FORMAL OPINION 1
DEDUCTION OF EXPENSES FROM RECOVERY IS DEPENDENT UPON ATTORNEY'S PORTION BEING REASONABLE FOR SERVICES RENDERED.
FORMAL OPINION 20
GROSS SETTLEMENT FOR SEVERAL CLIENTS WHEN PERMITTED
QUESTION: A lawyer represents a number of separate claimants having similar causes of action against the same defendant. May the lawyer properly negotiate a gross settlement for all claims that he is handling and then negotiate separate settlements with his clients?
ANSWER: The Advisory Committee is of the opinion that if the lawyer before making a gross settlement has consulted his clients and secured their consent to make a gross settlement of all pending claims, with the agreement that such gross sum shall be apportioned among the clients in an equitable manner, then such a settlement would be proper; but unless his clients have first authorized the same, such manner of settlement would be improper.
Canon 5 DR5-106(A) [Rule 4 1.5]
FORMAL OPINION 26
ATTORNEYS ADVANCEMENT OF EXPENSES PROCUREMENT OF BOND FOR COSTS.
ATTORNEYS MAY ADVANCE COSTS AND EXPENSES FOR CLIENT OR OBTAIN BOND FOR PAYMENT OF COSTS IN COURT WHEN
QUESTION: (a) Is it proper for a lawyer to advance money for a client to pay the expenses of litigation, such as court costs, obtaining attendance of witnesses, traveling expenses, and other necessary expenses of litigation?
(b) Is it proper for a lawyer to furnish collateral to secure a bond for the payment of costs in court?
(c) Does it make any difference that the lawyer at the time he advances the expenses, or obtains the cost bond, believes that the only prospect he has of being repaid or protected depends upon the successful termination of the litigation for his client?
ANSWER: (a) Section (B), DR5-103 of Rule 4 permits a lawyer to pay or bear the expenses of litigation under certain circumstances.DR5-103(B) is as follows:
"While representing a client in connection with contemplated or pending litigation, a lawyer shall not advance or guarantee financial assistance to his client, except that the lawyer may advance or guarantee the expenses of litigation, including court costs, expenses of investigation,expenses of medical examination, and costs of obtaining and presenting evidence, 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 client if done in good faith as a matter of convenience and subject to reimbursement. Within the "expense of litigation" which a lawyer may advance are court costs, money to obtain a tentative attendance of witnesses, traveling expenses and other necessary expenditures. The question assumes that the lawyer has made no promise, as a condition of employment, to advance the expenses of litigation. Good faith requires that a lawyer shall not represent or signify that he will advance expenses of litigation prior to or as a condition of employment, and to show merely that no 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 litigation prior to, as a condition of, or as an inducement to employment.
(b) While Section (B) of DR5-103 of Rule 4 is silent upon the furnishing of collateral to secure a bond for the payment of costs in the court, the Advisory Committee is of the opinion that such furnishing of collateral is subject to the same rule as the advancement of expenses of litigation.
(c) The Advisory Committee is of the opinion that the expenses of litigation may be advanced by the lawyer or collateral furnished to secure a cost bond even though the lawyer believes at the time of advancing the money or furnishing the collateral that the only prospect he has of being repaid or protected depends upon the successful termination of litigation for his 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 ON THE BENCH, COLLECT HIS PORTION OF CONTINGENT FEE EARNED BEFORE HIS ELECTION AND RETIREMENT FROM CASE.
QUESTION: A Missouri attorney accepted employment on a contingent fee to file suit for a client. Afterwards, and while the suit was pending, the attorney was elected and qualified as judge of the Circuit Court in which the suit was pending. After his election and prior to qualifying as judge he withdrew as counsel in the cause and other counsel was selected to try the cause on a contingent fee basis. After taking the bench the attorney originally employed made an order transferring the case on 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 as compensation for services rendered by him prior to his election to the bench?
