Sunday, January 16, 2011

Shame On The Texas Bar, And Us

A 47 year old Texas man, husband and father of two young children, steps on an airplane and goes from 37,000 feet to the bottom of the Atlantic Ocean. Recently promoted to CFO of his multi-national corporation, he leaves us at the height of his career, with his current salary of $1,500.000.00.

His family hires a personal injury lawyer and signs a retainer agreement. The Texas lawyer will receive 33% of any recovery prior to filing a complaint, and 40% thereafter. The personal injury lawyer has a stellar reputation and several 7 and 8 figure verdicts under his belt.

The lawyer writes a "demand letter," and seeks $5,000.000.00. Three days later he receives a call offering $3,000.000.00. Turns out there may have been some safety issue involving the engine, which was discovered by the lawyer doing a quick Google search. With the lawyer having done about 4 hours work, the family agrees to take the $3,000,000.00.

For that four hours of work, the lawyer will receive approximately one million dollars, or $250,000.00 per hour.

And there is nothing unethical or illegal about that.

A 47 year old Texas man, husband and father of two young children, receives a knock on his door from the FBI. Turns out the investment scheme he was promoting is just that, a scheme-to defraud. Recently promoted to CFO of his multi-national corporation, he imagines the inside of a jail cell at the height of his career.

He hires a criminal defense lawyer and signs a retainer agreement. The Texas lawyer will receive $50,000.00 prior to the filing of an Indictment, and $250,000.00 if an Indictment is returned by a grand jury or an Information is filed. The criminal defense lawyer has a stellar reputation and several "stunning" victories under his belt. He has the respect of prosecutors, judges and law enforcement throughout the community. The client happily writes a check for $50,000.00.

The lawyer calls the prosecutor and arranges a meeting. Three days after the meeting, the prosecutor offers to subpoena the client as a witness rather than file charges. With the lawyer having done about 4 hours work, pursuant to his "non-refundable" "earned upon receipt" retainer agreement, the client files a complaint with the Texas Bar, claiming he has just paid his criminal defense lawyer $12,500.00 per hour.

Pursuant to the proposed changes to the Texas Disciplinary Rules of Professional Conduct, he may get the refund to which he agreed he was not entitled.

Scott Greenfield muses about the "right to contract freely" in his post describing the practice of criminal defense."

But he knows we don't have that right. He is probably thinking of Thomas v. Anderson, 861 S.W.2d 58, 62 (Tex. App.-El Paso 1993, no writ). (As a general rule, the court has no authority to determine what fee a litigant should pay counsel, that being a matter of contract). Texas lawyers clearly don't have that right (When interpreting and enforcing attorney-client fee agreements, it is “not enough to simply say that a contract is a contract. There are ethical considerations overlaying the contractual relationship.” Lopez v. Munoz, Hockema & Reed, L.L. P., 22 S.W. 3d 857, 868 (Tex. 2000).

We have the right to do what our State Bar says we can do, because as I've said before, State Bars exist today for the sole purpose of protecting the public from lawyers. "Pay your dues, and keep the clients perfectly happy" is their mantra. While one Bar prosecutor once told me "there are two types of complaints, complaints against lawyers, and complaints against criminal defense lawyers," more and more the civil lawyers who Scott refers to as "Bar types," show their lack of love for us. The love only comes at 1:30 am when the partner who "can't stay in jail or he will die," must be released, and his case dismissed immediately, needs "the best" - for a reduced fee of course because while civil lawyers play like they're rich, they are cash poor and Lexus rich, or don't see the monetary value in criminal defense lawyers. (But get him out now and be thankful that a civil lawyer called you to represent a civil lawyer).

The issue in Texas, that Mark Bennett wants criminal lawyers, no, all lawyers to oppose is the proposed rule that addresses "unearned" fees.

The comment to the proposal states:

Fee agreements sometimes state that the fee is a flat fee, advance fee, nonrefundable retainer, or some other kind of fee. But without regard to the label, if the fee is a prepayment for services, paragraph (d) requires a lawyer to deposit the fee into a trust account until it is earned. Applicable law, not these Rules, determines when a fee is earned.

Dallas lawyer Michael Sawicki writes about the 41 year old seminal case on contingent fee agreements, Mandell & Wright v. Thomas, 441 S.W.2d 841, 847 (Tex. 1969) which contains an interesting dissent. In Mandell, the court held that a lawyer hired on a contingency fee basis, that is discharged without good cause before the representation is completed, may seek compensation in quantum meruit or in a suit to enforce the contract by collecting the fee from any damages the client subsequently recovers.

But as Sawicki notes, "any attempt to apply the 'strict contract' approach will be subject to substantial scrutiny." He also notes the power contained in the disciplinary rules," reflecting "the trend away from Mandell & Wright seen in other states."

The dissent (where most opinions in favor of anything criminal defense lie), "felt the focus on evaluating the contract should center on the facts at its inception, not when the contract terminated."

Here's where it gets interesting for criminal defense lawyers:

Fee arrangements normally are made at the outset of representation, at time when many uncertainties and contingencies exist, while claims of unconscionability are made in hindsight when the contingencies have been resolved . . . Except in very unusual situations, therefore, the circumstances at the time a fee arrangement is made should control in determining a question of unconscionability. Agreements are unconscionable when they are not or cannot be proper, not when it is merely possible for them to be improper.

Criminal defense lawyers understand this dissent without exception, the word "hindsight" sending chills through every advocate of the criminally accused.

As stated in the comments to the Texas rules: ...“unconscionable” adopts a
perspective to give the lawyer the benefit of the doubt of the uncertainties at the outset.


