Wednesday, January 25, 2006

How's This For Brain-Dead, Anti-Client Policy

I spoke with a lawyer today who is having a problem with the Michigan Attorney Grievance Commission. It isn't that he has done anything unethical - he has a client who wants money back, and sometimes clients use the AGC has a hammer to try to coerce a refund.

The attorney took a client for a custody matter on the eve of a complicated hearing, and thus requested an engagement fee. The client agreed to the fee, and does not dispute that he knew it was a non-refundable fee. Past ethics rulings indicate that under certain circumstances an engagement fee is acceptable, due to the nature and circumstances of the engagement and work to be performed. If a lawyer has to turn away work or block of a substantial amount of time in order to assist a client, and has to decline work to keep that time free, an engagement fee protects the attorney in the event that the client "changes his mind".

According to the attorney, the AGC is pressing him to refund part of the money he charged and that, if he does so, the matter will be dropped. They are taking the position that because he did not charge the engagement fee on top of his hourly rate, but instead credited the engagement fee against the total final bill, it wasn't truly an engagement fee. There is nothing in the Michigan Rules of Professional Conduct which would support that interpretation, and Michigan's contract law would support the attorney's desire to enforce the contract as written.

In essence, attorney indicates that the AGC is stating that in the future the lawyer should charge a flat engagement fee - likely thousands of dollars, not refundable under any circumstance, and not extend any credit to the client for work performed. That's what corporate law firms do. From the first minute the client is billed for any work performed above and beyond the engagement fee.

That is an absurd position to take, though, in relation to individual clients who may not be able to afford to effectively gift a lawyer thousands of dollars simply for agreeing to take a case. A lawyer who tries to structure an engagement fee to the maximum benefit of the client, offering such credit, should not be punished for doing so. How is it more fair or more ethical, and less an "excessive fee" for the lawyer to double-dip?

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