• Things They Didn’t Warn You About in Law School
  • May 10, 2013 | Author: Mark S. Ochs
  • Law Firm: Tully Rinckey, PLLC - Your Lawyers for Life - Washington Office
  • In my 30 years as grievance counsel in the state of New York, including 20 years as Chief Attorney for the Committee on Professional Standards, it was apparent that the vast majority of attorneys are hard working, ethical practitioners who are dedicated to providing their clients with quality representation and advice. However, despite these high ideals, attorneys regularly get “caught up in the details” by failing to comply with rules and requirements they are not familiar with.

    To assist the practitioner, I have set forth some of the more common missteps that attorneys make in the practice of law.

    When a Handshake isn’t Enough - The use of written retainer agreements and letters of engagement

    A number of court rules in New York including the Rules of Professional Conduct (RPC) require attorneys to either enter into a signed written retainer agreement with a client or provide them with a writing confirming the fee arrangement. The three major provisions are:

    Procedure for Attorneys in Domestic Relations Matters - The Matrimonial Rules

    The Matrimonial Rules apply to all claims, actions or proceedings, in either Supreme or Family Court, or in any appellate court, for divorce, separation, annulment, custody, visitation, maintenance, child support, or alimony, or to enforce or modify a judgment or order in connection with any such claims, actions or proceedings. (22 NYCRR 1400.1)

    Rules for contingent fee cases (RPC 1.5(c))

    Promptly after being retained in a contingent fee matter, an attorney must provide the client with a writing stating:

    • The method by which the fee is to be determined;
    • Percentages that accrue to the attorney in the event of settlement, trial or appeal;
    • Litigation and other expenses to be deducted from the recovery; and
    • Whether such expenses are to be deducted before or, if not prohibited by statute or court rule, after the contingent fee is calculated. (See, e.g. Third Dept §806.13(c) Contingent fees in claims and actions for personal injury and wrongful death).

    The writing must clearly notify the client of any expenses for which the client will be liable regardless of whether the client is the prevailing party.

    Upon conclusion of a contingent fee matter, the attorney is required to provide the client with a writing stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.

    The Written Letter of Engagement Rule (22 NYCRR 1215) applies to cases with a fee over $3,000 except:

    • Domestic Relations matters under Part 1400;
    • Representation of the same general kind as previously rendered (i.e., repeated bank closings or insurance defense assignments; or
    • Where there is no New York nexus (The attorney is admitted in another jurisdiction; has no New York office; or no material portion of the services are to be rendered in New York).

    Where the rule applies, the attorney who undertakes to represent a client and enters into a fee agreement must provide a written letter of engagement before commencement of the representation. If impracticable at the outset, the letter may be given within a reasonable time thereafter. For purposes of this rule, the client is the entity that engages the attorney (i.e., an insurance carrier). If there is a significant change in the scope of services or the fee charged, an updated letter of engagement should be provided.

    The letter of engagement needs to address the:

    • Scope of the legal services to be provided;
    • Attorney’s fees to be charged;
    • Expenses and billing practices; and
    • Where applicable, client’s right to arbitrate fee disputes.

    You may comply with this rule by entering into a signed written retainer agreement, provided it contains what would otherwise be included in a letter of engagement.

    The difference between a written retainer agreement and a letter of engagement is that the former needs to be signed by the attorney and client, whereas the latter needs only to be signed by the attorney.

    The use of a writing confirming the parties’ fee agreement, even when not required by the rules is a recommended practice. An attorney who has written confirmation of the fee agreement is more likely to avoid a fee dispute with a client and where one arises, to be success in fee arbitration or litigation.

    Those Darn Mats - Problems Specific to Domestic Relations Matters

    The Matrimonial Rules (22 NYCRR Part 1400) require among other things, that attorneys:

    • Provide a Statement of Client’s Rights and Responsibilities to the client and obtain a signed receipt;
    • Enter into a written retainer agreement in all domestic relations matters; and
    • Provide billing statements every 60 days.

    22 NYCRR 1400.3 lists thirteen items that must be included in the retainer agreement. The fact you do not believe that some of the required provisions will ever come into play, such as language relating to a security interest when you never intends to seek one, does not mean the language can be omitted.

    However, provided they do not conflict with the mandated items, you may add additional provisions to the retainer agreement, as long as they are set forth in plain language.

    An attorney’s failure to comply with provisions of the Matrimonial Rules has been held to constitute misconduct and has also resulted in the denial of legal fees.

