
FORMAL OPINION 71
IMPROPER TO PERMIT EMPLOYER LAY AGENCY TORETAIN ANY PORTION OF FEES CHARGED FOR LEGALSERVICES.
QUESTION: Is it proper for a lawyer retained by a Bank orBuilding and Loan Association or similar agency to permit the agency toretain a portion of fees charged for legal services?
ANSWER: No. Canon 3 DR3-102(A)
[Rule 4 5.4]
FORMAL OPINION 112
FEE COLLECTION USE OF BANK CREDIT CARDSIMPROPER.
FORMAL OPINION 114
ATTORNEY FEES DISSOLUTION OF MARRIAGE ACTIONSAND RELATED MATTERS UNDER DIVORCE REFORM ACT SECTIONS 452.300-452.415 RSMo 1973
Supp. V.A.M.S., effective January 1, 1974.
QUESTION: 1. Is it ethical for a Missouri lawyer to enter into acontingent fee agreement with his client which determines his fee basedupon a percentage of the amount recovered for maintenance for his client(gross or monthly), the amount recovered as the client's share of separateor marital property, or the amount recovered for child support?
2. If answered in the negative, is the same answer applicable tomotions to modify the original decree wherein the movant seeks to recoveran increased amount as monthly maintenance or child support?
3. If retained by a client for the collection of any past duemaintenance or child support previously adjudicated by a court, is acontingent fee improper?
ANSWER: 1. It is the opinion of the Advisory Committee that theuse of a contingent fee employment contract in the original dissolutionproceedings is improper.
The Committee believes that in all such cases such contracts areagainst public policy. 5 Am. Jur. p. 361, Sec. 166; 30 A.L.R. 189; 17 C.J.S.,Contracts, p. 618, Sec. 235; Hilleary v. Hilleary, 176 S.W. 282, 283; Sannerv. Sanner, Mo.App. 46 S.W.2d 936, 937 (1), (2).
This is true even though such contingent fee contracts are notexpressly prohibited by DR2-106 of Rule 4. The Committee had reviewedEC 2-20 and the specific language contained therein:
"Because of the human relationships involved and the uniquecharacter of the proceedings, contingent fee arrangements in domesticrelation cases are rarely justified."
In spite of that language, which indicates there could be anexception to the general principle, the Committee believes such contractsare improper, per se.
It is the opinion of the Advisory Committee that counsel and hisclient can make a valid employment contract for an agreed fee in excess ofthe amount awarded by the court as attorney fee in the action. The fee maybe determined at a fixed hourly rate or by any other method consistent withthe provisions of DR2-106 of Rule 4.
2. The answer to (2) is Yes. The same reason of public policyprohibits contingent fee contracts in motions to modify original decrees asit does in original proceedings.
3. The answer to (3) is No. The opinion of the Advisory Committeeas previously issued, remains that it is ethically proper for an attorney toaccept employment for the collection of any past due maintenance or childsupport on a contingent fee basis.
Adopted September 9, 1977.
[Rule 4 1.5(d)(1)]
FORMAL OPINION 115, AS AMENDED
ATTORNEY MAY NOT WITHHOLD PROPERTY BELONGINGTO HIS CLIENT TO ENFORCE PAYMENT OF FEES OREXPENSES.
QUESTION: May a Missouri Attorney ethically withhold from hisclient papers, books, documents or other personal property which belong tothe client and came to the attorney in the course of his professionalemployment to enforce payment of fees or expenses owed to the attorneyby the client?
ANSWER: It is the opinion of the Advisory Committee that underthe Rules of Professional Conduct, such action by an attorney is improper.The Advisory Committee is of the opinion that the file belongs to the client,from cover to cover, except for those items contained within the file forwhich the attorney has borne out-of-pocket expenses such as, but notlimited to, transcripts. The attorney may retain those items until such timeas he is reimbursed for the out-of-pocket expense and then they must beimmediately delivered to the client. Those items which have commonly beendenominated as "work product" of the attorney actually belong to the clientbecause those are the result of services for which the client contracted.
The basis given for such action by attorneys in Missouri has beenthe so-called Attorney's Common Law Retaining Lien, said lien havingexisted in the English Common Law and being recognized in a number ofstates of which Missouri is not one. It is strictly a passive lien inasmuch asthe attorney has no power to enforce payment other than to embarrass,inconvenience or to cause worry to the client by the withholding of hispapers. The legal question of whether or not the Attorney's Common LawRetaining Lien exists has not been affirmatively answered by the MissouriCourts.
The Advisory Committee recognizes the Statutory Attorney's Liencreated in Missouri by the act of 1901 and it, in no way, is affected by thisOpinion. This Lien is embodied in Sections 484.130 and 484.140 of theMissouri Revised Statutes of 1986. It has been held to give the attorney alien on the fund or funds produced for the client by his action where he fileda petition or counterclaim and/or where he has given sufficient notice to thedefendant of the existence and nature of his contract with the plaintiff.
