Lawyer Fees II

Quite the dust-up in Texas over “flat fees”.  Bennett is all over it, as he should be.  Greenfield weighs in, too.

I certainly hope the proposed amendment goes down in flames, but I wanted to add my two cents with a point that is being not missed, exactly, but not fleshed out enough.

I dealt with this issue a little bit here.  My point in that post was that bureaucrats seem to have no appreciation for, or even a concept of, the risks inherent in economic activity where the parties are free to contract or not.  The bureaucrat’s government paycheck appears every pay period, as if by magic, at least to him.  But it’s not magic.  That paycheck came from the collection of taxes which unlike commerce and even the private practice of law – which is not exactly commerce – is a forced transaction between the government and its subjects.  There is no economic risk involved, though there may be other kinds of risks – but that is not important here.

In other words, the bureaucrat’s paycheck is like when we buy our meat at the grocery store and don’t have to think about the butcher.

I once saw a divorce lawyer arguing a motion to be relieved from representing his client because the client could no longer pay the hourly bills.  He had collected about $45,000 in fees from the middle class schmuck.  The divorce litigation wasn’t even half done.  The client was broke, he wasn’t divorced yet, and now his lawyer wanted to abandon him for financial reasons.  The motion was granted.

I felt embarrassed for the profession.

If I were running things – and I assure you I am not – a lawyer would not be permitted to withdraw from representation except for extreme hardship cases – which, by the way, for all you lawyer haters out there, happen with some frequency.  Other than extreme hardship, once you’re in, you’re in.  Suck it up.

But the flip side is, I would never, ever, ever, ever – you got that? – never – question whether a lawyer was paid “too much”.  It’s an improper question.  And even if it wasn’t, no bureaucrat could possibly be qualified to answer it.  And the reason is that this is the only fair way to account for the risk.  If you can be trapped into a losing proposition – and this is inherent in the practice of law in my view – then no one can question when you maybe make up for it somewhere else.

And look at the bureaucrats.  They never come around with a pot of money or even to commiserate when you have to eat a loss; they only come around to question whether you have made “too much”.  Fuck them.

So as an “ethics” matter – not a civil matter or a criminal matter, that’s different – the lawyer himself is the last word on what fee he has “earned”.  Otherwise, his very livelihood is subject to the constant inane quibbles of unqualified bureaucrats in various bar committees that have nothing better to do than harass lawyers.  The small, private practice kind.  They never bother government lawyers, like prosecutors, or big firm lawyers.

And so the “flat fee” is perfectly ok in my book.  It is earned upon receipt.  A lawyer does business that way because he is accounting for his own risks, which he and no one else is qualified to do.

But the ethical rules created this problem before the proposed Texas amendments, because they refer to “unearned fees”, which have to be held in trust until they are earned.  This is because the rules are written from the perspective of “lawyers” who don’t practice law with real clients and deal with the genuine risk of non-payment.  The rules should either: a) dispense with the phrase entirely; or b) make it clear that the lawyer’s decision about what he has “earned” is not subject to “ethical” review, although it may be subject to review in a civil or even criminal process.

That’s the amendment Texas and everyone else should adopt.

Fat chance.

 

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