    My Clients Don’t Understand Me - Setting Honest and Realistic Client Expectations

    Do not guarantee results or give overblown assurances regarding a potential recovery. If you tell a client that his case is worth a half million dollar case when he retains you, how do you expect him to react when you press him to settle for $10,000 two years later?

    Don’t sugar coat the fee arrangement. Do not advertise or tell clients “no recovery, no fee.” Clients understand this to mean that if they are unsuccessful they walk away owing nothing. On the contrary, except in the case of indigent or pro bono clients, the client is responsible for costs and disbursements regardless of the outcome of the case (RPC 1.8(e)). Make sure the client understand this.

    The same goes for charging interest on unpaid balances. You may charge interest on unpaid legal fees only if the client has previously consented to your doing so and agrees to the terms.

    Lack of Communication; the Origin of Client Complaints - I’m so Busy

    A high percentage of complaints filed against attorneys allege a lack of communication by the attorney or the shunting off of the client to non-attorney personnel after retention. While most of these investigations do not result in a finding of misconduct on the part of the attorney in the handling of the underlying matter, the complaint must still be responded to. To avoid becoming the subject of such a complaint:

    • Maintain communications with your clients and reasonably return their calls;
    • Keep clients advised of the status of their case; and
    • Don’t delegate client care to non-attorneys.

    Statement of Client’s Rights - Suitable for Framing

    Every attorney with an office in the State of New York must post in their office a Statement of Client’s Rights containing the statements set forth in 22 NYCRR 1210.1.

    This posting relates to the practice of law in general. It is not a substitute for the Statement of Client’s Rights and Responsibilities required under the Matrimonial Rules.

    What do you mean I can’t collect my fee? - Fee Dispute Resolution

    The Fee Dispute Resolution Program (22 NYCRR Part 137) provides for fee arbitration in non-criminal cases where the fee is between $1,000 and $50,000. It is mandatory for the attorney if requested by the client. Many County Bar Associations also have fee dispute programs.

    In the event of a fee dispute that falls under Part 137, the attorney must forward a “Notice of Client’s Right to Arbitrate” to the client and any subsequent action to recover the fee must allege that the attorney has complied with the Fee Arbitration rules (Part 137(a) & (b)).

    In arbitration the burden is on the attorney to prove the reasonableness of the fee by a preponderance of the evidence.   You may not commence suit to recover legal fees until notice has been given to the client of their right to pursue arbitration.

    I’m a lawyer not an accountant - Maintaining Client Funds

    New York’s Rule of Professional Conduct (RPC) 1.15 requires that an attorney in possession of funds of a client or a third party maintain them in an escrow account, which is separate from the attorney’s business or personal accounts and is appropriately titled. The account is to be maintained in a New York bank which agrees to provide reports pursuant to the Dishonored Check Reporting Rule (22 NYCRR 1300) and only an attorney admitted in that state may sign the checks.

    When you receive funds from a client or a third party which in your judgment are too small in amount or are expected to be held for too short a time to generate sufficient interest to justify a separate account, they should be deposited into an IOLA account, the interest on which is used to fund various legal service programs (Judiciary Law §497). You may not keep the interest earned on an escrow to cover the cost of managing the account.

    It goes without saying that attorneys should never use funds of a client or third party for their own purposes or commingle such funds with their own. Regardless of how small a defalcation may be, it can expose an attorney to serious discipline. Significantly, since there is no statute of limitation in the bringing of disciplinary charges, financial indiscretion may come back to haunt an attorney years after the fact and long after the financial problem that led to the shortage has passed.

    It is important to note that an attorney does not have to misappropriate client or third party funds in order to run afoul of New York’s escrow rules. Commonly found errors include:

    • Not complying with the Dishonored Check Rule;
    • Failure to set up an IOLA account;
    • Improper account title;
    • Leaving an attorney’s funds in the account;
    • Non-attorney signatories;
    • Checks made payable to cash or funds withdrawn using of an ATM card;
    • Issuing checks against a bank or certified check that has not cleared;
    • The absence of or an improper check endorsement, including the use of a “For Deposit Only” stamp;
    • Wire transfer delays and snafus; and
    • Deposit of funds into one account with the corresponding disbursement coming from another.

    Escrow account records must be accurate and entries should be made at or near the time of the event recorded. These records and supporting documents must be retained for seven years.

    Finally, keep in mind that when it comes to your escrow account, you are your brother’s (or sister’s) keeper. Where client funds are misappropriated by an attorney in a law firm, the failure to oversee or review the firm’s books and bookkeeping practices may expose an otherwise innocent signatory to discipline.

