Thursday, August 18, 2022
Recently Pennsylvania Bar Association and Philadelphia Bar Association legal ethics committees issued a Joint Formal Opinion addressing ethical considerations in the handling of several related forms of billing for services: flat fee, earned upon receipt, and non-refundable fees. Elder Law attorneys use various forms of such billing.
On the one hand, clients often want to know up front the full cost for services and thus like flat fee billing. On the other hand there can be tensions about whether or when such fees are "earned." The opinion stresses the need for clarity in the client-attorney relationship, so as to assure mutual understanding about when a fee is deemed earned, and to make sure clients are fully advised about the fee structure. With older clients -- and their family members -- it can be especially important to avoid assuming everyone understands mere "labels" for different fee arrangements.
In Joint Ethics Opinion No. 2022-300, the Committees conclude that under Pennsylvania Rules of Professional Conduct and with the guidance of prior opinions:
• Any fee not “earned upon receipt” is deemed an “advance” fee, which may only be deposited into the operating account if the client provides informed consent, confirmed in writing, in accordance with Rule 1.15(i); and,
• When a fee is deemed to be “earned upon receipt,” attorneys may deposit the fee into an operating account rather than a Rule 1.15 IOLTA account or other Trust account, provided that the attorney specifically states in the fee agreement that the fee is intended to be nonrefundable and earned upon receipt.
Hat tip to Rob Clofine, elder law attorney extraordinaire, for sharing this with Pennsylvania lawyers.