Defense attorneys: define the scope of your representation carefully.

By Thomas J. Farrell

Criminal Defense Tools and Techniques

Excerpted from Criminal Defense Tools and Techniques

Forms provided below:

Except for court-appointed cases, always commit your agreement to represent a client to writing. [See Model Rules of Professional Conduct, MR 1.5(b) (fee arrangements should be communicated in writing unless you regularly represent this particular client).]

In court appointed cases, court rules and statutes will define the scope of your representation and the terms of your compensation.

Several state bars publish sample fee agreements on the internet:

§2:02   Defining the Scope of the Representation

Define the scope of your representation carefully.

Once you enter an appearance in a court of record, the court may force you to remain in a case from initial appearance to appeal if the engagement agreement does not say otherwise – and sometimes even if it does. [Compare Commonwealth v. Librizzi, 2002 Pa. Super. 343, 810 A.2d 692 (Pa. Super. 2002) (petition to withdraw after trial denied where no written fee agreement)with Commonwealth v. Sweeney, 368 Pa. Super. 33, 533 A.2d 473 (Pa. Super. 1987) (lower court reversed for abuse of discretion in denying petition for withdrawal where the fee agreement limited representation to the trial level). See also Local Appellate Rules, United States Court of Appeals for the Third Circuit, LAR Misc. 109.1 (“Trial counsel in criminal cases, whether retained or appointed, are expected to continue on appeal absent extraordinary circumstances.”); Eleventh Cir. Rule 46-1(g)(1) (Retained counsel must continue on appeal until successor counsel is appointed and cannot withdraw absent order of court).]

Therefore, if you are representing the client before an information or indictment has been filed, you should specify that once charges are filed the client must provide an additional retainer before you will file a notice of appearance.

Explain in writing that you represent the client only through trial and sentencing. Appeals and re-trials require a new fee and engagement agreement.

Specify whether you represent the client in related proceedings, such as civil lawsuits, forfeiture proceedings and licensing hearings. While you may be inclined to file an appearance in such matters to protect your client from incriminating himself, you may find yourself stuck in a lengthy and time-consuming case.

§2:03   The Scope of the Representation in Court Appointed Cases

Generally, a court appointment encompasses only the pending criminal case on which the defendant has a constitutional right to counsel.

Counsel appointed to a federal criminal case under the Criminal Justice Act [18 U.S.C. §3006A] may be able to represent a client in “ancillary matters appropriate to the proceedings.” These may include appearing for a client in related civil litigation to claim the Fifth Amendment privilege against self-incrimination and representing a client on the merits in a related civil forfeiture case, but little more. [See Guidelines for the Administration of the Criminal Justice Act and Related Statutes, §2.01.F(5) & (6) (available at http://www.fd.org).]

The Guidelines authorize you to seek an ex parte ruling in advance from the Court as to whether it will compensate you for the ancillary representation. You may also call the district’s federal public defender or the court’s financial administrator with further questions.

Local jurisdictions may lack such written guidelines. Call the chambers of the judge who appointed you or the office which approves appointments and vouchers and ask.

II. Fee Arrangements and Billing

§2:10   Types of Fee Arrangements; Retainers

Two types of fee arrangements predominate in criminal cases:

  • Flat, nonrefundable fees.
  • Hourly fees.

Contingent fees are unethical in criminal cases. [Model Rule 1.5(d)(2).]

Even when charging on an hourly basis you should obtain a retainer that approximates the total amount you anticipate charging on the case, or at least what you will need until you reach a stage in the representation at which you can demand that the retainer be replenished (i.e., when charges are filed or after the preliminary hearing and before entering an appearance in the court of record). Shortly before trial is not an optimum time to seek additional money because the judge is not likely to allow you to withdraw at that late stage.

Retainers are necessary because the fact of a prosecution, even apart from the resulting incarceration, often severely hampers the client’s earning ability. Once convicted, clients have little incentive or ability to pay outstanding legal bills, and perhaps even less incentive if acquitted.

Form 2-1:    Engagement Letter—Hourly Billing
Download the Engagement Letter—Hourly Billing in Microsoft Word.

