Practice Blawg » Ethics

Nonrefundable Retainer Rules Change July 1

Andrea Hable — Wed, 22 Jun 2011 15:03:36 +0000

In December, the Minnesota Supreme Court clarified the rules about “nonrefundable” retainers. These amendments to the Minnesota Rules of Professional Conduct 1.5 (Fees) and 1.15 (Safekeeping Property) go into effect on July 1, 2011. Read the full opinion and amendments here.

The new rules aren’t so much a change as a clarification. The Lawyer’s Board has been concerned for several years about the practice of calling fees “nonrefundable” in a retainer agreement to bypass the requirement of holding fees in an IOLTA. But simply calling a fee “nonrefundable” or “earned upon receipt” does not make it so, and it never has. A fee must actually be earned, or serve some other purpose such as guaranteeing a lawyer’s availability, because Rule 1.5 requires that a fee be “reasonable.” Keeping unearned fees is not reasonable.

Amended Rule 1.5 provides guidance. It specifically states that fees are presumed to be unearned when taken in advance. It also defines how and when fees can be “earned” in advance: flat fees per 1.5(b)(1) and availability fees per 1.5(b)(2). Rule 1.5(b) and 1.15(c)(5) are amended to state that that all advance fees must be held in an IOLTA except when they fall into one of the two defined exceptions. Furthermore, 1.5(b)(3) explains that even advance fees permitted by the rule must be refunded in certain circumstances, therefore a retainer agreement can never describe a fee as “nonrefundable” or “earned upon receipt.”

Take away points:

If you always hold unearned fees in your IOLTA, then you don’t need to change anything.
If you take fees that are described by 1.5(b)(1) (flat fees) or 1.5(b)(2) (availability fees) and you do not hold these fees in your IOLTA, make sure your practices conform with the requirements of the amended rules.
If you currently describe fees as “nonrefundable” or “earned upon receipt,” you must remove this language from your retainer agreements. It is more correct to call these “advance fees,” assuming they meet the requirements in Rule 1.5.

For more discussion, see West Reference Attorney Blog, Small Firm Success, and MSBA Rules of Professional Conduct Committee Memorandum.

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Ethics Scramble

Nancy Hupp — Wed, 06 Apr 2011 19:00:45 +0000

The MSBA offices are on the third floor of City Center, right next to Minnesota CLE, and spring is the time of year I connect with old colleagues as I make my way to my office. Why? Because ‘tis the season of the CLE Scramble. You all know it… you are reminded by the Minnesota Board of Continung Legal Education that you need to report compliance by June 30. Then you remember that three years ago, you were going to keep a running total of the CLEs you attended, what sessions you went to, so when reporting time rolled around, you’d be all set. But of course, few are. Oh, sure, we’ve all gone to CLEs, but it isn’t just attending, it’s the kind of credits

I pulled out my folder of CLEs attended. Sadly I’ve overdone the Law Office Management credits. I can only count 6. The other .75 will just have to be chalked up to the General Improvement of Nancy. I am well over 45 credits total. In my current job as MSBA’s Director of practicelaw, I need to keep up in several practice areas, and I am entitled to attend many CLEs free, hence the surplus. I see with pride that I have racked up the required number Elimination of Bias credits. But then my heart sinks.

I am short three Ethics credits.

Emily Post once said, “Nothing is less important than which fork you use. Etiquette is the science of living. It embraces everything. It is ethics. It is honor.” Oh, Emily, if only that were true. The CLE Board wants me to aspire to learn more than the moral code of silverware.
Now I must make a couple of confessions:

Having been a former professor, I am hard on CLE presenters, particularly those who read me their Power Points.
Not being in private practice, the topics and level of detail in some CLEs don’t appeal to me.
I am cheap.
I don’t have fond memories of Ethics classes or CLEs. I am ashamed of these feelings. Same way I felt about religion class in grade school. In sixth grade I got a D-5 in Religion which meant a “D” for my understanding of the material and a “5” on effort – the scale being 1-5 with a 1 signaling the most effort. My mother was horrified, my poor grade became that night’s dinnertime topic. My older siblings pointed out that a D-1 would have been worse, that is, if I had made one heck of an effort and still learned little. My mother was not amused.

But I’ve digressed. Back to today when I find myself in a 11 week countdown to find three ethics hours that will be cheap, well-taught, interesting, and widely applicable. I have a hunch others may be in the same boat so I’m sharing my findings below. I am sure I’ve missed some, so please add a comment if you know of others.

MSBA Nine Days in June - Ethics credits are offered each day:

1 credit in the 6th and 10th districts and on a Day Nine in Minneapolis
1.5 credits in the 1st, 3rd, 5th, 7th, 8th and 9th districts

MSBA Section CLEs

Hennepin County Bar Association

University of Minnesota

Ramsey County Bar Association

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Coffee Shop Ethics

Andrea Hable — Wed, 23 Mar 2011 13:00:40 +0000

This isn’t about fair trade or organic coffee. Rather, what are the ethics of the lawyer working in a coffee shop?

