Washington Lawyer

Bar Counsel: Retainers: The Haves and the Have-Nots

From Washington Lawyer, December 2005

By Asma Naeem and Reid Trautz

Illustration by Mick Wiggins

The contractual nature of an attorney–client relationship is most literally embodied in the retainer agreement.[1] Although the issue of remuneration for an attorney’s services generally falls outside the scope of the Office of Bar Counsel’s investigations, our office routinely examines retainers and the manner in which they set out the parameters of the attorney–client relationship and the financial expectations between the two parties.[2]

Retainer agreements can take many forms. The Office of Bar Counsel has seen some that are simple receipts for money received by the attorney, and others that are dense, multipage documents weighed down with legalese.[3] Indeed, some retainers are never written down at all, and this is when an attorney can run into ethical difficulty.

According to Rule 1.5(b) of the D.C. Rules of Professional Conduct, “[w]hen the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, in writing, before or within a reasonable time after commencing the representation.” Section (c) of the rule goes on to state that all contingent fee agreements must be in writing and demonstrate how the fee was determined. The rationale for this language, as propounded in comment 2 to the rule, is that “[a] written statement concerning the fee, required to be furnished in advance in most cases by paragraph (b), reduces the possibility of misunderstanding.” Thus, a plain reading of the rule and the comment suggests that a written retainer is advisable in all cases, and mandatory for those in which there is a contingent fee.[4]

Despite the ethical obligations arising out of Rule 1.5, the respondent in In re Williams[5] decided to forgo a written agreement in his representation of a former law student in a property case. The fact that no retainer was ever made created nothing but problems for the respondent. At the disciplinary hearing he and the client had different recollections of the initial meeting between them. The client claimed the respondent told him that “there would be no bill.” The respondent testified he informed the client that he would represent him on a contingent fee basis and that they “would work it out.”[6]

After the respondent obtained a settlement of $7,000, he contacted the client and explained that he usually received 25 percent of the proceeds in cases involving friends and relatives. When the client tendered $500 instead, the respondent filed suit in small claims court against the client and eventually found himself the subject of a Bar Counsel investigation.[7] The respondent contested the issuance of an informal admonition by the Office of Bar Counsel and appealed to the D.C. Court of Appeals, which affirmed the admonition.

Though the representation began with the best of intentions, it quickly devolved into a war of words—an imbroglio that could have been avoided had the respondent simply taken the time to create a retainer agreement beforehand.

As this case illustrates, any representation can easily tread into unpredicted territory; and the use of a retainer, indeed even modifying existing retainers, can keep both attorney and client apprised of each other’s expectations. Pro bono cases, for example, can give the client the impression that no fee is owed. Yes, sometimes these cases can result in large settlements or judgments with attorney’s fees awarded by a court, leading to an inevitable dispute between the client and the attorney over who gets how much. Retainer agreements should contain language to accommodate such possible outcomes.

Creating a retainer is also a wise choice from a proper management perspective. Although Rule 1.5 may only require a written rate disclosure, a comprehensive agreement can avoid misunderstandings that a simple hourly rate disclosure would be inadequate to prevent. Therefore, it is strongly recommended that a lawyer draft a comprehensive fee agreement to be signed by the lawyer and his or her client at the start of each representation.

The D.C. Bar Practice Management Advisory Service suggests the following considerations be taken into account when drafting a retainer agreement:

• Define the scope of your services. Expressly state in the agreement the legal matter in which you are representing the client. Be specific.

• Define the timing of your services. If you want payment before commencing work, clearly state to the client that your services start after the client has paid the advance or the flat fee. State that your services may cease if the client fails or ceases to pay your bill. See also Rule 1.16(d) about steps to follow whenever a representation is terminated.

• Explain the fee arrangement. For your client’s edification, explain the type of fee arrangement you are using. If it is a flat fee, expressly state that your fee is a one-time, upfront payment before services begin. For an advance fee, explain in the agreement that you will be charging your services against the advance fee on an hourly basis, and write in that hourly amount. Let the client know that when the advance fee is exhausted, you will require more money. By the same token, explain that you will return any unused portion of the advance fee (pursuant to Rule 1.16).

• State how fee advances and costs will be handled. Rule 1.15(d) now states that advances of unearned fees and unincurred costs shall be treated as property of the client unless the client consents to a different arrangement. Therefore, advance fees and costs must be placed into your client trust account rather than your operating account—unless your client agrees otherwise. State in your agreement where the fee and/or cost advance will be placed. If it is to be placed in your client trust account, state when the fee will be withdrawn.

• Explain the client’s obligation for costs.

• Explain your billing practices. Let your client know how often he or she can expect to receive your bill (preferably monthly), then make sure you stick to the promised schedule. Also explain when payment is due (upon receipt, within 30 days, etc.).

