‼️
Prof Responsibility • Financial Duties
PR#010
Legal Definition
In California, unlike the ABA rules (which prefer fee arrangements to be in writing), there must be a written fee agreement if the total fee is reasonably expected to exceed $1,000, except where: (1) the client is a corporation; (2) the client states in writing that they do not want a written agreement; (3) legal services are of the same kind the client has previously received and paid for; (4) there is an emergency; or (5) a writing is impractical.
Plain English Explanation
California takes fee agreements seriously. The law recognizes that many people don't hire lawyers often, so they may not know what to expect regarding fees. By requiring written agreements, the law helps ensure clarity between lawyers and clients about costs. This protects both sides - clients know what they'll pay, and lawyers have clear proof of what was agreed.
The $1,000 threshold targets more substantial legal work, where miscommunications about fees could have bigger consequences. Exceptions exist for situations where formal agreements might be unnecessary (like with savvy corporate clients) or impractical (like in true emergencies).
The $1,000 threshold targets more substantial legal work, where miscommunications about fees could have bigger consequences. Exceptions exist for situations where formal agreements might be unnecessary (like with savvy corporate clients) or impractical (like in true emergencies).
Hypothetical
Hypo 1: Bob, a criminal defense attorney, gets a frantic 3 AM call from Sam, who's just been arrested. Sam begs Bob to come to the police station immediately to prevent him from being interrogated without counsel. Bob rushes to the station and spends 4 hours advising Sam, ultimately preventing him from making any statements. The next day, Bob sends Sam a bill for $1,200. Result: Bob did not violate the rule. This situation falls under the emergency exception. Given the urgent nature of Sam's arrest and the need for immediate representation, it would have been impractical for Bob to prepare a written fee agreement before rendering services. However, Bob should provide a written agreement as soon as practicable if he continues to represent Sam.
Hypo 2: Bob agrees to represent Sam in a civil lawsuit. Sam is an old friend, and they verbally agree that Bob will charge $300 per hour. Over the next few months, Bob works on Sam's case, accumulating $5,000 in fees. When Bob sends the bill, Sam is shocked and refuses to pay, claiming he thought Bob was doing it as a favor. Result: Bob violated the rule. The total fee exceeded $1,000, so a written agreement was required. The fact that Sam is a friend doesn't create an exception. Bob should have provided a written agreement detailing his hourly rate and other terms. Without this, Bob may have difficulty enforcing the fee agreement, and he could face disciplinary action.
Hypo 3: BigCorp, a Fortune 500 company, asks Bob to handle a routine contract review. Bob estimates it will take about 5 hours at his standard rate of $400 per hour. He begins work without providing a written agreement. Result: Bob did not violate the rule. Even though the fee will exceed $1,000, BigCorp is a corporation, which is a specific exception to the written agreement requirement. The law assumes that sophisticated corporate clients are less vulnerable and more familiar with legal fee arrangements.
Hypo 4: Sam asks Bob to draft a simple will. Bob explains that his fee will be $950. Sam says, "That's fine, but I don't want to bother with paperwork. Can we just shake on it?" Bob agrees and does the work without a written agreement. Result: Bob did not violate the rule. Under California's rules, a written fee agreement is generally preferred, but it is not mandatory for fees under $1,000. Since Bob’s fee is $950, the rule does not require a written fee agreement, and there is no requirement that Sam’s refusal to have a written agreement must be in writing. Bob could proceed with the work based on their verbal agreement without violating the rules.
Hypo 5: Bob agrees to represent Sam in a small claims court case. The maximum allowed claim in small claims court is $10,000, and Bob's fee will be 20% of any recovery. They don't sign a written agreement. Result: Bob violated the rule. This is a contingent fee arrangement, which always requires a written agreement in California, regardless of the potential fee amount. The rule for contingent fees is even stricter than the general rule for fees over $1,000. Bob needed to provide a written agreement specifying the method for calculating the fee and other required details.
Hypo 2: Bob agrees to represent Sam in a civil lawsuit. Sam is an old friend, and they verbally agree that Bob will charge $300 per hour. Over the next few months, Bob works on Sam's case, accumulating $5,000 in fees. When Bob sends the bill, Sam is shocked and refuses to pay, claiming he thought Bob was doing it as a favor. Result: Bob violated the rule. The total fee exceeded $1,000, so a written agreement was required. The fact that Sam is a friend doesn't create an exception. Bob should have provided a written agreement detailing his hourly rate and other terms. Without this, Bob may have difficulty enforcing the fee agreement, and he could face disciplinary action.
Hypo 3: BigCorp, a Fortune 500 company, asks Bob to handle a routine contract review. Bob estimates it will take about 5 hours at his standard rate of $400 per hour. He begins work without providing a written agreement. Result: Bob did not violate the rule. Even though the fee will exceed $1,000, BigCorp is a corporation, which is a specific exception to the written agreement requirement. The law assumes that sophisticated corporate clients are less vulnerable and more familiar with legal fee arrangements.
Hypo 4: Sam asks Bob to draft a simple will. Bob explains that his fee will be $950. Sam says, "That's fine, but I don't want to bother with paperwork. Can we just shake on it?" Bob agrees and does the work without a written agreement. Result: Bob did not violate the rule. Under California's rules, a written fee agreement is generally preferred, but it is not mandatory for fees under $1,000. Since Bob’s fee is $950, the rule does not require a written fee agreement, and there is no requirement that Sam’s refusal to have a written agreement must be in writing. Bob could proceed with the work based on their verbal agreement without violating the rules.
Hypo 5: Bob agrees to represent Sam in a small claims court case. The maximum allowed claim in small claims court is $10,000, and Bob's fee will be 20% of any recovery. They don't sign a written agreement. Result: Bob violated the rule. This is a contingent fee arrangement, which always requires a written agreement in California, regardless of the potential fee amount. The rule for contingent fees is even stricter than the general rule for fees over $1,000. Bob needed to provide a written agreement specifying the method for calculating the fee and other required details.
Visual Aids
Related Concepts
How and when must a lawyer determine fee arrangements with a new client?
How does California rule on fee splitting differ from the ABA?
How may a contingent fee be calculated?
In California, what constitutes "reasonable fees"?
Under the ABA, which types of cases are prohibited from contingent fee arrangements?
What constitutes "reasonable fees"?
What is a contingency fee?
What is required to fee split with another lawyer not in their firm?
What must a contingent fee offer warn the client of, and how?
