News comes to me this week of a proposed bill that promises to affect the billing and trust accounting practices of a large swathe of attorneys across the State of California who charge and collect “fixed” or “flat” fees from their clients. Assembly Member Lorena Gonzalez is the sponsor of a proposed bill — AB 1515 — that would regulate attorney-client transactions involving the payment of a “fixed” or “flat” fee in exchange for the provision of legal services. If enacted in its present amended form, AB 1515 would amend Business and Professions Code section 6068 by stipulating that funds received in advance from a client, or for that client, as a “fixed” or “flat” fee, remain the property of the client until the attorney earns the funds by performing and completing each of the stages specifically agreed upon. AB 1515 would also authorize the State Bar of California to "adopt for approval by the [California] Supreme Court" amendments to its Rules of Professional Conduct in conformance with section 6068.
Upon receiving advance funds as a “fixed” or “flat” fee in exchange for the provision of legal services, the attorney would be required to deposit the funds into the attorney’s client trust account. The attorney would be prohibited from withdrawing those funds as payment for services until the attorney earned the funds by performing and completing the specific steps outlined in the fee agreement between the attorney and the client. Furthermore, AB 1515 would impose a statutory duty on attorneys not only to state in their fee agreement each of the stages of services to be performed, but also to specify the amount allowed to be withdrawn at each stage as payment for services performed and completed by the attorney. The intent of the bill appears to be to protect consumers from fraud by making attorneys who collect a “fixed” or “flat” fee at the outset of the representation accountable for their handling of the client’s funds.
I should make a disclaimer here, which is that I am not a fan of fixed fee arrangements. They simply do not suit my style of practice and in my view are prone to abuse by both attorneys and clients alike. In fact, I question whether flat fee arrangements really provide the value clients think they do relative to the skill required to be employed by the attorney -- and taking into account the individual needs of the client -- which can vary from case to case.
Far from an attack on "fixed" or "flat" fee arrangements, however, AB 1515 is being offered as an important consumer protection measure which has the backing of the State Bar of California. To read the complete text of AB 1515 please click here.
Timothy D. Widman is a San Jose Immigration Attorney and the owner of the Law Office of Timothy D. Widman.