• Allow your client time to question your bill. Discussing your bill with your client will ease client concerns when the bill starts to mount. Let your client know in the fee agreement that he or she may discuss the bill with you at any time. However, put a time limit on the ability to question specific charges—say, within 30 days of receipt. This may save you problems with a client who later decides to question all charges and not pay the bill.

Finally, although most attorneys realize the importance of creating a document that memorializes the nature of the representation, some deviate from their ethical obligations with the language they choose to include in the retainer. This type of misconduct usually results in informal admonitions. In one instance the respondent created a retainer with language that limited the client to the filing of a complaint with the Office of Bar Counsel to one year after the attorney–client relationship had ended, in direct violation of D.C. Rule XI, §1(c), which specifically states that no statute of limitations applies to attorney disciplinary proceedings. Thus, the creation of a retainer agreement in and of itself does not protect an attorney from a disciplinary investigation.

Remember, you are the attorney with the legal training and any agreement will be read by the Office of Bar Counsel in favor of the client who did not draft the document. Close scrutiny and careful consideration in drafting retainer agreements, and the use of sound language in the retainer agreement, should be in every practicing attorney’s skill set.

Notes
[1] The term retainer also connotes the initial fee given to an attorney as compensation for turning down other cases, future performance, and future costs.
[2] The D.C. Bar Attorney/Client Arbitration Board seeks to resolve disputes between attorneys and clients about such matters as legal fees.
[3] A retainer could be a receipt that says “$300 for a divorce.” However, such innocuous language fails to consider whether the attorney may have signed up to represent a client in an uncontested or contested divorce, the possibility of child custody questions, and future appeals all the way up to the U.S. Supreme Court.
[4] The exception to the general principle of creating a written retainer agreement is when the attorney has regularly represented the client and may be charging an hourly fee. See D.C. Rules of Prof’l Conduct R. 1.5, cmt. 1. Also, the issue of whether a retainer is required in probate cases is more complex. See In re Boykins, 748 A.2d 413 (D.C. 2000) (per curiam) (failure to provide a written agreement in conservatorship representation resulted in a 30-day suspension that was stayed in lieu of one-year probation).
[5] 639 A.2d 327 (D.C. 1997).
[6] In re Williams, Bar Docket No. 212-94, at 2–3 (Nov. 13, 1995) (citing transcript at 17, 25, and 48).
[7] Even though the respondent had accepted the $500 from the client without protest, he sued the client for $1,250, and the action resulted in the respondent receiving another $300. Id. at 4 (citing transcript at 21).

Asma Naeem is assistant bar counsel for intake. Reid Trautz is director of the D.C. Bar Practice Management Advisory Service.

Disciplinary Actions Taken by the Board on Professional Responsibility
Original Matters
In re Leonard W. Krouner. Bar No. 190165. September 28, 2005. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar Krouner, nunc pro tunc to May 23, 2003. Krouner was found guilty in the Supreme Court of New York, Albany County, of one count of insurance fraud in the third degree, in violation of N.Y. Penal Law § 176.20; one count of grand larceny in the fourth degree, in violation of N.Y. Penal Law § 155.30(1); and one count of workers’ compensation fraudulent practices, in violation of N.Y. Workers’ Comp. Law § 114(1), crimes that involved moral turpitude per se, for which disbarment is mandatory.

In re Jeffrey P. Morris. Bar No. 461007. August 12, 2005. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar Morris by consent.

In re Dennis M. O’Keefe. Bar No. 210310. September 30, 2005. The Board on Professional Responsibility recommends that the D.C. Court of Appeals disbar O’Keefe by consent effective December 31, 2005.

Reciprocal Matters
In re David. M. de Clue. Bar No. 433324. September 30, 2005. In a reciprocal matter from Missouri, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose identical reciprocal discipline and disbar de Clue. The Supreme Court of Missouri disbarred de Clue based on his abandonment of three clients, failing to cooperate with disciplinary authorities, and practicing law while suspended for failure to pay bar dues and failure to certify his continuing legal education requirements.

In re John R. Hallal. Bar No. 444398. September 30, 2005. In a reciprocal matter from Massachusetts, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose functionally identical reciprocal discipline and suspend Hallal for five years with fitness. The Supreme Judicial Court for Suffolk County, Massachusetts, suspended Hallal indefinitely based on a joint stipulation for billing clients for his personal expenses over a number of years while he was a partner at a law firm.

In re Eugene H. Steele. Bar No. 168112. September 30, 2005. In a reciprocal matter from Florida, the Board on Professional Responsibility recommends that the D.C. Court of Appeals impose functionally equivalent reciprocal discipline and publicly censure Steele. The Supreme Court of Florida publicly reprimanded Steele for sending derogatory and demeaning correspondence on behalf of his client.