ANSWER. The Advisory Committee is or the opinion that it is proper for the attorney first retained who afterwards was elected to the bench to accept a portion of the contingent fee received by the attorneys who were afterwards selected to handle the case. The attorney who was elected to the bench was entitled to be paid for the services that he rendered up to the time of his withdrawal from the case. If he had been employed on a fixed fee to be paid in cash regardless of the outcome of the litigation he would have been entitled to that portion of the fee that he earned prior to his withdrawal. The fact the fee was contingent does not affect his right to that portion of the contingent compensation earned by him up to the time he became disqualified to further represent his client.
[Rule 4 1.5(e)]
FORMAL OPINION 30
COLLECTIONS ATTORNEY EMPLOYING CONSTABLE IMPROPER FOR ATTORNEY HANDLING COLLECTIONS TO PAY CONSTABLE FOR SENDING OUT NOTICES ON ACCOUNTS OR BEFORE EXECUTION
QUESTION: Is it proper for an attorney handling collection have constables send out notices on delinquent accounts and then have the same constables send out notices before execution? The constables receive a small percentage for their services.
ANSWER: The Advisory Committee is of the opinion that it is improper for an attorney handling collections to give a part or percentage of his collection fees to a constable to send out notices on delinquent accounts or to send out notices before execution is issued where a judgment is obtained. The attorney in such case is dividing fees with a layman and if the notice contains a threat of suit or threat of levy of execution he is cooperating 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 SALARY BASIS CANNOT REQUEST ALLOWANCE OF ATTORNEY'S FEES TO BE RETAINED BY CORPORATION.
QUESTION: Is it permissible for an attorney employed by a corporation on a salary basis, in appearing in Court as attorney for the corporation in a note case, to request the allowance of attorney fee, it being understood that the corporation desires the attorney fee for its own use as the 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 PROHIBITED FROM PRACTICING LAW MAY NOT FORWARD LEGAL BUSINESS AND PARTICIPATE IN FEE.
QUESTION: Can a lawyer Probate Judge-Magistrate, who is prohibited 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 SETTLING CLAIM WHEREIN CLIENT HAS RECEIVED WORKMEN'S COMPENSATION FROM EMPLOYER.
QUESTION: "A" is employed by a milling company. He was injured by attempting to stop a car operated by a railroad company, not connected with the milling company. "A" made the usual fifty percent contingent contract with "X" lawyer who sued the railroad company and is settling the claim for $10,000.00.
"A" made a claim for compensation against the milling company.Compensation was started without the efforts of "X" attorney, and compensation in the amount of $1,300.00 was paid and doctors' bills and incidental 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 the reduction 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 which goes 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) fifty percent 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 SALARY BASIS CAN REQUEST THE ALLOWANCE OF FEE IN REPRESENTING EMPLOYER SO LONG AS FEE IS NOT TURNED OVER TO EMPLOYER BUT RETAINED BY ATTORNEY.
QUESTION: Is it permissible for an attorney employed by an insurance company on a salary basis, in appearing as attorney for the insurance company in an interpleader suit, to request the allowance of an attorney's fee, it being understood that any fee allowed by the Court would belong to the attorney individually and would not be turned over to the insurance company? The insurance company permitting such, in spite of the fact 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 COMPANIES IN CERTAIN TYPES OF LITIGATION.
QUESTION: An automobile finance company in replevin and repossession cases tells their lawyers that attorney's fees earned by them in such cases must be collected from the owner of the automobile and all costs and expenses must be paid by such owner as a condition to recover his car.
(a) Is it ethical for the lawyer representing the finance company to force the automobile owner to pay attorney's fees and expenses as elements of damage, in addition to the amount due, before the car is surrendered to the owner?
(b) Is it ethical for the lawyer to make such an arrangement with the finance company and agree not to charge the finance company attorney's fees but to have his fees and expenses contingent on collecting them from the owner?