Form 2-2:    Engagement Letter—Flat Fee
Download the Engagement Letter—Flat Fee in Microsoft Word.

§2:11   Refundable Retainers

If the retainer is refundable, you must deposit it in a client trust account, because the money is the client’s until you earn it by providing legal services. [See, e.g., Iowa Sup. Ct. Bd. of Professional Ethics and Conduct v. Frericks, 671 N.W.2d 470 (Iowa, 2003) (Retainers must be maintained in trust account and may not be withdrawn until earned).]

The rules require that you maintain accurate records of the money in the account and its disposition. [See, e.g., MR 1.15; Rules of Prof. Conduct of State Bar of Calif. R. 4-100 (detailing attorney’s accounting duties to include, among others, maintaining a written record of all client deposits and the date, amount and purpose of each disbursement).]

§2:12   Estimating the Retainer

If you are retained before charges are filed, estimating an appropriate retainer may be difficult because the case’s demands will be unpredictable:

  • The prosecution may drop the matter without much work on your part.
  • You may engage in extensive research, investigation, and negotiation that result in a pre-charging resolution.
  • The pre-charging work may be but a prelude to defending the charges once filed.

The client reasonably may not want to commit to a large retainer at the outset.

You might consider an “evergreen” retainer. These take several forms:

  • You may preserve the retainer in your trust account to use for the final bills and have the client pay current bills monthly.
  • You may draw on the retainer to pay your bills for monthly services, but demand that it be replenished once it drops below a specific amount.
  • You may charge the monthly bills against it and require that the client restore it to full value monthly.

The evergreen retainer can serve as an early warning that the client has payment problems while ensuring that you will get paid for work toward the end of the representation, a time when many clients believe they no longer need counsel.

[For several versions of evergreen retainers, see Form 2-3: Engagement Letter—Evergreen Retainer.]

Download the Engagement Letter—Evergreen Retainer in Microsoft Word.

§2:13   Nonrefundable Retainers

Check the ethics rulings in your particular jurisdiction to determine whether nonrefundable retainers are permissible.

Some jurisdictions forbid such retainers. [See, e.g., Iowa Supreme Court Board of Professional Ethics and Conduct v. Apland, 577 N.W.2d 50 (Iowa 1998) (non-refundable fee for specific services to be performed in the future is unethical); In re Cooperman, 83 N.Y.2d 465, 611 N.Y.S.2d 465, 633 N.E.2d 1069 (1994) (non-refundable retainers are unenforceable and unethical because they conflict with the client’s right to terminate the relationship at any time).]

Other jurisdictions permit nonrefundable retainers. [See,e.g., Diaz v. Paul J. Kennedy Law Firm, 289 F.3d 671, 675 (10th Cir. 2002) (attorney could keep whole of flat fee if her client discharged him early in representation; applying New Mexico law); Ryan v. Butera, Beausang, Cohen & Brennan, 193 F.3d 210 (3d Cir. 1999) (applying Pennsylvania law); Rules Regulating Fla. Bar, R. 4-1.5, 1.16.]

In any jurisdiction, the amount of the fee must be reasonable. [See, e.g., Matter of Hirschfeld, 192 Ariz. 40, 960 P.2d 640 (1998) (flat fee must be evaluated carefully against extent of services ultimately rendered); Bunker v. Meshbesher, 147 F.3d 691, 695 (8th Cir. 1998) (applying Minnesota law); Ryan, 193 F.3d at 214.]

Hostility to nonrefundable retainers seems to be growing. [See In re Miles, 335 S.C. 242, 247 n.2, 516 S.E.2d 661, 664 n.2 (S.C. 1999) (noting the trend against them).]

Even if you do not face a disciplinary action for charging a nonrefundable retainer in a jurisdiction hostile to such arrangements, charging the wrong kind of fee can bring other inconveniences:

  • Your client may sue for the return of monies you already spent.
  • A bankruptcy court may rule that the fee payment was a fraudulent conveyance, and the money must be returned. [See, e.g., In re Bressman, 214 B.R. 131 (Bankr. D.N.J. 1997).]