Whether you like meeting clients somewhere casual or just want to get out of the office, hopefully you’ve thought through these issues. While this kind of practice is becoming more commonplace — even desired by clients — it’s also weighted against a long-time stigma that lawyers who don’t work in offices are “practicing out of their trunks” and are somehow less legitimate. No matter what you think, it’s hard to deny working in a coffee shop will become more commonplace as technology allows us to work remotely more easily.

Caffeine make you jittery? The same issues apply to public libraries, restaurants, or even talking on your phone in “public” (anywhere someone can hear you: a bathroom, the dentist’s waiting room, the bus, or the train).

If you’re bucking the traditional law office, here’s some food (to go with your coffee) for thought.

Public Wi-Fi

The spark for this blog post comes from a recent California ethics opinion about confidentiality and technology. Here’s what they said about public wi-fi:

[D]ue to the lack of security features provided in most public wireless access locations, Attorney risks violating his duties of confidentiality and competence in using the wireless connection at the coffee shop to work on Client’s matter unless he takes appropriate precautions, such as using a combination of file encryption, encryption of wireless transmissions and a personal firewall.

There are many easy things you can do to safeguard your information (see here or here). If you don’t have these protections, the simple solution is to either disconnect (sometimes that’s more productive anyway), or focus on non-sensitive work on a netbook or laptop without client files. Be equally careful with paper files, and make sure your client’s name and bank account numbers aren’t laid out for the guy next to you to read.

Client Meetings

How does a coffee shop client meeting impact you client’s confidentiality? Remember the client is in charge of the representation. They can keep things confidential or not. They can tell whomever they want about everything. But you must keep it confidential unless they give you permission not to. That’s Rule 1.6 (while you’re there, read comments 15 and 16).

If a client prefers convenience, weighted against the relative sensitivity of the information, it might be fine to meet them somewhere public. Personally, I feel that’s always my client’s choice and not mine — I usually offer my office and say we can meet elsewhere if they are comfortable not meeting in private. With simple estate planning most people don’t really care if the guy in the next booth hears about their kids. But use good judgment if you’re meeting about something like a sensitive business deal, even if the client seems okay with it. You never know who is sitting across the room, and your client might not think through the implications.

“Loud Talkers”

That’s the colloquial term for people who talk — often on a cell phone — so loudly that you hear their entire conversation. Usually completely oblivious to the fact that, even if one-sided, you can fill in the blanks. Aside from being incredibly rude, often awkward and uncomfortable, this also raises confidentiality concerns. Now I’m not suggesting that opposing counsel would ride your bus in hopes of overhearing your conversation, but I’m continually surprised at how small our legal community really is, who knows who, and what they might overhear by accident. Aside from having a personal agenda to reduce the number of loud talkers, I don’t think you should treat the phone any differently than you would an actual in-person conversation when it comes to sensitive information.

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Free eBook: Minnesota Legal Ethics by William J. Wernz

Gregory Luce — Wed, 09 Mar 2011 15:56:52 +0000

OK, disclaimer and a bit of promotion here. I just spent the better part of the last six weeks helping to put together the final technical pieces of Minnesota Legal Ethics, the MSBA’s first electronic book. It’s a doozy, for at least four reasons.(...)
Read the rest of Free eBook: Minnesota Legal Ethics by William J. Wernz (258 words)

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Don’t Right Click This Post

Gregory Luce — Wed, 17 Feb 2010 17:03:38 +0000

The Minnesota Office of Lawyers Professional Responsibility has been busy with its opinions in the last year, amending two prior opinions, proposing and approving two new opinions, and proposing a third new opinion that is currently open for comment. The two relatively new opinions cover the use of the term “& Associates” in a firm’s name (if you are a solo, it’s a no go) and the duty of a lawyer to discuss his or her own malpractice with the client (the new opinion says it’s mandated in certain circumstances).

The currently proposed opinion, Opinion No. 22, covers that scintillating technical topic known as metadata, or what many folks simply call “data about data.” I could cover another few pages about metadata, including where to find it, how to find it, how to scrub it, and what it looks like when it’s downright embarrassing, but that’s all been done many times over and is the subject of numerous CLE seminars, typically about about e-discovery issues. I’ll just cut to the chase: the new proposed opinion takes a decidedly reasonable ground on the issue of guarding against inadvertent disclosure of confidential metadata, simply extending to metadata a lawyer’s duty not to knowingly reveal confidential client information. Nothing really new there.(...)
Read the rest of Don’t Right Click This Post (438 words)

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Post tags: Confidentiality, Disclosure, Metadata

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