Muldoon, Getz & Reston

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“Minimum Fee” Retainer Agreements
Gary Muldoon
Muldoon & Getz
Rochester, NY
(585) 262-5130
www.muldoongetz.com


 

“Minimum fee” (or “flat fee”) arrangements are common in certain areas of law. The agreement typically provides that the client is to pay an agreed-upon sum to the lawyer in return for representation on a case. The fee is usually paid at the start of the representation, although in some areas, e.g., a residential real estate closing, the fee is typically paid at the end.


The term “flat fee” suggests that the fee will remain the same regardless of the amount of time and effort spent by the attorney. “Minimum fee” suggests that the amount paid is the minimum but that there may be additional fee charged, e.g., if the case requires a greater amount of work than initially anticipated.


Whether termed “flat fee,” “fixed fee,” or “minimum fee,” such an agreement may be encountered in certain areas of law such as name change, real estate closing, chapter 7 bankruptcy, and some criminal cases.


In People v Cybulski, 192 Misc2d 442, 746 NYS2d 558 (Co. Ct 2002), reversed on other grounds sub nom. Katzer v County of Rensselaer, 1 AD3d 764, 767 NYS2d 474 (3d Dept 2003), the lower court judge in dictum noted the prevailing fee standards for criminal defense work in Rensselaer County, stating: “The standard for criminal defense attorneys is not to charge an hourly rate for criminal cases, but rather a flat fee for representation. The amount of the flat fee is normally determined by whether or not the matter is resolved with or without a trial. This flat fee standard recognizes the fact that the preparation and trial of a criminal case requires many disparate tasks and functions for the attorney and support staff. Some may require legal expertise while others may only be ministerial in nature. To charge one hourly rate for all services rendered would not be fair and reasonable to the client. Therefore, the flat fee is the standard accepted by the criminal defense bar.”


Cooperman decision

This type of arrangement was brought into question in Matter of Cooperman, 83 NY2d 465, 611 NYS2d 465 (1994). In that case, the criminal defense attorney had an agreement that he was to be paid $15,000 to represent the client on a felony charge. According to the contract, this fee was earned upon the attorney filing a notice of appearance in the case, and under no circumstances would be refunded. Having previously received letters of caution for this same conduct, the attorney in Cooperman was suspended for two years.


But it was not a “flat fee” or “minimum fee” agreement that was found improper in Cooperman. Rather, what the Court of Appeals faulted was that the fee was nonrefundable. The Court noted: “Minimum fee arrangements and general retainers that provide for fees, not laden with the nonrefundability impediment irrespective of any services, will continue to be valid and not subject in and of themselves to professional discipline.” 83 NY2d at 476.


The Code of Professional Responsibility, DR 2-110, “Withdrawal from Employment,” provides: “A lawyer who withdraws from employment shall refund promptly any part of a fee paid in advance that has not been earned.” DR 2-110(A)(3). See Simon’s Code of Professional Responsibility Annotated.


Domestic relations cases

For domestic relations matters, one section of the NYCRR addresses the propriety of a flat-fee arrangement. Section 1400.4 states:

" . . . A lawyer may enter into a 'minimum fee' arrangement with a client that provides for the payment of a specific amount below which the fee will not fall based upon the handling of the case to its conclusion." The section is in accord with the holding in Cooperman.


The Code of Professional Responsibility also addresses domestic relations retainers, stating, “A lawyer shall not include in the written retainer agreement a nonrefundable fee clause.” 22 NYCRR § 1200.11(c)(2)(ii).


The distinction, then, in both domestic relations cases and elsewhere, is whether the fee is nonrefundable: if the attorney is entitled to the full fee even if the client terminates the representation before the case ends, the fee arrangement is improper. What constitutes the “conclusion”of the case may be important.


Quantum meruit for work performed

An agreement for a flat fee for work "to the conclusion of the case" is valid under § 1400.4. That was not the situation in Cooperman, where the attorney charged a flat fee and, once fired, returned nothing. Had the agreement provided for $15,000 through trial and sentencing, or through some other agreed-upon conclusion of the representation, and the attorney was fired before that point was reached, he could have validly kept a portion. The portion is earned in quantum meruit. “If a client exercises the right to discharge an attorney after some services are performed but prior to the completion of the services for which the fee was agreed upon, the discharged attorney is entitled to recover compensation from the client measured by the fair and reasonable value of the completed services.” Matter of Cooperman, 83 NY2d at 473.


The principle underlying the Cooperman decision is that a client has an unfettered right to terminate a lawyer-client relationship at any time, for any reason or no reason, and that to condition that ability upon losing the whole retainer penalizes the client’s right to choose.


© 2008 by Gary Muldoon