Even if the Attorney's Common Law Retaining Lien were deemedto be in existence, the question of the ethical propriety of its exercise muststill be answered with reference to the Rules of Professional Conduct. Thesituations under which this question normally arise will be where theattorney has withdrawn from the representation of his client or where theclient has discharged the attorney because the representation has beencompleted or prior to the time of the completion of the representation. Forpurposes of this discussion, however, the aforementioned situations do notdiffere inasmuch as Rule 1.15(b) of Missouri Supreme Court Rule 4 states"Upon receiving funds or other property in which a client or third personhas an interest, a lawyer shall promptly notify the client or third person.Except as stated in this Rule or otherwise permitted by law or byagreement with the client, a lawyer shall promptly deliver to the client orthird person any funds or other property that the client or third person isentitled to receive and, upon request of the client or third person, shallpromptly render a full accounting regarding such property." Furthermore,Rule 1.16(d) of Rule 4 of the Missouri Supreme Court Rules states that"Upon termination of representation, a lawyer shall take steps to the extentreasonably practicable to protect a client's interest, such as givingreasonable notice to the client, allowing time for employment of othercounsel, surrendering papers and property to which the client is entitledand refunding any advance payment of fee that has not been earned. Thelawyer may retain papers relating to the client to the extent permitted byother law." (Emphasis added). If a lawyer wishes to keep a copy of the filefor his own use or protection, then the lawyer must bear the costs ofcopying the file.
The above quoted disciplinary rules require the lawyer to turn oversuch property to which the client is "entitled". It could be argued that thedisciplinary rules constitute an exception which would include the propertyover which the lawyer has a recognized lien. However, in the opinion of theAdvisory Committee, for a lawyer to force payment of his fees or expensesby resorting to a lien which can only be effective by causing embarrassment,inconvenience or worry to his client is for the lawyer to act in a mannertotally inconsistent with the above-cited disciplinary rules and, further, isinconsistent with the spirit of his professional responsibility. This isparticularly true since other methods are available for use by an attorneyfor the collection of those fees and expenses to which he may be legallyentitled.
Adopted March 4, 1988.
[Rule 4 1.8; 1.16(d); 111 ALR 487]
QUESTION: Can an attorney ethically accept, for forming aMissouri for profit corporation, the payment of his fee by issuance to himof preferred voting stock and/or common non-voting stock?
ANSWER: Assuming the attorney did not personally participate inthe decision of the incorporators to engage his legal services, it is theopinion of the Advisory Committee that acceptance of stock as payment forlegal services in forming said corporation is not improper.
QUESTION: Can the above attorney represent said corporation forlegal services after the formation?
ANSWER: Yes, provided the legal services are not involved in anyshareholder's suit and that the attorney does not personally participate inthe decision of the corporation to engage his legal services. Rendered March29, 1977.
[Rule 4 1.8(a); 1.7(b)]
QUESTION: Is a fee dispute between a client and his attorneyarising from services in a dissolution of marriage action a legal question oran ethical problem?
ANSWER: Usually a legal question. Assuming the fee charged forthe services is not clearly excessive and unconscionable, it presents a legalquestion for determination by the courts under standards set forth underDR2-106(B). Sometimes an agreement can be made between the client andthe attorney whereby the amount of the fee in dispute can be placed inescrow pending the court's decision and the undisputed portion distributedto the client and the attorney. Rendered July 20, 1977.
[Rule 4 1.5]
QUESTION: Can an attorney accept employment on a contingentfee basis with a school district for litigation against the County Assessor forallegedly under appraising commercial properties resulting in loss ofrevenue to said district? The proposed contingent fee contract would beapplicable to the increased revenue, if any, produced for only one year.
ANSWER: Yes. It is the opinion of the Advisory Committee thereis nothing ethically wrong in entering into a contingent fee contract with theschool district, provided the district is legally authorized to enter such acontract. The contract must result in a reasonable fee under DR2-106(B).The compensation could be computed upon a time/hourly basiscommensurate with the conditions, contingent upon a successful recovery.Rendered August 22, 1977.
[Rule 4 1.5]
(Opinion omitted. See Notes on Use.)
(Opinion omitted. See Notes on Use.)
QUESTION: An attorney represented a minor child in a case forpersonal injuries (damage to her teeth). A recovery of $2500.00 was madeand no guardianship was established.
By agreement between the child's mother and the attorney, thebalance after paying for teeth repair needed now, was placed in a savingsaccount in a local bank, which requires signature of the child's mother andthe attorney before any money could be withdrawn.
Recently the child's mother sought to withdraw some money fromthis account for purposes other than teeth repair and the attorney refusedto authorize the withdrawal of funds.
The attorney inquires whether any ethical problems exist underthis arrangement?