Both for these reasons and to budget your practice, you may want to bill and draw against a retainer, even a nonrefundable one, on a monthly basis rather than spending it all when received.

However, if the fee truly is nonrefundable and fully earned when paid, the Internal Revenue Service will consider it taxable in the year and quarter when paid, not when you draw on it.

§2:14   Accepting Cash

There is nothing wrong with accepting cash as long as a few rules are obeyed.

You have no obligation to inquire where your client obtained the money except where circumstances raise undeniable suspicion. [See, e.g., United States v. Saccoccia, 165 F.Supp.2d 103 (D.R.I. 2001) (district court ordered forfeiture of post-trial fees, where attorneys paid by “covert deliveries of large quantities of cash, made by anonymous intermediaries”; defendant had no legitimate source of income and just had been convicted of racketeering), rev’d, United States v. Saccoccia, 354 F.3d 9 (1st Cir. 2003) (reversing because forfeiture laws do not allow recovery of substitute assets for criminal proceeds when those assets are held by a third party, here, the attorneys).]

If a client suspected of bank robbery offers cash in bank wrappers, ask for a check. Follow these rules:

  • Record all fees received and report them to the taxing authorities.
  • When you receive an amount of cash in excess of $10,000 you must file a Form 8300 with the IRS. [See 26 U.S.C. §6050I.] “Cash” means currency, travelers’ checks, cashiers’ checks, bank drafts and money orders, but not personal checks. Violations of section 6050I carry a fine of up to $100,000.
  • Do not break a cash fee of $10,000 or more into several payments for the purpose of avoiding the reporting requirement. This is the felony offense of structuring currency transactions in order to avoid the reporting requirement. [31 U.S.C. §5324.]
  • Confirm payments with your clients. Provide a receipt for flat fee payments. If you bill by the hour, bill every month and note on the statement how much remains in escrow. Clients who pay two thousand dollars a month for a year without complaint often will balk at a single annual bill for $10,000.

If you file a Form 8300 and fail to identify the source of the money, you will receive a form letter from the IRS urging you to supplement your Form 8300 filing before the IRS commences enforcement action against you.

Generally, fee arrangements and client or payor identities are not privileged. [Lefcourt v. United States, 125 F.3d 79 (2d Cir. 1997); United States v. Blackman, 72 F.3d 1418 (9th Cir. 1995).] However, there is an exception in special circumstances, where the disclosure of client identity and fee information would necessarily disclose confidential communications or implicate the client in the very criminal activity for which advice was sought. [SeeUnited States v. Sindel, 53 F.3d 874, 876 (8th Cir. 1995) (describing various doctrines which might justify nondisclosure); Ralls v. United States, 52 F.3d 223, 225-26 (9th Cir. 1995) (assertion of the privilege valid where party paying attorney’s fee to represent the defendant had consulted attorney concerning his culpability in the very transaction for which defendant was charged.]

Forms 8300 are available at IRS offices or can be downloaded from its website, www.irs.gov, as a fill-in form.

§2:15   Third Party Payors

Clients frequently depend on the kindness of friends, relatives, and employers for the payment of attorneys’ fees. [See United States v. Stein, 435 F.Supp. 2d 330, 335, 354-55 (S.D.N.Y 2006) (describing prevalence of practice of corporations advancing attorneys’ fees for officers and employees under investigation).]

Accepting payment from such sources is ethical as long as you guarantee all parties that your allegiance and duty of confidentiality run to the client, not the payor, and you advise your client of any potential conflicts and the client consents. [See United States v. Corona, 108 F.3d 565, 575 (5th Cir. 1997) (third party’s payment of fees did not raise conflict of interest); MR 1.7(b), 1.8(f).]

[For a fee agreement with language concerning third-party payors, see Form 2-1.]