Texas lawyer Roger Hughes, author of Drafting Appellate Fee Agreements and Handling Fee Disputes: A Defense Perspective, writes about "unconscionable" legal fees.

Apparently, back in the 1940's, freedom of contract was paramount, kind-of:

Back then, except for fraud, breach of fiduciary duty, or if the parties to the contract were mentally incompetent or minors (did we prosecute minors back then?)if the contract was valid when made and the parties are mentally competent, it is enforced without court review of the reasonableness of the fees agreed upon. Polybutylene Plumbing, 23 S.W.3d at 436; Parker v. Boyles, 197 S.W.2d 842, 849 (Tex. Civ. App.–Galveston 1946, writ ref. n.r.e.).

When I said "kind-of," I was referring to this language regarding the exceptions:

There are two recognized exceptions to enforcement once the attorney has performed:

Performed? Cue the circus music.

Have I "performed" if I resolve your case, and return you to your life in 3 hours instead of 3 months? I, like anyone else, sometimes get the question at the end of the case: "So, I get any money back?" "No, you agreed the fee was earned upon receipt." Yes, but you didn't do much."

And then I'll ask this question: "If I told you at the time you hired me, that for that fee I would resolve the case in a matter of a day or two, would you have paid it?"

(Shrugged shoulders).

The terms "unconscionable," and "reasonable," when talking about attorney's fees are determined by a collection of theories, definitions and statutes.

"The ultimate litmus test for unconscionable under Rule 1.04 will be a comparison of the lawyer’s time and effort with the fee and the results." See Walton, 149 S.W.3d at 844. Results? Well since contingent fees in criminal cases are prohibited, of course Texas wouldn't use the standard of results for us criminal defense lawyers. So we're left with time, efforts, and fee.

But who determines our time and efforts in comparison to the fee? State Bars claim they don't participate in "fee disputes," which we all know is horseshit, because the dispute invariably revolves around "I paid too much and want some back." As the question is always whether the fee is "unconscionable" or "unreasonable," State Bars do involve themselves in fee disputes. It is only a fee dispute for which the Bar refuses participation when the fee is determined to be reasonable, therefore leaving the issue to a civil court if the client chooses that route.

The Texas Bar has painstakingly tried to convince criminal defense lawyers that "oh, we're fine, don't worry." And this comment to the rule seems to lead a reasonable lawyer to believe them:

Applicable law, not these Rules, determines when a fee is earned

Applicable law? Meaning Texas Law?

TEX CP. CODE ANN. § 38.003: PRESUMPTION

It is presumed that the usual and customary attorney's fees for a claim of the type described in Section 38.001 are reasonable. The presumption may be rebutted.

Ok, so we assume all fees are reasonable, but clients can rebut that presumption.

TEX CP. CODE ANN. § 38.001:RECOVERY OF ATTORNEY'S FEES

A person may recover reasonable attorney's fees from an individual or corporation, in addition to the amount of a valid claim and costs, if the claim is for:

(1) rendered services;

(2) performed labor;

(3) furnished material;

(4) freight or express overcharges;

(5) lost or damaged freight or express;

(6) killed or injured stock;

(7) a sworn account; or

(8) an oral or written contract.


Or an oral or written contract? Is that the "applicable law" of which the Texas Bar speaks?

Wait a minute, if this is the "applicable law," that a lawyer can recover fees simply based on a contract, then are we saying lawyers are governed by this statute and not the Bar rule? Of course not, because this "applicable law" speaks of freedom of contract, which we lawyers do not have. The Bar will determine whether a fee is reasonable, whether the client agrees to it, and even if there is a clear contract.

The Bar committee proposing these rule changes notes that as to flat fee agreements, it should be clear (to the lawyer, as well as to the client) and agreed to by the client," and that criminal defense lawyers should find some other term to use or not use a term and simply be descriptive in a written fee agreement with the client).

The Texas Bar's focus on the criminal defense lawyer's "flat fee," is disgraceful. But it is symptomatic of what Scott Greenfield refers to as the "Bar types" that mill around state bar committees when they are not in their offices waiting for someone to bring them coffee in embossed ceramic cups (with a saucer Goddammit, and now).

And so Mark, I have some bad news for you. Your criminal defense colleagues may vote against this and all the new proposals. More likely, they will remember after the deadline that the ballot went in to the garbage, and they didn't have time to vote because they were "in trial." You are screaming from the rooftops, maybe others are joining you, but the masses won't pay attention until they receive a letter a year from now from the Texas Bar about their non-refundable $2,000.00 fee.

I am a Bar-type. I mill around those Bar committees in my khakis and blue shirts (no-tie) while the masses of civil lawyers in suits with briefcases tagged with their initials in gold who "tolerate" us, cast us off as part of the problem in the profession - disregarding that their precious billable hour is the definition of fraud. I am a Bar-type, I pay my own way to meeting after meeting, speaking up when I hear our criminal defense bar malinged, and constantly trying to convince my colleagues there is a good answer to "why do you go to all these meetings?" They all think I'm doing it for my resume, or some judicial aspiration, and are still wondering why after 16 years, neither has been true.

Until the criminal defense bar infiltrates state bars, gets on every committee, and participates at the same table as the manicured civil bar, we will continue to beg for our constitutionally mandated existence.

Good luck Mark, and good luck my brothers and sisters in the Texas Criminal Defense Bar. May the rights of clients to be guaranteed a flat fee and not be nickel and dimed for every .2 conversation, or charged for when we are "thinking about the case" throughout the representation, be protected.

Brian Tannebaum is a criminal defense lawyer in Miami, Florida practicing in state and federal court, and the author of The Truth About Hiring A Criminal Defense Lawyer.Share/Save/Bookmarkokdork.com rules Post to Twitter