ANSWER: The answer to both questions so far as attorney's fees are 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 there is 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 DEFEND COUNTER CLAIM WHERE A COUNTERCLAIM WAS NOT ANTICIPATED IN ORIGINAL EMPLOYMENT.
QUESTION: A client employs an attorney to institute action against another on an account for $200.00. For this service the attorney charges him $35.00. When service is had, defendant files a counterclaim for$1,400.00, which makes the case rather complicated. Under such circumstances would it be ethical to charge the plaintiff an additional fee to defend him on the counterclaim, the client not explaining anything about counterclaim at the time of employment?
[Rule 4 1.5]
FORMAL OPINION 71
IMPROPER TO PERMIT EMPLOYER LAY AGENCY TO RETAIN ANY PORTION OF FEES CHARGED FOR LEGAL SERVICES.
QUESTION: Is it proper for a lawyer retained by a Bank or Building and Loan Association or similar agency to permit the agency to retain 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 CARDS IMPROPER.
FORMAL OPINION 114
ATTORNEY FEES DISSOLUTION OF MARRIAGE ACTIONS AND 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 a contingent fee agreement with his client which determines his fee based upon a percentage of the amount recovered for maintenance for his client(gross or monthly), the amount recovered as the client's share of separate or marital property, or the amount recovered for child support?
2. If answered in the negative, is the same answer applicable to motions to modify the original decree wherein the movant seeks to recover an increased amount as monthly maintenance or child support?
3. If retained by a client for the collection of any past due maintenance or child support previously adjudicated by a court, is a contingent fee improper?
ANSWER: 1. It is the opinion of the Advisory Committee that the use of a contingent fee employment contract in the original dissolution proceedings is improper.
The Committee believes that in all such cases such contracts are against 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 not expressly prohibited by DR2-106 of Rule 4. The Committee had reviewed EC 2-20 and the specific language contained therein:
"Because of the human relationships involved and the unique character of the proceedings, contingent fee arrangements in domestic relation cases are rarely justified."
In spite of that language, which indicates there could be an exception to the general principle, the Committee believes such contracts are improper, per se.
It is the opinion of the Advisory Committee that counsel and his client can make a valid employment contract for an agreed fee in excess of the 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 with the provisions of DR2-106 of Rule 4.
2. The answer to (2) is Yes. The same reason of public policy prohibits contingent fee contracts in motions to modify original decrees as it does in original proceedings.
3. The answer to (3) is No. The opinion of the Advisory Committee as previously issued, remains that it is ethically proper for an attorney to accept employment for the collection of any past due maintenance or child support 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 BELONGING TO HIS CLIENT TO ENFORCE PAYMENT OF FEES OR EXPENSES.
QUESTION: May a Missouri Attorney ethically withhold from his client papers, books, documents or other personal property which belong to the client and came to the attorney in the course of his professional employment to enforce payment of fees or expenses owed to the attorney by the client?
ANSWER: It is the opinion of the Advisory Committee that under the 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 for which the attorney has borne out-of-pocket expenses such as, but not limited to, transcripts. The attorney may retain those items until such time as he is reimbursed for the out-of-pocket expense and then they must be immediately delivered to the client. Those items which have commonly been denominated as "work product" of the attorney actually belong to the client because those are the result of services for which the client contracted.
The basis given for such action by attorneys in Missouri has been the so-called Attorney's Common Law Retaining Lien, said lien having existed in the English Common Law and being recognized in a number of states of which Missouri is not one. It is strictly a passive lien inasmuch as the attorney has no power to enforce payment other than to embarrass,inconvenience or to cause worry to the client by the withholding of his papers. The legal question of whether or not the Attorney's Common Law Retaining Lien exists has not been affirmatively answered by the Missouri Courts.