Caution:

In certain situations, such as organized crime cases or large-scale drug conspiracies, the kingpins may offer to pay fees to buy a defendant’s silence or to be forewarned of his intent to cooperate against them. Accepting representation under such circumstances may endanger your license, liberty and life. [See Quintero v. United States, 33 F.3d 1133, 1134 (9th Cir. 1994) (trial judges in drug cases should determine whether third parties are paying the fees of retained counsel when a defendant is indigent, and, if so, whether the defendant understands the potential conflict of interest and voluntarily waives the conflict); United States v. Locasio, 6 F.3d 924, 933 (2d Cir. 1993) (Mafia “house counsel’s” representation of underlings was part of the racketeering enterprise); United States v. Coiro, 922 F.2d 1008 (2d Cir. 1991)(upholding obstruction of justice conviction of defense attorney for counseling subpoenaed witnesses to testify falsely in the grand jury).]

§2:16    Billing

Whether the case is retained or appointed, you must keep accurate time records. Record your time immediately after an event; it is the only way to ensure your time is accurate. Nothing sours the relationship with a client like an accusation that you have overcharged for meetings and calls in which you both participated.

 You should keep track of your time in flat fee cases as well for a number of reasons:

  • If you must withdraw at an early stage, you may be obligated to return part of the fee. Even in those jurisdictions which permit nonrefundable retainers, bankruptcy law might force return of any portion that has not been earned through services provided. [In re Bressman, 214 B.R. 131 (Bankr. D.N.J. 1997) (nonrefundable retainers are not “reasonable” under Bankruptcy Code §328(a)).]
  • Tracking your time might help salvage at least part of your fee from a forfeiture proceeding. [See United States v. McCorkle, 321 F.3d 1292, 1295 n. 4 (11th Cir., 2003) (only that portion of fee representing payment for services provided before the attorney learns that the client’s money is derived from an illegal source may resist forfeiture).]
  • Contemporaneous records of the time the matter consumed may be necessary to establish how much of the fee you deserve to keep if the attorney-client relationship is terminated before your services are completed. [Wong v. Michael Kennedy, P.C., 853 F.Supp. 73 (E.D.N.Y. 1994) (to meet his burden of showing entitlement to portion of the retainer under a quantum meruit theory, attorney must present contemporaneous records detailing the dates of services, hours expended and nature of the work performed).]

Additionally, at the end of the representation, you can tally the time and determine if you priced the case accurately.

Bill clients monthly and promptly, not only to maintain your cash flow and to detect quickly if a client has payment problems, but also so that the client has a detailed description of what you did for him that month.

§2:17    Adjusting the Fee Arrangement According to the Case

You may adjust your fee arrangements according to the seriousness of the case, the impact of a prosecution on your client, and the amount of work the case may demand.

Misdemeanors or felony charges that are likely to be reduced often will be resolved at the initial appearance or preliminary hearing. A flat fee works best for that type of case. The fee can be calculated based on an estimate of the time the appearance and any preparation will take and the market rate for those types of hearings. Since the case and your client’s need for you will end quickly, you do not want to bill and chase the client for an hourly fee. Build into your flat fee any amounts needed for investigators, court reporters, and interpreters.

In deciding how much of your fee to demand up front, evaluate not only your client’s income and assets, but the impact the prosecution will have on his earnings:

  • Is he likely to be detained without bail and lose his job?
  • If the charge or investigation arises from his business, can he continue to operate it profitably?
  • Does the charge carry such infamy that it will cause loss of employment or business?

If your client has not been charged yet, remember that you will have another chance to request a hefty retainer if charges are filed. If your client refuses the increase, you can withdraw easily because you have not entered an appearance in any court. While you need enough money to start work with confidence, you do not want to demand such a high retainer as to scare away the client.

Form 2-4:    Engagement Letter—Multiple Clients
Download the Engagement Letter—Multiple Clients in Microsoft Word.


Thomas J. Farrell’s practice focuses on criminal defense, ranging from Congressional hearings, pre-indictment investigations and negotiations and the representation of witnesses and victims, to appeals and post-conviction petitions, from white collar matters such as mortgage fraud, health care fraud, tax evasion, securities frauds, and environmental crimes, to capital murder.  He is a partner with Dreier LLP in Pittsburgh, PA (www.dreierllp.com). Mr. Farrell was selected as one of The Best Lawyers in America in 2006 and 2007 for white collar and non-white collar criminal defense. Mr. Farrell is the author of Criminal Defense Tools and Techniques, from which this article is excerpted.