Professionally Permissible Piecework

by WSBA President Mark Johnson

On November 18, important amendments to RPC 1.5 (Fees), and RPC 1.15A (Safeguarding Property), took effect. The amendments permit a lawyer to charge flat fees for specified work and to place those fees, upon receipt, into the lawyer’s operating account — assuming certain written disclosure requirements. See RPC 1.5 (f) (2). The new rules also permit a lawyer to charge a “retainer,” defined and described as “a fee that a client pays to a lawyer to be available to the client during a specified period or on a specified matter, in addition to and apart from any compensation for legal services performed.” RPC 1.5 (f) (1). Amended RPC 1.15A clarifies the general rule that advance deposits towards fees and costs must be placed into trust and withdrawn only as the fees are earned or the costs incurred, absent a fee arrangement which qualifies as a retainer or flat fee. See RPC 1.15A (c) (2).

The word retainer has been used, interchangeably and incorrectly, with advance fee deposits, as well as many other fee structures, and the amendments seek to correct that misusage. The fee arrangement described in (f)(1) is an “availability,” “true,” “general,” or “classic” retainer. See new Comment 13 to RPC 1.5. An advance fee deposit is a payment towards future services and costs and unless the fee arrangement complies with the terms of 1.5 (f) (1) or (2), the fee is an advance fee deposit and must be held in the lawyer’s trust account until the fee is earned or the cost incurred. See new Comment 12 to RPC 1.5 and RPC 1.15A(c) (2). A retainer, which must be in writing and agreed to by the client, is permissible only if the true nature of the arrangement is to ensure the lawyer’s availability for a certain time or matter. It is not intended to be used as a substitute for what is, in reality, an advance fee deposit or to circumvent the trust account obligations for advance fee deposits.

New RPC 1.5 (f) (2) permits a lawyer to charge a “flat fee” for specified services and to place that fee into the lawyer’s operating account, if there is a written fee agreement containing certain disclosure requirements. See RPC 1.5(f) (2).

The new flat-fee rules require a written fee agreement which sets out the scope of the services, the amount of the fee and terms of payment, a statement that the fee becomes the lawyer’s property upon receipt, that the fee arrangement does not alter the client’s right to discharge the lawyer and that the client may be entitled to a refund if the agreed-upon services are not performed. See RPC 1.5 (f) (2). The lawyer is also required to take reasonable and prompt steps to resolve any disputes over the fee. See RPC 1.5(f) (3).

Although the use of retainers will probably be limited, the “piecework” portion of the rule changes, permitting a client to retain a lawyer for a specific piece of work at an agreed-upon price, should gain wide acceptance. Clients will have the security of a writing describing the material terms of the agreement and will know, up front, the cost of the legal services. Lawyers will know that they will be paid and will have immediate use of the money. The flat-fee rule should increase the availability of unbundled legal services, reduce the cost of some services, and help the financial viability of small firms and sole practitioners. 

WSBA President Mark Johnson can be reached at 206-386-5566 or mark@johnsonflora.com.