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 deemed to be in existence, the question of the ethical propriety of its exercise must still be answered with reference to the Rules of Professional Conduct. The situations under which this question normally arise will be where the attorney has withdrawn from the representation of his client or where the client has discharged the attorney because the representation has been completed or prior to the time of the completion of the representation. For purposes of this discussion, however, the aforementioned situations do not differe in as much as Rule 1.15(b) of Missouri Supreme Court Rule 4 states"Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person.Except as stated in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request of the client or third person, shall promptly 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 extent reasonably practicable to protect a client's interest, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by other law." (Emphasis added). If a lawyer wishes to keep a copy of the file for his own use or protection, then the lawyer must bear the costs of copying 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 attorney arising from services in a dissolution of marriage action a legal question or an ethical problem?
ANSWER: Usually a legal question. Assuming the fee charged for the services is not clearly excessive and unconscionable, it presents a legal question for determination by the courts under standards set forth under DR2-106(B). Sometimes an agreement can be made between the client and the attorney whereby the amount of the fee in dispute can be placed in escrow pending the court's decision and the undisputed portion distributed to 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 to enter into a contract with a "medical-legal consulting firm" to provide a review of medical facts, records, etc. and give an opinion as to whether malpractice exists? The consulting firm for an additional consideration will provide expert witnesses to testify at trial, (providing malpractice exists) on a time basis or on a contingent fee basis. The contract is in writing between consulting firm and the client and the client's attorney is given written authority by the client to pay all proper items of cost direct to the consulting firm from any proceeds recovered.
ANSWER: Yes. It would be improper for the attorney to contract with the medical-legal consulting firm and agree that the consulting firm would be paid out of that portion of the recovery which the attorney had contracted to receive for his services.
The Advisory Committee sees nothing unethical in an attorney allowing his client to contract with an organization which will provide medical assessment of a claim and a professional witness to testify so long as the witness receives his compensation for testifying regardless of the outcome of the case. (The question of the advisability of the client entering into the contingent fee contract with the consulting firm who furnishes the name of the witness is a matter which must be decided by the client upon the advice of his attorney.)
The Committee believes it is more desirable from an ethical point of view for the professional witness to be paid directly by the client, so long as the witness is actually paid an agreed fee for his time and effort in testifying and his pay is not contingent on the outcome of the case. The Committee does not believe it would be unethical even if the witness was paid 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 same account as a litigation operating account and a trust account for the holding of client's funds would constitute a "commingling of funds" which would be prohibited by DR9-192(A). Rendered February 20, 1979.
[Rule 4 1.15]
1. Can a "not for profit" legal aid corporation which exists for the purpose of securing free legal assistance for persons unable to pay for the same, 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 can maintain client trust funds in an interest-bearing account is a legal question and 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 of Lawyers X, Y and Z. That firm undertakes a contingent fee contract to represent 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 should continue to represent him and thus, Z and W should advise Client A to write a letter to Partner X terminating the services of X and Y and directing that 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 interest in 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, purchaser gave the law firm two $100.00 checks as earnest money, one of which was placed in the law firm's trust account and the other deposited to the estate checking account.
The law firm computed its statutory fee on the entire purchase price.
1. Can the firm charge the spouse individually a separate fee equal to 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 the statutory 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 firm cannot apply the $100.00 earnest money held in the trust account towards payment of the fee, without the express permission or the client. Rendered October 18, 1979.
[Rule 4 1.5]
QUESTION: Attorney X is contacted by the respondent in a dissolution action; however, he is not formally employed by respondent.Attorney X has incurred some long distance phone expense and consultation fees for this respondent, who is a member of the Armed Forces. 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 prevents Attorney X's representation of the respondent unless Attorney X feels that he is prejudiced because of the failure of the respondent to pay the statement for fees and expenses. Some members of the Committee question whether a suit over long distance calls and a consultation fee can be justified either from the standpoint of legal ethics or economic advantage to the attorney.
