Under current regulations, any time an attorney’s efforts will or reasonably expect to exceed $1,000, there must be an agreement in writing. That agreement must contain certain disclosures, the most important of which (in my opinion) is how the attorney will bill for his time (hourly rate), what exactly you will be paying for (mileage, photocopying, travel time, etc.) and the frequency with which you should expect to receive, or be able to request, billing statements.
“Earned Upon Receipt” Provisions
These are a red flag and specifically when you are entering into an hourly fee agreement with an attorney, prohibited by the California State Bar. There may be circumstances where this is not a problem, for example, if the agreement is for limited scope representation. In a limited scope agreement, or a true “flat fee” agreement, a set fee that is earned upon receipt is commonplace, although technically California law does not view such agreements as legally binding (on either party).
Flat-fee agreements sound enticing, after all, it lets you know exactly what you will be paying at the beginning of representation. The problem that may arise though, is that if the attorney ends up spending a lot of time on your case, or communicating with you constantly to get the information needed, the attorney may feel as though the incentive to get your case to the finish line (whatever that may look like) diminishes…
But back to my point, if you find this provision in your attorney-client agreement and the attorney is working for you on an hourly basis, you should probably keep searching for another attorney. Here’s why: an attorney that needs to access the entirety of your retainer immediately is indicative of cashflow problems that could impact your case, lead to overbilling, or affect your ability to recover the remainder of your retainer should you decide to fire this attorney and seek out a new one.
You can always take whatever fee agreement you’re about to sign to another attorney to review. If your potential attorney resists, walk away. The rules are complex and may seem burdensome, but lawyers who play by the rules are the ones you want to hire. Lawyers ignore the rules (or, bend, perhaps is a nicer way to put it) because it is easier, however, that desire to “make it easier” will likely also be applied to you and your case, thereby impacting the quality of your representation and perhaps even the quality of the outcome.