ANSWER: No. It is the conclusion of the Committee that there isno ethical problem in the situation which now exists where the minor'ssettlement funds are held in a joint savings account with right of withdrawalheld jointly by the attorney and the minor's mother. The Committee agreesthat the money can only be withdrawn for the use originally intended or forsome other benefit exclusively for the child which might intervene prior tothe expenditure of those funds and be more pressing. If the interveningcircumstances do occur and the attorney had some question about thepropriety of withdrawing the funds for the alternate use, then aguardianship should be established and the directions of the court sought.Rendered October 20, 1978.
[Rule 4 1.15(c)]
QUESTION: A salaried full-time attorney for a city-owned utilitysubmits for clarification Formal Opinions No. 42 and No. 50 which coverattorney fees recovered and whether they should be turned over to thecorporation or retained personally by the attorney.
ANSWER: Before the attorney would be personally entitled toreceive the award of attorney fees, it would be necessary for him to securethe approval of the utility to the retention of fees by the attorney and itwould be necessary for said attorney to so inform the court prior to itsaward that any attorney's fee allowed by it would be retained by theattorney individually.
The utility could not ethically receive the attorney fees under theabove present opinions. Rendered October 20, 1978.
[Rule 4 5.4]
QUESTION: Can a Missouri lawyer ethically advise his client toenter into a contract with a "medical-legal consulting firm" to provide areview of medical facts, records, etc. and give an opinion as to whethermalpractice exists? The consulting firm for an additional consideration willprovide expert witnesses to testify at trial, (providing malpractice exists) ona time basis or on a contingent fee basis. The contract is in writing betweenconsulting firm and the client and the client's attorney is given writtenauthority by the client to pay all proper items of cost direct to theconsulting firm from any proceeds recovered.
ANSWER: Yes. It would be improper for the attorney to contractwith the medical-legal consulting firm and agree that the consulting firmwould be paid out of that portion of the recovery which the attorney hadcontracted to receive for his services.
The Advisory Committee sees nothing unethical in an attorneyallowing his client to contract with an organization which will providemedical assessment of a claim and a professional witness to testify so longas the witness receives his compensation for testifying regardless of theoutcome of the case. (The question of the advisability of the client enteringinto the contingent fee contract with the consulting firm who furnishes thename of the witness is a matter which must be decided by the client uponthe advice of his attorney.)
The Committee believes it is more desirable from an ethical pointof view for the professional witness to be paid directly by the client, so longas the witness is actually paid an agreed fee for his time and effort intestifying and his pay is not contingent on the outcome of the case. TheCommittee does not believe it would be unethical even if the witness waspaid by the consulting company with which the client had contracted.
The ABA Committee on Ethics and Professional Responsibility hasissued its informal opinion No. 1375 on August 10, 1976 renderingsubstantially the same opinion. Rendered November 9, 1978.
[Rule 4 3.4(b); 5.4(a)]
QUESTION: Can an attorney ethically deposit into his trustaccount a sum of his own personal funds and use the account to paylitigation costs in matters he is handling? Would this constitute a"commingling of funds" which would be prohibited by DR9102(A)?
ANSWER: No. The Committee believes that using the sameaccount as a litigation operating account and a trust account for the holdingof client's funds would constitute a "commingling of funds" which would beprohibited by DR9-192(A). Rendered February 20, 1979.
[Rule 4 1.15]
1. Can a "not for profit" legal aid corporation which exists for thepurpose of securing free legal assistance for persons unable to pay for thesame, maintain client trust funds in an interest-bearing account?
2. If so, may the interest earned from that account be used tofinance the corporation's activities?
1. The question of whether the "not for profit" corporation canmaintain client trust funds in an interest-bearing account is a legal questionand nut an ethical one.
2. Interest earned on such trust funds, in the Committee's view, inabsence of specific statutory authority, must go to the client unless theclient consents for its use for other purposes. Rendered August 29, 1979.
[Rule 4 1.15] [Note: this opinion pre-dates IOLTA]
QUESTION: Client A is a client of a partnership composed ofLawyers X, Y and Z. That firm undertakes a contingent fee contract torepresent Client A on an action for personal injuries.
Partner Z files a lawsuit and handles most of the work.
Shortly thereafter, partnership XYZ is broadened to includePartner W. Thereafter XYZW partnership is dissolved with Partners X andY remaining together and Partners Z and W forming a professionalcorporation.
Client A contacts Z and expresses regret that the file has stayedwith Partner X and expresses a desire that Partner Z continue with hiscase.
The question submitted is what advice should Z and W give toClient A regarding the matter?
ANSWER: Client A has the right to select which partner shouldcontinue to represent him and thus, Z and W should advise Client A towrite a letter to Partner X terminating the services of X and Y and directingthat the file be forwarded to law firm Z and W. Rendered August 29, 1979.