2. The Committee believes no appearance of impropriety exists if the court sees fit to accept the recommendation of opposing counsel regarding 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 of marriage on behalf of the wife. There are no children, both parties are employed, there is no marital property. Attorney "B" enters his appearance for husband and files answer and cross-petition. The case is set on the uncontested docket, there appearing no item of dispute. Attorney "A"obtains continuance of the case. Attorney "A" states that the petitioner-wife will not be ready until Attorney "A" has been paid $500.00 by one or both of the parties. Attorney "A" will not agree to accept a judgment for fees in the dissolution action against the husband for any part of the fees or even all of the fees, and will only "be ready" when he has been paid $500.00 by one of the parties for the simplest of uncontested dissolutions.
Is it proper for Attorney "A" to refuse to try a case until he has been paid, no other matters being in dispute?
ANSWER: No. It is the opinion of the Advisory Committee that it is not proper for Attorney "A" to refuse to try the dissolution case until he has been paid, no other matters being in dispute.
If the court sets the case, the attorney is obligated to go forward with 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 an informal opinion by the Committee.
(Part a. omitted.)
b. May the attorney who advertises a fixed fee for a permitted routine service make an additional charge in a dissolution case for additional work such as a written property settlement or deeds prepared incident to the dissolution?
ANSWER: An attorney may make an additional charge if it was fully explained to his client that such services are not included as "routine"before furnishing the service. We believe there are certain cases that the matters set out would be considered routine and others that would not.
c. Is the lawyer obligated to return to the client the court cost deposit refund?
ANSWER: Yes. The lawyer is obligated to return to the client the court 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 the Industrial Development Authority of a City established under Chapter 349.The Corporation consists of a nine-member board of directors, all of whom are appointed by the City Council. After appointment the Corporation is autonomous and it is not controlled by the City. The purpose of the Corporation is to assist in industrial development by issuing industrial revenue bonds without the need of a vote of the people. Lawyer A has served on the Authority and as its president for a number of years.Generally speaking, he draws most of the documents that lead to the issuance of the bonds. The company which benefits by issuance of the bonds normally pays all expenses incurred in issuance of the bonds, which normally include a fee for legal services.
The attorney-officer of the Corporation submits a question as to whether 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 paid no salary.
ANSWER: The Committee recognizes the general rule, that as an officer 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 conflict of interest for the Corporation officer to vote to approve a bond if he knew that he would be doing the legal work and would be getting paid for it by the company benefitting from the bond. We think this involves a legal question on whether such conduct would violate the conflict of interest statutes of the State of Missouri.
The Committee believes the safer ethical course would be for the lawyer to resign from his appointment and thus be free to accept paid employment from the Corporation. The alternative course would be for him to remain on the Authority but to suggest that the Corporation hire outside counsel 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 to withdraw from representation of a client if the client fails to pay the agreed fee or expenses.
ANSWER: As a general rule it is not unethical to withdraw from representation of a client if the client fails to pay the agreed upon fee or expenses. In matters of litigation, however, that is subject to the jurisdiction of the trial court. An attorney seeking to withdraw from representation should file a motion to withdraw which must be approved by the court. If the court allows the withdrawal, then there is nothing unethical 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 of facts.
Decedent, hereinafter referred to as "D", is injured in an automobile accident, is hospitalized, and after approximately a month dies while still in the hospital as a direct result of the accident.
"D" leaves no surviving spouse or any surviving descendants, either natural or adopted. "D"'s stepdaughter (not adopted), hereinafter referred to 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 the probate of the will of "D"; "L" being the attorney who had prepared the will of "D".
"L", at the time the will is discovered, tells the brothers and sisters of "D" that he cannot represent them; that he, "L", is representing "S", and further informs them that they should get their own attorney if they desire representation.
