Wednesday, May 18, 2011

Michigan Attorney Discipline Board finds flat fees are not earned upon agreement

Here is yet another comment on the character of flat fees.  I have commented on this issue several times before, most recently here

In this case (available here), the attorney and client agreed to a flat fee.  The attorney began to work on the matter but failed to follow through on it.  He then claimed that the fee had been earned on receipt.  The Board disagreed and stated that "Respondent's primary argument is that "there can be no unused [or unearned] portion of a 'flat fee' " This is simply erroneous as a matter of law. It would be absurd for the law to provide, as respondent argues, that " [t]he total fee was due (earned) the moment the attorney began any work on the file." This would enable an attorney to begin an agreed upon representation, abandon it, and retain the entire fee as if the whole of the work had been completed. For obvious reasons, this has never been the law..."

This is the logical result for the circumstances of the case.  Otherwise, as the Board correctly points out, attorneys would be free to disregard the client's matters and collect the fees anyway. 

Thanks to the Legal Profession blog for the information and link.

1 comment:

  1. Flat fees are such a confusing area for lawyers... do they put the money in the IOLTA account, or do they wait until after the work is finished?
    What if they get fired halfway through?
    The ethics behind flat fees can be aggravating at times.
    The courts help too slowly, meanwhile we all just guess...