Saturday, February 27, 2016
Flat Fees In Ohio - More Ethics Opinions On The Way
The Ohio Board of Professional Conduct released an opinion on fees that is summarized on the Supreme Court's web page
The Ohio Supreme Court’s Board of Professional Conduct released an advisory opinion regarding the propriety of flat fee agreements related to a lawyer’s representation of a client and the manner in which such “paid-in-advance” fees must be accounted for by Ohio lawyers.
With the release of Advisory Opinion 2016-1, the board withdraws Advisory Opinion 96-4, which addressed the same topic under the former Code of Professional Responsibility.
Advisory Opinion 2016-1 addresses flat fee agreements paid in advance under the Rules of Professional Conduct. The board determined that under Prof.Cond.R. 1.15(c), a lawyer is required to deposit flat fees and expenses paid in advance for representation into a client trust account (IOLTA), unless the fee is designated as “earned upon receipt” or similarly, and may withdraw the funds only as the fee is earned or the expense is incurred. Regardless if the fee is designated “earned upon receipt,” “nonrefundable,” or similarly, the client must be advised in writing that the client may be entitled to a refund of any fee paid in advance, if the lawyer fails to complete the representation for any reason.
The opinion does not address a true retainer, which is a payment to a lawyer to secure availability of that lawyer’s services over a period of time and without regard to a specific matter.
In addition to addressing the propriety of flat fee agreements, Advisory Opinion 2016-1 provides guidance regarding other aspects of flat fee agreements. A flat fee must not be excessive, and a lawyer shall not provide financial assistance to a client – aside from advances in court costs and litigation expenses. Additionally, the flat fee agreement must not interfere with an attorney’s duties to provide competent and diligent representation to each client.
Advisory Opinion 2016-1 is the first in a series of opinions that will be reissued by the board during the next several months. The board is evaluating previously issued opinions that address often-asked questions from lawyers and judges and offer advice under the former Code of Professional Responsibility or former Code of Judicial Conduct. These opinions will be updated and reissued to provide guidance under the existing Rules of Professional Conduct and Code of Judicial Conduct.
(Mike Frisch)
https://lawprofessors.typepad.com/legal_profession/2016/02/the-ohio-board-of-professional-conduct-released-an-opinion-on-fees-that-is-summarized-on-the-supreme-courts-web-page.html