"L" then attempts to settle the claim due to the death of "D" and arrives at an equitable figure of settlement with the insurance company. "L"then contacts the brothers and sisters of "D" in order to obtain release of their 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 can get "S" to accept a lower figure. No written contract exists between any of the 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 to represent them who then contacts the insurance company and, after discussions, files the necessary lawsuit to apportion the settlement figures agreed 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 for an attorney fee for services to the brothers and sisters of "D" in an action brought by the attorney retained by the brothers and sisters under the provisions of Section 537.095 of the Revised Statutes of Missouri?
ANSWER 1: It is the Committee's conclusion, based upon the facts as given, that Attorney "L" has no claim for fees for representation of the brothers and sisters of the decedent. It can see no place where he has sought to represent the brothers and sisters. In his discussion with them concerning a possible settlement, it appears to us that "L" was representing the estate of the decedent and the decedent's stepdaughter personally. Had he been able to have all of said parties agree on a division of the recovery and then had filed the necessary action to complete the settlement and apportion the recovery in conformity with that agreement, "L" might then have had a basis for a claim for some attorney's fees. Under the facts as given, however, the Committee does not believe "L" is entitled to any fees for services to the brothers and sisters of the decedent.
QUESTION 2: Did Attorney "L" have a conflict of interest when he urged the brothers and sisters of "D" to give part of the settlement to the estate 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 of giving a part of the settlement to the estate of the decedent. "L" was still representing that estate and the stepdaughter. He had already told the brothers and sisters of the decedent that he could not represent them, that he was representing the stepdaughter and he advised them to get their own attorney if they desired representation. Rendered September 12, 1980.
Rule 4 1.5; 1.7]
QUESTION: Lawyer A has entered into a contingent fee contract with the client. Lawyer A has notified the defendant's insurer of his employment and of his statutory lien for services. The client then discharged Lawyer A and enters into a contingent fee contract with Lawyer B.
On an ethical basis, what interest does Lawyer A have in the case?
ANSWER: It is the opinion of the Advisory Committee that Lawyer A is entitled to a reasonable fee for what services he actually performed for the client and he has a statutory lien for that fee. The attention of the attorney's lien should only be for a reasonable fee to the attorney and any attempt to collect a larger fee by assertion of the lien for the percentage in the contingent fee contract would be a violation of the Code of Professional Responsibility. 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 checking account funds belong?
ANSWER: It is the opinion of the Advisory Committee that any interest earned by client's funds goes with the principal. The Committee has previously so held with regard to an ordinary trust account and can see no basis on which to change its holding because the trust account may also be a checking account. If any of the funds in the trust account belong to the attorney (as under a contingent fee arrangement on a personal injury claim), then the interest earned on the amount which is attorney's fees would go to the attorney. As a caveat, the Committee thinks this situation has potential income tax problems for both the client and the attorney which 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 income tax preparation service (service) where the service would, along with its advertising of other locations and outlets include the name, location and telephone number of an attorney who is, in fact, utilizing the computer preparation of tax returns, avoiding any reference in the advertising that a 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 above paragraph, divide the tax return preparation fee with the tax service or trust the attorney pay a set amount to the service for the preparation of each return and, finally, can the attorney have a sign in the window of his law office displaying the corporate name of the computerized tax service which in fact indicates that the service is available on the premises?
ANSWER: It is the opinion of the Committee that an attorney can use the computerized income tax preparation service if the client is advised in advance and specifically waives the breach of confidentiality that such use obviously necessitates. The attorney cannot divide the fee on a percentage basis with the computer service. He would have to pay the computer service separately and then charge his client an appropriate total fee. It would be improper for the service to advertise the name, location and telephone number of the attorney using the service. It would also be improper for the attorney to have a sign in the window of his law office displaying the corporate 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 promissory note for legal services rendered, assign that note to his non-lawyer secretary for nominal consideration, then file suit in her name seeking recovery on the note plus attorney fees, as provided by the terms of the note?
