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Fee changes on horizon

Fees are the common denominator for all lawyers in private practice. That makes it important for Wisconsin lawyers to keep track of potential changes to the rules controlling the handling of fees, according to a Milwaukee lawyer who specializes in legal ethics and professionalism.

Last week during a Milwaukee Bar Association CLE on ethics related to legal fees, Daniel L. Shneidman told a group of lawyers they need to pay attention to proposed changes to fee rules that the Supreme Court will be considering as it takes up the Ethics 2000 proposal this year. That review will provide a chance for state lawyers to make their voices heard as rules changes are considered, he said.

During the next year, the state’s high court will begin reviewing a proposal from the Ethics 2000 Commission, which the court established to look at a proposed overhaul of SCR Chapter 20, the rules governing professional conduct. Ethics 2000 was designed to develop recommendations that would bring the state’s Supreme Court Rules on lawyer activities closer in line with the American Bar Association’s model rules.

Shneidman indicated there were some disturbing elements to the proposed changes. "Wisconsin has always sought to establish its own standards of professional conduct," he added.

Part of the comprehensive recommendations would address SCR 20:1.5, which governs the handling of fees. One of the proposed elements would require lawyers to communicate the scope of representation, the fees and expenses for which the client will be responsible in writing to the client. That agreement also must be signed by the client.

"There are virtues to that, so as to minimize any OLR complaints and cut down any grief the client may give you," Shneidman said.

He also noted that there are some "unarticulated principles" that are an intrinsic part of SCR Chapter 20.

"A client has an unqualified right to engage or terminate counsel subject to economic consequences, if any," Shneidman said. "Courts and disciplinary agencies will regard and analyze fee provisions differently than those applicable to commercial contracts."

Shneidman also stressed the importance of being familiar with the new trust account rules, which took effect July 1, 2004. Throughout the discussion of legal fees, the issue of advanced payments arose several times. He issued a warning related to the handling of those advanced fees under the trust account rules. Until the money has actually been earned and the client has been billed, an advanced payment cannot be placed in the lawyer’s operating account.

"I would suggest that the rules always require that it go into a trust account," Shneidman said.

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Proposed Changes to fee rules

He explained that the trust account rules essentially state that the money remains the property of the client until the lawyer has earned them. As a result, if the client calls and asks for the money to be returned, it needs to be separate and available. Problems could arise if the money had been mingled with the lawyer’s operating account, sending up red flags for OLR.

He noted that the new trust account rules also give clients a tremendous amount of power if they challenge a fee disbursement. Until the disagreement is resolved, the funds must remain in a trust account. That places a tremendous burden on the lawyer, he observed.

In the end, Shneidman reiterated the importance of becoming familiar with the new trust account rules as well as the proposed changes to the Supreme Court Rules related to fees. Lawyers need to make sure their voices are heard as the high court considers additional changes to SCR Chapter 20, he said.

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