Disciplinary Actions Taken by the District of Columbia Court of Appeals
Original Matters
In re Paris A. Artis. Bar No. 181396. September 8, 2005. The D.C. Court of Appeals suspended Artis for 30 days, with reinstatement conditioned upon his compliance with Bar Counsel’s subpoena duces tecum and the court order enforcing it. Artis failed to comply with a board order compelling responses to Bar Counsel’s written inquiries and failed to respond to Bar Counsel’s subpoena duces tecum and the court order enforcing the subpoena. Rule 8.4(d) and D.C. Bar R. XI, § 2(b)(3).

In re Samuel Bailey Jr. Bar No. 384974. September 15, 2005. The D.C. Court of Appeals suspended Bailey for nine months. Bailey failed to maintain complete trust account funds, failed to notify a physician of a client’s settlement, entered into an impermissible business transaction with a client, and engaged in negligent misappropriation while retained to represent a client in a personal injury matter. Rules 1.8(a), 1.15(a), and 1.15(b).

In re William Bingham. Bar No. 228064. August 25, 2005. The D.C. Court of Appeals publicly censured Bingham and ordered that he be placed on probation for three years, and further ordered that as a condition of probation he pay restitution to his clients in the amount of $250 plus interest. Bingham failed to file a petition for probate or to advance the probate of an estate over the course of approximately four years, and failed to withdraw from a matter when his physical or mental condition materially impaired his ability to represent his clients. Rules 1.1(a), 1.1(b), 1.3(a), 1.3(c), and 1.16(a)(2).

In re Arthur J. Frank. Bar No. 419575. August 25, 2005. The D.C. Court of Appeals suspended Frank for six months for negligent misappropriation. Frank’s withdrawals from his law firm’s trust accounts resulted in the accounts containing insufficient funds to cover his obligations to a client. Rule 1.15.

In re Michael A. Gasch. Bar No. 928788. September 29, 2005. The D.C. Court of Appeals indefinitely suspended Gasch based on disability.

In re Jeffrey P. Morris. Bar No. 461007. September 15, 2005. The D.C. Court of Appeals disbarred Morris by consent.

In re Harry T. Spikes. Bar No. 372091. September 1, 2005. The D.C. Court of Appeals suspended Spikes for 30 days for filing nonmeritorious actions against attorneys who filed a complaint against him with the Office of Bar Counsel and who were immune from suit pursuant to D.C. Bar R. XI, § 19(a). The court found that Spikes engaged in conduct that seriously interfered with the administration of justice. Rules 3.1 and 8.4(d).

In re Sheron J. Walters. Bar No. 464655. August 18, 2005. The D.C. Court of Appeals disbarred Walters by consent.

In re Donald W. Whitehead. Bar No. 431037. September 22, 2005. The D.C. Court of Appeals suspended Whitehead for 60 days, with the suspension stayed in favor of two years’ probation, during which time he will be required to comply with five specified conditions. Whitehead committed rule violations during his representation of four separate clients pursuant to the Criminal Justice Act, D.C. Code § 11-2601 et seq. (2001). Rules 1.1(b), 1.3(a), 1.3(c), 1.4(a), 1.16(d), and 8.4(d).

Reciprocal Matters
In re Wayne A. Hagendorf. Bar No. 430695. August 25, 2005. In a reciprocal matter from Nevada, the D.C. Court of Appeals imposed identical reciprocal discipline and suspended Hagendorf for five months, with all but 60 days stayed. The Supreme Court of Nevada suspended Hagendorf for five months with all but 60 days stayed, on condition that he pay restitution of $25,000 and costs not to exceed $1,000. Hagendorf’s suspension by the Nevada court was based on an agreement for violating Nevada disciplinary rules pertaining to candor toward the tribunal; relations with opposing counsel; truthfulness in statements to others; dishonesty, fraud deceit, or misrepresentation; and conduct prejudicial to the administration of justice while representing himself in civil litigation against a former landlord.

In re Antoine I. Mann. Bar No. 433378. September 29, 2005. In a reciprocal matter from Maryland, the D.C. Court of Appeals imposed identical reciprocal discipline and indefinitely suspended Mann. Mann may apply for reinstatement after he is reinstated in Maryland or after five years, whichever occurs first. Mann was indefinitely suspended in Maryland based on a joint petition by consent as a result of eight complaints charging him with serious violations of the Maryland Rules of Professional Conduct, including fraud, lying under oath, and other criminal conduct.

In re Michael J. Miller. Bar No. 397689. September 15, 2005. In a reciprocal matter from Maryland, the D.C. Court of Appeals imposed functionally identical discipline and publicly censured Miller. The Court of Appeals of Maryland publicly reprimanded Miller for his unauthorized practice of law in Mississippi.