ANSWER: No. In the opinion of the Committee, it would be improper for the attorney to assign the promissory note to a non lawyer for nominal consideration and then file suit on behalf of the non-lawyer seeking recovery of the amount owed on the note. This would be a subterfuge and a fraud on the Court since the named party would not. he the real party in interest. Rendered October 1, 1981.
[Rule 4 3.3; 8.4(c)]
1. An attorney submits the following hypothetical questions for an Advisory Opinion for his personal guidance.
Situation No. 1: Lawyer A and Lawyer B were formerly law partners and represented XYZ Corporation. XYZ Corporation was considered to be the client of Lawyer A, but Lawyer B performed much of the legal work for XYZ Corporation. Under the partnership agreement between Lawyer A and Lawyer B, Lawyer A was to receive one third of the fees paid by XYZ Corporation as the "referring partner". Lawyer B was to receive the remaining two-thirds for his services rendered. During the course of time, Lawyer A and Lawyer B decided that they no longer desired to be partners and that they simply wanted to enter into an "office sharing arrangement" wherein they would not be partners. They do not hold themselves out as partners either on the office door or on the letterhead.
Is it ethical for Lawyer B to continue performing legal services for XYZ Corporation and have Lawyer A share in the fee under the premise that XYZ Corporation was originally his client?
ANSWER Situation No. 1: No, it is not ethical for Lawyer B to continue performing legal services for the corporation and have Lawyer A share in the fee.
Situation No. 2: After the dissolution of the partnership of Lawyer A and Lawyer B, a new client, the City, comes to see Lawyer A and requests that Lawyer A perform legal services for the City. Lawyer A refers the file to Lawyer B and requests that Lawyer A perform research on the legal 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 name and letterhead of Lawyer A. Lawyer B would be compensated pursuant to the same formula referred to in Situation No. 1.
Is it ethical for Lawyer A to send out opinions under his name and send out bills under his name even though he has not performed the work in question? Should Lawyer A inform the client that the work in question had 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 to send out opinions under his name and send out bills under his name when he has not performed the work in question.
Situation No. 3: During the partnership, Lawyer B had performed some legal work for a client of Lawyer A, Dr. X. Dr. X had been a client of long standing of Lawyer A even before Lawyer A and Lawyer B were partners. 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 were split between Lawyer A and Lawyer B pursuant to the same partnership formula referred to in Situation No. 1 above. After the dissolution of the partnership of Lawyer A and Lawyer B, Dr. X called Lawyer B directly and requested that he perform additional legal services for him.
What responsibility does Lawyer B have to Lawyer A to either notify him of the legal work to be done for Dr. X or the division of fees for said work? Should Lawyer A go ahead and perform the work for Dr. X? If Lawyer B does decide to go ahead and do the work for Dr. X, does he have any responsibility to share his fee with Lawyer A?
ANSWER Situation No. 3: All of the questions are answered by DR2-107 of Rule 4, Supreme Court of Missouri. Lawyer B has no responsibility to notify Lawyer A of the legal work and certainly cannot divide 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, he would have done to him.
Rendered October 1, 1982.
[Rule 4 1.5(e)]
QUESTION A: May an attorney employ outside counsel to collect fees and may said firm be retained on a contingent fee basis?
ANSWER A: In the opinion of the Committee it is permissible for the 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 fee basis.
QUESTION B: Can an attorney retain a collection agency for collection of outstanding legal fees?
ANSWER B: An attorney can enlist the aid of a collection agency for the collection of outstanding legal fee accounts so long as the collection agency operates within the legal limits and does not attempt to engage in any 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 a dissolution case based solely upon these facts? The client, who was represented by different counsel during trial, seeks to appeal only from the trial court distribution of marital property. She does not have the liquid assets to pay an hourly fee for the appeal. She does not contend the marriage should not be dissolved.
ANSWER: Yes, under the above restricted facts, it would be permissible. This is contrary to the general rule expressed in Formal Opinion No. 114 adopted September 9, 1977 and Shanks v. Kilgore, (Ct. of Appeals, w.n. 1979) 589 S.W.2d 318. Rendered March 31, 1983.
