The United States Law Week

New Sanctions Proposed for California Lawyers over Flat Fees

Jan. 24, 2019, 4:40 PM

California’s proposing changes to rules for sanctioning attorney misconduct including new restrictions on flat fees and commingling client funds.

The California Bar Board of Trustees this week will consider the new package of sanctions that include requiring lawyers who take advance fees to place the funds in a separate client account or face suspension. A vote is expected Jan. 25.

The proposal also places restrictions on flat fees, and that’s a change, said Ed Lear, president of the Association Discipline Defense Counsel.

“There are an awful lot of attorneys that charge flat fees. And what I fear is many of those attorneys will not know those new rules, which is no excuse, and they’re going to run afoul of the rule,” Lear, with Century Law Group in Los Angeles and a former state bar prosecutor, told Bloomberg Law.

Flat Fees

Flat fees in family matters are prohibited when contingent upon securing a divorce or nullifying a marriage or hitting a specific amount of spousal or child support or property settlement. A fee for recovery of post-judgment balances for child or spousal support or other financial orders are OK, the proposal said.

Lawyers can charge or collect a fee that is denominated as “earned on receipt” or “non-refundable,” or in similar terms, “only if the fee is a true retainer and the client agrees in writing after disclosure that the client will not be entitled to a refund of all or part of the fee charged,” the proposal said.

Lawyers must promptly account in writing for the client or other person for whom the lawyer holds funds or property.

The amendments were prompted by first-in-a-generation changes to the state’s rules of professional conduct the California Supreme Court approved last May.

The rules were effective Nov. 1. The revised rules put California in line with the rest of the country that already adopted American Bar Association templates.

The sanctions were proposed separately. The Association of Discipline Defense Counsel met with the bar’s Office of Chief Trial Counsel seven times over the proposed sanctions, Interim Chief Trial Counsel Melanie J. Lawrence said in a memo to trustees and the Regulation and Discipline Committee.

Much of the change involves substituting the word “lawyer” for “member” as the Legislature has forced the bar to be more responsive as a public state agency with a focus on public safety. California lawyers are regulated by the California Supreme Court and the California Legislature.

Suspensions Standard

A three-month suspension is the penalty for commingling or failing to deposit funds, including advance fees, into a client trust account, fee-splitting with non-lawyers, and charging an unconscionable fee.

Ditto for frivolous filings “that have no other substantial purpose other than to delay or prolong the proceedings or cause needless expense” that results in substantial harm to the individual or administration of justice.

Disbarment is the sanction for a criminal act that adversely reflects on the lawyer’s honesty or fitness as a lawyer in other respects.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

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