In re Robert A. Ras. Bar No. 244699. September 29, 2005. In a reciprocal matter from Illinois, the D.C. Court of Appeals imposed functionally equivalent discipline and suspended Ras for one year, with reinstatement conditioned upon fitness. The Supreme Court of Illinois suspended Ras for one year and until further order of that court. Illinois disciplinary authorities charged Ras with violating Illinois rules based on his conduct of threatening to present criminal charges to gain advantage in a civil matter; intentional degradation of a witness or other person before a tribunal; communication with a represented party without the lawyer’s consent; respect for rights of third persons; making false statements of material fact; conduct involving dishonesty, fraud, deceit, or misrepresentation; engaging in conduct prejudicial to the administration of justice; and conduct tending to defeat the administration of justice or bring the courts or the legal profession into disrepute.

In re Albert S. Watkins. Bar No. 399625. August 25, 2005. In a reciprocal matter from Missouri, the D.C. Court of Appeals imposed functionally identical reciprocal discipline and publicly censured Watkins. The Supreme Court of Missouri publicly reprimanded Watkins for improperly disclosing confidential information in connection with his representation of two clients with conflicting interests.

Informal Admonitions Issued by the Office of Bar Counsel
In re John Critzos II. Bar No. 399180. August 31, 2005. Bar Counsel issued Critzos an informal admonition for failing to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation, and failing to take timely steps to the extent reasonably practicable to protect a client’s interest in connection with termination of the representation, while representing clients in personal injury matters. Rules 1.4(b) and 1.16(d).

In re Adrian M. Fenty. Bar No. 455205. August 31, 2005. Bar Counsel issued Fenty an informal admonition for failing to provide competent, zealous, and diligent representation as court-appointed fiduciary for a ward of the court, to file accountings required by the court, and to take timely steps to the extent reasonably practicable to protect a ward of the court’s interest following his removal. Rules 1.1, 1.3(a), 1.16(d), and 8.4(d).

In re Alan D. Hutchison. Bar No. 972596. August 1, 2005. Bar Counsel issued Hutchison an informal admonition for failing to provide competent, diligent, and zealous representation and to communicate adequately while representing a client in an immigration matter. Rules 1.1, 1.3(a), and 1.4(b).

In re Antoini Jones. Bar No. 428159. August 17, 2005. Bar Counsel issued Jones an informal admonition for failing to provide effective assistance of counsel while representing a client before and at trial in a criminal matter. Rules 1.1(a), 1.1(b), and 1.3(a).

In re Roy R. Martinez. Bar No. 416239. August 17, 2005. Bar Counsel issued Martinez an informal admonition for failing to surrender papers and property to which a client was entitled in a timely manner after the representation ended while representing a client in an employment matter. Rule 1.16(d).

In re William Payne. Bar No. 419255. September 1, 2005. Bar Counsel issued Payne an informal admonition for failing to provide competent and diligent representation, to communicate, and to withdraw from a case as required by the rules while representing a client in an immigration matter. Rules 1.1(a), 1.1(b), 1.3(a), and 1.16(d).

In re Barbara E. Sosnick. Bar No. 273409. September 1, 2005. Bar Counsel issued Sosnick an informal admonition for failing to communicate, to promptly transfer the client file to successor counsel, and to respond to court orders while appointed to represent a client on appeal of his criminal conviction. Rules 1.4(a), 1.16(d), and 8.4(d).

In re Essie F. Stevens. Bar No. 411798. August 31, 2005. Bar Counsel issued Stevens an informal admonition for failing to provide a writing setting forth the basis or rate of her fee while representing a client in an immigration matter. Rule 1.5(b).

In re Carlos Vanegas. Bar No. 447067. July 28, 2005. Bar Counsel issued Vanegas an informal admonition for failing to respond accurately to a court inquiry as to his knowledge of his client’s whereabouts while serving as the defense attorney for a criminal defendant who fled the jurisdiction. Rule 3.3(a)(1).

The Office of Bar Counsel compiled the foregoing summaries of disciplinary actions. Reports and recommendations issued by the Board on Professional Responsibility, as well as informal admonitions issued by the Office of Bar Counsel, are posted on the D.C. Bar Web site at www.dcbar.org. Court opinions are printed in the Atlantic Reporter and, for decisions issued since mid-1998, are also available online. To obtain a copy of a recent slip opinion, visit www.dccourts.gov/
dccourts/appeals/opinions_mojs.jsp
. Please note that in some cases Bar members may have the same name. To confirm the identity of individuals who have been subject to discipline, contact the D.C. Bar Member Service Center at 202-626-3475 or membership@dcbar.org.