INFORMAL OPINION 930085
QUESTION: May attorney enter into a contingent fee arrangement to collect on final judgment which was entered in a domestic relations case? Because payments to client as a result of collection action will be in installments over a lengthy period, may attorney require that client irrevocably designate attorney as payee of the payments?
ANSWER: The contingent fee arrangement is not prohibited. Their revocable 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 contractual relationship with a potential client where the lawyer agrees to provide certain specifically delineated legal services in return for payment of a regular monthly retainer? (2) If yes, may a lawyer hire direct employees or contract with an independent contractor to promote, market, and sell the plan? (3) May an employee be compensated with a salary and receive bonuses based on performance? (4) May an independent contractor be used and paid on a flat fee or commission basis?
ANSWER: The answer to all questions is yes. Neither an employee nor an independent contractor may be paid on the basis of the amount of fees paid to the attorney or billed by the attorney for legal services. That conduct 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 case involving distribution of property on a contingent fee basis? The order granting 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 a contingent fee basis where the order granting the dissolution is final and neither alimony nor child support remain as issues?
[Rule 4 1.5(d)]
INFORMAL OPINION 930108
QUESTION: What is the appropriate apportionment of fees between two attorneys who worked together on the same case?
ANSWER: This opinion request requires a determination of facts rather than application of the rules to an established set of facts. This office cannot determine the facts. Once the facts have been determined by all parties involved, this office could give an opinion applying the rules to the established 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 signed a 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 regarding apportionment of fees and right of former partner to have continuing control 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 to ensure that client is not billed twice for the same representation. Former partner only has right to control cases if former partner is acting as co-counsel with the knowledge and consent of the client. The decision on who the attorney will be belongs to the client.
[Rule 4 1.5]
INFORMAL OPINION 930153
QUESTION FACTUAL SITUATION 1: Attorney will purchase information from a separate business obtained from police reports of traffic accidents. Attorney will solicit prospective clients from this information, by mail only.
QUESTION FACTUAL SITUATION 2: Attorney will be retained to represent drivers employed by a business in traffic ticket cases. Either the company or the drivers will retain Attorney. Attorney would charge a flat monthly fee per driver. Would this violate the rule on fees for months when a driver received
ANSWER FACTUAL SITUATION 1: This would not, as a general rule be a violation. However, special attention must be paid to Rule 4-7.3(c). It seems particularly likely that Rule 4-7.3(c)(1) would apply to some accident victims.
ANSWER FACTUAL SITUATION 2: This arrangement would not 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 who are plaintiffs in a case arising out of an automobile accident. Attorney has filed 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 of limitations runs on the passenger's case. Both clients have been informed of this action. Must Attorney withdraw from the passenger's case now? If Attorney must withdraw, may Attorney assert a lien? How will the legal fees be calculated?
ANSWER: To represent both the driver and passenger, Attorney must make a determination that the dual representation will not adversely affect representation of either party. Each client must be given full disclosure of the conflicts and potential conflicts involved in the situation. Each client must affirmatively act to consent. If a problem arises after representation is begun, this procedure must be repeated. If either client will not consent, Attorney must withdraw from representing both, unless both clients consent to Attorney continuing to represent one. Attorney may assert a lien for fees. The question of how fees will be calculated is a legal issue.
[Rule 4 1.5; 1.7]
INFORMAL OPINION 940065
QUESTION: Attorney accepted a case on a flat fee basis. Attorney now wishes to withdraw before the case is concluded due to the client's lack of cooperation. Attorney states that, as a result of client's lack of cooperation, attorney fees valuing several times the flat fee paid have been provided. 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. This office cannot resolved factual issues such as the amount of a refund owed in the context of an informal advisory opinion.
[Rule 4 1.5; 1.16(d)]