Are flat fees earned upon payment or is the attorney simply guarding the money for the client?

There has been a lot of discussion recently on the increasing popularity of "flat fees." So, it is important to understand the possible ethical issues that arise from their use. For example, it is important to know when the fee is actually earned, since the attorney has a duty to return any unearned fees at the end of the representation.

Yesterday, the District of Columbia Court of Appeals published an opinion in which it held that that a flat fee paid to a lawyer remains the property of the client until it is earned. Unfortunately, it is not particularly clear at which point the fee is, in fact, earned. The court simply suggested that whether the fee has been earned will be determined based on an objective reasonableness standard "in light of the scope of the representation" and "in the context of the anticipated length and complexitity of the representation."

The text of the opinion is available here. For more on the story go to the Legal Times Blog and to the Legal Profession Blog.