[Rule 4 1.16; 1.2]
QUESTION: A committee of a Circuit Bar Association hassubmitted a request for an informal Advisory Opinion on the following facts:
The estate of decedent, subject to Missouri probate, has a value of$20,000. The estate for federal estate tax purposes is many times larger,which includes trusts, insurance packages, real estate held by the entirety,etc.
Counsel for the executor and heirs must spend many hours servinghis clients and is expected to serve all subjects arising out of the death ofthe decedent without regard to whether or not a given item is in theprobate estate.
The question submitted: Is counsel limited in his demand for a feeto the statutory schedule? If not, is counsel entitled to set, justify anddemand a fee from his clients for the other services rendered in connectionwith the whole estate, or is he limited to what the probate court wouldallow in the way of fees for extraordinary services?
ANSWER: In the view of the Committee, the questions submittedare legal questions, not ethical ones, and, therefore, the Committee has nojurisdiction to express an opinion. The Committee submits only the caveatthat any fees charged must be reasonable for the services rendered.Rendered August 29, 1979.
[Rule 4 1.5(a)]
(Opinion omitted. See Notes on Use.)
QUESTION: A law firm represents the wife of a decedent, who isserving as administratrix of her husband's estate. She has filed a petitionfor homestead and family allowances. The estate has no liquid assets andits only asset is a piece of real property.
The court granted the wife as such allowances a 49/68ths interestin the real property and ordered the real property sold.
The property was sold for $19,000.00 and the proceeds divided49/68ths to the spouse and 19/68ths to the estate. In addition, purchasergave the law firm two $100.00 checks as earnest money, one of which wasplaced in the law firm's trust account and the other deposited to the estatechecking account.
The law firm computed its statutory fee on the entire purchaseprice.
1. Can the firm charge the spouse individually a separate fee equalto 49/68ths of the purchase price?
2. Can the law firm apply, without the express consent of the client,the $100.00 in its trust account towards its fee due from the spouse?
1. No. If the entire purchase price was used to compute thestatutory fee, it would be improper to charge the spouse any additional fee.
2. No. It is the opinion of the Advisory Committee that the law firmcannot apply the $100.00 earnest money held in the trust account towardspayment of the fee, without the express permission or the client. RenderedOctober 18, 1979.
[Rule 4 1.5]
QUESTION: Attorney X is contacted by the respondent in adissolution action; however, he is not formally employed by respondent.Attorney X has incurred some long distance phone expense andconsultation fees for this respondent, who is a member of the ArmedForces. The court appointed Attorney X as "trustee" for the respondent atthe request of counsel for petitioner.
1. Can Attorney X represent the respondent when he has an unpaidbill for "services" and "expenses" against him on which he may later file suit?
2. Does it create the appearance of impropriety to appoint a"trustee" upon the specific recommendation to the court by counsel for thepetitioner?
1. It is the opinion of the Committee that nothing stated preventsAttorney X's representation of the respondent unless Attorney X feels thathe is prejudiced because of the failure of the respondent to pay thestatement for fees and expenses. Some members of the Committeequestion whether a suit over long distance calls and a consultation fee canbe justified either from the standpoint of legal ethics or economic advantageto the attorney.
2. The Committee believes no appearance of impropriety exists ifthe court sees fit to accept the recommendation of opposing counselregarding the appointment of a trustee.
Rendered November 2, 1979.
[Rule 4 1.7(b)]
(Opinion omitted. See Notes on Use.)
QUESTION: Attorney "A" files a petition for dissolution ofmarriage on behalf of the wife. There are no children, both parties areemployed, there is no marital property. Attorney "B" enters his appearancefor husband and files answer and cross-petition. The case is set on theuncontested docket, there appearing no item of dispute. Attorney "A"obtains continuance of the case. Attorney "A" states that the petitioner-wifewill not be ready until Attorney "A" has been paid $500.00 by one or bothof the parties. Attorney "A" will not agree to accept a judgment for fees inthe dissolution action against the husband for any part of the fees or evenall of the fees, and will only "be ready" when he has been paid $500.00 byone of the parties for the simplest of uncontested dissolutions.
Is it proper for Attorney "A" to refuse to try a case until he has beenpaid, no other matters being in dispute?
ANSWER: No. It is the opinion of the Advisory Committee that itis not proper for Attorney "A" to refuse to try the dissolution case until hehas been paid, no other matters being in dispute.
If the court sets the case, the attorney is obligated to go forwardwith it or get the court's approval of his withdrawal.
[Rule 4 1.3; 1.16]
(Opinion omitted. See Notes on Use.)
QUESTION: An attorney submits a multi-part question for aninformal opinion by the Committee.
(Part a. omitted.)
b. May the attorney who advertises a fixed fee for a permittedroutine service make an additional charge in a dissolution case for additionalwork such as a written property settlement or deeds prepared incident tothe dissolution?
ANSWER: An attorney may make an additional charge if it wasfully explained to his client that such services are not included as "routine"before furnishing the service. We believe there are certain cases that thematters set out would be considered routine and others that would not.
c. Is the lawyer obligated to return to the client the court costdeposit refund?