    Business is slow, I need to advertise! - Advertising and Solicitation

    Rule 7.1 addresses attorney advertising including computer based communications.

    New York lawyers are required to pre-approve all advertisements, including websites. Copies of the ads must be retained, for one to three years, depending on the type of advertising. If mailed, a copy of the ad must be filed with the disciplinary committee.

    The attorney or law firm’s name, telephone number and principal law office address must be included in all advertisements, including websites, and most advertising, including websites needs to be labeled “Attorney Advertising.”

    You cannot run an ad that makes statements or claims that are false, deceptive or misleading or that violate a disciplinary rule and you cannot refer to “specialization.” You may, however, use:

    • Paid spokespersons;
    • Actors;
    • Fictionalized events or scenes; and
    • Client endorsements; although current clients must give informed consent confirmed in writing; and

    You may:

    • Compare yourself with other attorneys;
    • Create expectation about results you can achieve; and
    • Discuss quality, if

    The statements are factually supportable and you include the disclaimer “Prior results do not guarantee a similar outcome.”

    “Solicitation,” as defined by RPC 7.3 is an advertisement initiated by a lawyer directed to, or targeted at, a specific recipient or group of recipients, or their family members or legal representatives, the primary purpose of which is the retention of the lawyer and a significant motive is pecuniary gain.

    You may not engage in solicitation by:

    • In-person contact;
    • Telephone; or
    • Real-time or interactive computer-accessed communication, except in the case of family, friends or clients.

    Other prohibitions on solicitation include:

    • A violation of Rule 4.5 or 7.1(a);
    • The recipient has made known to the lawyer a desire not to be solicited;
    • The solicitation involves coercion, duress or harassment;
    • The age or physical, emotional or mental state of the recipient makes it unlikely that the recipient will be able to exercise reasonable judgment; or
    • Without disclosure, the legal services will be performed primarily by another lawyer.

    You must file a copy of the solicitation with the grievance committee, including a transcript of any radio or television solicitation, and if in a language other than English, an accurate translation.

    No solicitation relating to a specific incident involving potential claims for personal injury or wrongful death shall be disseminated before the 30th day after the date of the incident, unless a filing must be made within 30 days of the incident as a legal prerequisite to the particular claim, in which case no unsolicited communication shall be made before the 15th day after the date of the incident. See also Rule 4.5 (Communication after incidents involving personal injury or wrongful death) and 22 NYCRR 130-1.1a (Signing of papers).

    My driver’s license is expiring and my attorney registration is due - Attorney Registration

    Every attorney admitted to the practice of law in New York is required to file a biennial registration statement with the Office of Court Administration (22 NYCRR Part 118); and every practicing attorney is required to pay a biennial registration fee of $375. Attorneys are also required to file an amended statement in the event of a change of information, particularly, a change of address.

    Noncompliance with this rule constitutes conduct prejudicial to the administration of justice and is referred to the Appellate Division for discipline. An attorney’s failure to comply with these provisions may lead to suspension (Judiciary Law §468 a).

    What am I, still in school? - Continuing Legal Education

    22 NYCRR 1500 (Mandatory Continuing Legal Education) requires all newly admitted attorneys in New York to complete a minimum of 32 hours of accredited transitional education within the first two years following admission. For all other admitted attorneys, the rule requires 24 hours of accredited continuing legal education during each biennial attorney registration reporting cycle.

    This rule is mandatory but extensions to comply may be obtained from the CLE Board.

    The Grievance Committee is a Pain - Complaints to the Grievance Committee

    While you may be convinced that a complaint filed by a client is totally without merit, you may be called upon by a grievance committee to respond to it. Do not ignore the request. Even where no misconduct has been found with respect to the underlying complaint, attorneys have been disciplined for failing to cooperate with a grievance committee’s investigation.

    Help, I’m drowning! - Lawyer Assistance Programs

    There are a number of lawyer assistance programs throughout New York that are available to assist attorneys facing problems with drug and alcohol addiction and mental health issues.

    Resources include the New York State Bar Association’s Lawyer Assistance Program (LAP) and programs run by many of the 62 County Bar Associations.

    The New York Lawyer Assistance Trust Resources page, located at www.nylat.org/resources/ has a list of programs by county and judicial district.


    Complying with the obligations I’ve outlined is not burdensome and it can go a long way in protecting your law practice from inadvertent ethical lapses.