ANSWER: Yes. The lawyer is obligated to return to the client thecourt cost deposit refund if the initial deposit came from the client.
(Unrelated parts d and e are not included.) Rendered April 10,1980.]
[Rule 4 1.5; 1.4; 1.15]
QUESTION: Attorney A is serving as the President of theIndustrial Development Authority of a City established under Chapter 349.The Corporation consists of a nine-member board of directors, all of whomare appointed by the City Council. After appointment the Corporation isautonomous and it is not controlled by the City. The purpose of theCorporation is to assist in industrial development by issuing industrialrevenue bonds without the need of a vote of the people. Lawyer A hasserved on the Authority and as its president for a number of years.Generally speaking, he draws most of the documents that lead to theissuance of the bonds. The company which benefits by issuance of the bondsnormally pays all expenses incurred in issuance of the bonds, whichnormally include a fee for legal services.
The attorney-officer of the Corporation submits a question as towhether he is prohibited from charging a fee for such legal services as herenders to the Authority? As officer of this Authority he, of course, is paidno salary.
ANSWER: The Committee recognizes the general rule, that as anofficer he would not vote to pay himself for services which he is rendering.The Committee raises the question as to whether there would be a conflictof interest for the Corporation officer to vote to approve a bond if he knewthat he would be doing the legal work and would be getting paid for it bythe company benefitting from the bond. We think this involves a legalquestion on whether such conduct would violate the conflict of intereststatutes of the State of Missouri.
The Committee believes the safer ethical course would be for thelawyer to resign from his appointment and thus be free to accept paidemployment from the Corporation. The alternative course would be for himto remain on the Authority but to suggest that the Corporation hire outsidecounsel to do the legal work which the attorney officer formerly did and topay for such outside counsel a reasonable fee. Rendered May 23, 1980.
[Rule 4 1.7(b)]
QUESTION: Attorney submits an inquiry as to his right towithdraw from representation of a client if the client fails to pay the agreedfee or expenses.
ANSWER: As a general rule it is not unethical to withdraw fromrepresentation of a client if the client fails to pay the agreed upon fee orexpenses. In matters of litigation, however, that is subject to thejurisdiction of the trial court. An attorney seeking to withdraw fromrepresentation should file a motion to withdraw which must be approved bythe court. If the court allows the withdrawal, then there is nothingunethical in so doing. Of course, if the court denies the motion to withdraw,the attorney must continue the representation. Rendered June 23, 1980.
[Rule 4 1.16]
(Opinion omitted. See Notes on Use.)
An attorney requests an Advisory Opinion on the following set offacts.
Decedent, hereinafter referred to as "D", is injured in an automobileaccident, is hospitalized, and after approximately a month dies while still inthe hospital as a direct result of the accident.
"D" leaves no surviving spouse or any surviving descendants, eithernatural or adopted. "D"'s stepdaughter (not adopted), hereinafter referredto as "S", who is Executrix and the principal legatee of the will of "D",retains an attorney, hereinafter referred to as "L", to represent her in theprobate of the will of "D"; "L" being the attorney who had prepared the willof "D".
"L", at the time the will is discovered, tells the brothers and sistersof "D" that he cannot represent them; that he, "L", is representing "S", andfurther informs them that they should get their own attorney if they desirerepresentation.
"L" then attempts to settle the claim due to the death of "D" andarrives at an equitable figure of settlement with the insurance company. "L"then contacts the brothers and sisters of "D" in order to obtain release oftheir claim, telling at least one of the brothers that "S", the stepdaughter,as Executrix, wants 50%, of the settlement but that he, "L", believes he canget "S" to accept a lower figure. No written contract exists between any ofthe brothers and sisters of "D" and "L" for a fee, either fixed or contingent,nor do there exist any agreements in writing.
The brothers and sisters of "D" retain another attorney torepresent them who then contacts the insurance company and, afterdiscussions, files the necessary lawsuit to apportion the settlement figuresagreed to bar the insurance company and the brothers and sisters of "D",which is in the aforesaid negotiated settlement amount.
QUESTION 1: Is it ethical for Attorney "L" to present his claim foran attorney fee for services to the brothers and sisters of "D" in an actionbrought by the attorney retained by the brothers and sisters under theprovisions of Section 537.095 of the Revised Statutes of Missouri?
ANSWER 1: It is the Committee's conclusion, based upon the factsas given, that Attorney "L" has no claim for fees for representation of thebrothers and sisters of the decedent. It can see no place where he hassought to represent the brothers and sisters. In his discussion with themconcerning a possible settlement, it appears to us that "L" was representingthe estate of the decedent and the decedent's stepdaughter personally. Hadhe been able to have all of said parties agree on a division of the recoveryand then had filed the necessary action to complete the settlement andapportion the recovery in conformity with that agreement, "L" might thenhave had a basis for a claim for some attorney's fees. Under the facts asgiven, however, the Committee does not believe "L" is entitled to any feesfor services to the brothers and sisters of the decedent.
QUESTION 2: Did Attorney "L" have a conflict of interest when heurged the brothers and sisters of "D" to give part of the settlement to theestate of "D" and was apparently representing the brothers and sisters of"D" at the same time?
ANSWER 2: No. There was no conflict of interest when "L"discussed with the brothers and sisters of the decedent the possibility ofgiving a part of the settlement to the estate of the decedent. "L" was stillrepresenting that estate and the stepdaughter. He had already told thebrothers and sisters of the decedent that he could not represent them, thathe was representing the stepdaughter and he advised them to get their ownattorney if they desired representation. Rendered September 12, 1980.
Rule 4 1.5; 1.7]
QUESTION: Lawyer A has entered into a contingent fee contractwith the client. Lawyer A has notified the defendant's insurer of hisemployment and of his statutory lien for services. The client thendischarged Lawyer A and enters into a contingent fee contract with LawyerB.
On an ethical basis, what interest does Lawyer A have in the case?
ANSWER: It is the opinion of the Advisory Committee that LawyerA is entitled to a reasonable fee for what services he actually performed forthe client and he has a statutory lien for that fee. The attention of theattorney's lien should only be for a reasonable fee to the attorney and anyattempt to collect a larger fee by assertion of the lien for the percentage inthe contingent fee contract would be a violation of the Code of ProfessionalResponsibility. Rendered October 2, 1980.
[Rule 4 1.5(e); see also International Materials Corp. v. Sun Corp., Inc.,824 S.W.2d 890 (Mo. banc 1992); Plaza Shoe Store, Inc. v. Hermel, Inc., 636S.W.2d 53 (Mo. banc 1982)]
QUESTION: To whom does interest earned upon trust checkingaccount funds belong?
ANSWER: It is the opinion of the Advisory Committee that anyinterest earned by client's funds goes with the principal. The Committeehas previously so held with regard to an ordinary trust account and can seeno basis on which to change its holding because the trust account may alsobe a checking account. If any of the funds in the trust account belong to theattorney (as under a contingent fee arrangement on a personal injuryclaim), then the interest earned on the amount which is attorney's feeswould go to the attorney. As a caveat, the Committee thinks this situationhas potential income tax problems for both the client and the attorneywhich should be monitored very closely. Rendered November 7, 1980.
[Rule 4 1.15] [Note: this opinion pre-dates IOLTA]
QUESTION: Can an attorney ethically use a computerized incometax preparation service (service) where the service would, along with itsadvertising of other locations and outlets include the name, location andtelephone number of an attorney who is, in fact, utilizing the computerpreparation of tax returns, avoiding any reference in the advertising thata person at that location is an attorney and that the office is a law office?
In addition, can an attorney, under the facts stated in the aboveparagraph, divide the tax return preparation fee with the tax service ortrust the attorney pay a set amount to the service for the preparation ofeach return and, finally, can the attorney have a sign in the window of hislaw office displaying the corporate name of the computerized tax servicewhich in fact indicates that the service is available on the premises?
ANSWER: It is the opinion of the Committee that an attorney canuse the computerized income tax preparation service if the client is advisedin advance and specifically waives the breach of confidentiality that such useobviously necessitates. The attorney cannot divide the fee on a percentagebasis with the computer service. He would have to pay the computer serviceseparately and then charge his client an appropriate total fee. It would beimproper for the service to advertise the name, location and telephonenumber of the attorney using the service. It would also be improper for theattorney to have a sign in the window of his law office displaying thecorporate name of the computerized tax preparation service.
Rendered January 15, 1981.
[Rule 4 1.6; 5.4; 7.2]
QUESTION: Can an attorney, who has been given a promissorynote for legal services rendered, assign that note to his non-lawyersecretary for nominal consideration, then file suit in her name seekingrecovery on the note plus attorney fees, as provided by the terms of thenote?
ANSWER: No. In the opinion of the Committee, it would beimproper for the attorney to assign the promissory note to a nonlawyer fornominal consideration and then file suit on behalf of the non-lawyer seekingrecovery of the amount owed on the note. This would be a subterfuge anda fraud on the Court since the named party would not. he the real party ininterest. Rendered October 1, 1981.
[Rule 4 3.3; 8.4(c)]
1. An attorney submits the following hypothetical questions for anAdvisory Opinion for his personal guidance.
Situation No. 1: Lawyer A and Lawyer B were formerly lawpartners and represented XYZ Corporation. XYZ Corporation wasconsidered to be the client of Lawyer A, but Lawyer B performed much ofthe legal work for XYZ Corporation. Under the partnership agreementbetween Lawyer A and Lawyer B, Lawyer A was to receive one third of thefees paid by XYZ Corporation as the "referring partner". Lawyer B was toreceive the remaining two-thirds for his services rendered. During thecourse of time, Lawyer A and Lawyer B decided that they no longer desiredto be partners and that they simply wanted to enter into an "office sharingarrangement" wherein they would not be partners. They do not holdthemselves out as partners either on the office door or on the letterhead.
Is it ethical for Lawyer B to continue performing legal services forXYZ Corporation and have Lawyer A share in the fee under the premisethat XYZ Corporation was originally his client?
ANSWER Situation No. 1: No, it is not ethical for Lawyer B tocontinue performing legal services for the corporation and have Lawyer Ashare in the fee.
Situation No. 2: After the dissolution of the partnership of LawyerA and Lawyer B, a new client, the City, comes to see Lawyer A andrequests that Lawyer A perform legal services for the City. Lawyer A refersthe file to Lawyer B and requests that Lawyer A perform research on thelegal question involved and render an opinion under the name of Lawyer A.The opinion would then go out to the City under the name of Lawyer A.The billing for legal services rendered would also go out under the nameand letterhead of Lawyer A. Lawyer B would be compensated pursuant tothe same formula referred to in Situation No. 1.
Is it ethical for Lawyer A to send out opinions under his name andsend out bills under his name even though he has not performed the workin question? Should Lawyer A inform the client that the work in questionhad been performed by Lawyer B and that he was sharing in the fee?
ANSWER Situation No. 2: No, it is not ethical for Lawyer A tosend out opinions under his name and send out bills under his name whenhe has not performed the work in question.
Situation No. 3: During the partnership, Lawyer B had performedsome legal work for a client of Lawyer A, Dr. X. Dr. X had been a client oflong standing of Lawyer A even before Lawyer A and Lawyer B werepartners. During the time that Lawyer A and Lawyer B were partners,Lawyer B did perform a lot of work for Dr. X and they became quite close,both professionally and socially. Fees for the work performed for Dr. X weresplit between Lawyer A and Lawyer B pursuant to the same partnershipformula referred to in Situation No. 1 above. After the dissolution of thepartnership of Lawyer A and Lawyer B, Dr. X called Lawyer B directly andrequested that he perform additional legal services for him.
What responsibility does Lawyer B have to Lawyer A to eithernotify him of the legal work to be done for Dr. X or the division of fees forsaid work? Should Lawyer A go ahead and perform the work for Dr. X? IfLawyer B does decide to go ahead and do the work for Dr. X, does he haveany responsibility to share his fee with Lawyer A?
ANSWER Situation No. 3: All of the questions are answered byDR2-107 of Rule 4, Supreme Court of Missouri. Lawyer B has noresponsibility to notify Lawyer A of the legal work and certainly cannotdivide the fees with him. Neither should he refer the work to Lawyer A.Had the client wanted the other lawyer to do the work in the first place, hewould have done to him.
Rendered October 1, 1982.
[Rule 4 1.5(e)]
QUESTION A: May an attorney employ outside counsel to collectfees and may said firm be retained on a contingent fee basis?
ANSWER A: In the opinion of the Committee it is permissible forthe firm to represent other attorneys for collecting their past due legal fees.It is also permissible for the firm to accept employment on a contingent feebasis.
QUESTION B: Can an attorney retain a collection agency forcollection of outstanding legal fees?
ANSWER B: An attorney can enlist the aid of a collection agencyfor the collection of outstanding legal fee accounts so long as the collectionagency operates within the legal limits and does not attempt to engage inany unauthorized practice of law in the collection of said accounts.
Rendered December 3, 1982.
[Rule 4 1.5(c); 5.4(a); 5.5]
QUESTION: Can a firm enter into a contingent fee contract in adissolution case based solely upon these facts? The client, who wasrepresented by different counsel during trial, seeks to appeal only from thetrial court distribution of marital property. She does not have the liquidassets to pay an hourly fee for the appeal. She does not contend themarriage should not be dissolved.
ANSWER: Yes, under the above restricted facts, it would bepermissible. This is contrary to the general rule expressed in FormalOpinion No. 114 adopted September 9, 1977 and Shanks v. Kilgore, (Ct. ofAppeals, w.n. 1979) 589 S.W.2d 318. Rendered March 31, 1983.
INFORMAL OPINION 930085
QUESTION: May attorney enter into a contingent feearrangement to collect on final judgment which was entered in a domesticrelations case? Because payments to client as a result of collection actionwill be in installments over a lengthy period, may attorney require thatclient irrevocably designate attorney as payee of the payments?
ANSWER: The contingent fee arrangement is not prohibited. Theirrevocable assignment implicates Rule 1.8(a) on conflicts of interest.
[Rule 4 1.8(a); 1.5(d)(1)]
INFORMAL OPINION 930090
QUESTION: (1) May a lawyer enter into a direct contractualrelationship with a potential client where the lawyer agrees to providecertain specifically delineated legal services in return for payment of aregular monthly retainer? (2) If yes, may a lawyer hire direct employees orcontract with an independent contractor to promote, market, and sell theplan? (3) May an employee be compensated with a salary and receivebonuses based on performance? (4) May an independent contractor be usedand paid on a flat fee or commission basis?
ANSWER: The answer to all questions is yes. Neither an employeenor an independent contractor may be paid on the basis of the amount offees paid to the attorney or billed by the attorney for legal services. Thatconduct would violate Rule 5.4, fee splitting with a non-lawyer.
[Rule 4 1.5; 5.4; 7.2(c)]
INFORMAL OPINION 930100
QUESTION: May an attorney take a domestic relations caseinvolving distribution of property on a contingent fee basis? The ordergranting the dissolution is final but maintenance is still an issue.
ANSWER: No, it is prohibited by Rule 1.5(d).
[Rule 4 1.5(d)]
INFORMAL OPINION 930101
QUESTION: May attorney take a domestic relations case on acontingent fee basis where the order granting the dissolution is final andneither alimony nor child support remain as issues?
[Rule 4 1.5(d)]
INFORMAL OPINION 930108
QUESTION: What is the appropriate apportionment of feesbetween two attorneys who worked together on the same case?
ANSWER: This opinion request requires a determination of factsrather than application of the rules to an established set of facts. This officecannot determine the facts. Once the facts have been determined by allparties involved, this office could give an opinion applying the rules to theestablished facts.
[Rule 4 1.5]
INFORMAL OPINION 930113
QUESTION: Attorney was appointed to represent a juvenile. Juvenile's parent was ordered to pay the attorney's fee and costs and signeda contract agreeing to pay. Parent has defaulted on contract. May attorneysue parent for the fee and costs?
INFORMAL OPINION 930121
QUESTION: Former associate and partner disagree regardingapportionment of fees and right of former partner to have continuingcontrol over cases associate took.
ANSWER: This office cannot make factual determinations but Rule1.5 requires lawyer's fee to be reasonable. It is incumbent on each toensure that client is not billed twice for the same representation. Formerpartner only has right to control cases if former partner is acting asco-counsel with the knowledge and consent of the client. The decision onwho the attorney will be belongs to the client.
[Rule 4 1.5]
INFORMAL OPINION 930153
QUESTION FACTUAL SITUATION 1: Attorney will purchaseinformation from a separate business obtained from police reports of trafficaccidents. Attorney will solicit prospective clients from this information, bymail only.
QUESTION FACTUAL SITUATION 2: Attorney will be retainedto represent drivers employed by a business in traffic ticket cases. Eitherthe company or the drivers will retain Attorney. Attorney would charge aflat monthly fee per driver. Would this violate the rule on fees for monthswhen a driver received
ANSWER FACTUAL SITUATION 1: This would not, as ageneral rule be a violation. However, special attention must be paid to Rule4-7.3(c). It seems particularly likely that Rule 4-7.3(c)(1) would apply tosome accident victims.
ANSWER FACTUAL SITUATION 2: This arrangement wouldnot violate Rule 4-1.5. However, if the employer pays the retainer fee,special attention should be paid to Rule 4-1.8(f).
[Rule 4 1.5; 1.8(f); 7.3]
INFORMAL OPINION 940053
QUESTION: Attorney represents the driver and passenger whoare plaintiffs in a case arising out of an automobile accident. Attorney hasfiled suit on behalf of the driver but not on behalf of the passenger. Attorney is hoping to resolve the driver's case before the statute oflimitations runs on the passenger's case. Both clients have been informedof this action. Must Attorney withdraw from the passenger's case now? IfAttorney must withdraw, may Attorney assert a lien? How will the legalfees be calculated?
ANSWER: To represent both the driver and passenger, Attorneymust make a determination that the dual representation will not adverselyaffect representation of either party. Each client must be given fulldisclosure of the conflicts and potential conflicts involved in the situation. Each client must affirmatively act to consent. If a problem arises afterrepresentation is begun, this procedure must be repeated. If either clientwill not consent, Attorney must withdraw from representing both, unlessboth clients consent to Attorney continuing to represent one. Attorney mayassert a lien for fees. The question of how fees will be calculated is a legalissue.
[Rule 4 1.5; 1.7]
INFORMAL OPINION 940065
QUESTION: Attorney accepted a case on a flat fee basis. Attorneynow wishes to withdraw before the case is concluded due to the client's lackof cooperation. Attorney states that, as a result of client's lack ofcooperation, attorney fees valuing several times the flat fee paid have beenprovided. May Attorney withdraw and, if so, what amount of refund, if any,is owed the client?
ANSWER: Attorney may ask the court for leave to withdraw. Thisoffice cannot resolved factual issues such as the amount of a refund owedin the context of an informal advisory opinion.
[Rule 4 1.5; 1.16(d)]