Deck 6: Fair Fees and Client Trust Accounts

Question 1

Rita Paralegal is interviewing for a job with Big Law Firm. She is informed that beginning paralegals are expected to bill 2000 hours per year. Rita's next question should be: 83) ______

A) "Great! When do I start?"
B) "Does that mean I am expected to work weekends?"
C) "Is there enough work to keep me busy full time?"
D) "When my time is written down before the bill goes to a client, does the written-down time still count toward the 2000 billables?"

Answer 1

D

Question 2

Laura Lawyer 's client Curtis brought a check for $2000 to Laura as an advance payment retainer. Laura instructs you to include the payment in Curtis's fee agreement and put this money in the firm's General Operating Account. You 86) ______

A) should put this money in the trust account so that it can be drawn against as the firm incurs costs and fees on behalf of Curtis.
B) should put this money in the trust account because it belongs to the client until it is earned.
C) can do this because an advance payment retainer is considered earned when Laura receives it. No part of the money belongs to the client so it does not have to be put in the Trust Account.
D) should deposit this check but make no note of it in the fee agreement because it is not proper to make this sort of note in a fee agreement.

Answer 2

C

Question 3

Patty Paralegal's job requires her to call all 250 of the firm's corporate clients twice each year and give them some information. Most of these telephone calls take less than 2 minutes, especially if she can just leave a voicemail. The smallest billable amount at Patty's law firm is .1 or 6 minutes. If Patty makes 30 phone calls per hour, but bills them at 6 minutes, Patty's one hour becomes 3 hours. Therefore, at the end of an 8 hour day, Patty can bill 24 hours! Patty should

A) ask her supervising lawyer for permission to not bill clients for this service but ensure that the time she spends at this task is added to her annual cumulative billable hours.
B) bill each call at a full hour because no one is going to know.
C) ask her supervising lawyer for permission to just not bill clients for this service.
D) bill each call at 2 minutes and let the accounting department deal with it.

Answer 3

A

Question 4

Lara Lawyer's standard advertising says: "Contingency fee arrangements available in personal injury cases. No Recovery, No Fee!" This ad is

A) misleading and deceptive if clients are held responsible for paying costs even if they lose.
B) not permissible because it is illegal for lawyers to advertise fees.
C) perfectly fine and a fairly typical ad.
D) misleading and deceptive only if clients are held responsible for paying costs when they lose.

Question 5

Louise Lawyer's contract for personal injury claims provides that she is entitled to 40% of the recovery if the case is settled before a complaint is filed; 45% if the case is settled after the complaint is filed but before trial; and 50% if the case goes to trial. It further provides that the client is responsible for all costs of the case such as filing fees, deposition costs, messenger fees and copying costs at $.50 per page. This contract:

A) is an example of a standard contingency fee agreement.
B) is an example of "overreaching" by a lawyer.
C) is all fine except for the $.50 per page copying fee. That part of the contract is excessive.
D) is an example of a standard hourly fee agreement.

Question 6

Hubert Lawyer has received a $10,000 security retainer from Cindy Client. Hubert gives you the money and tells you to deposit it. You 85) ______

A) should open a special savings account for this client's money so that the money earns interest.
B) should deposit the $10,000 in the general operating account because the money belongs to Hubert.
C) should deposit the $10,000 in the client trust account to draw against for future legal fees.
D) should deposit $9000 in the client trust account and $1000 in the firm's general operating account so that the initial costs of the case (filing fees, etc.) may be paid.

Question 7

Rhonda Lawyer has agreed to take on the criminal defense case of the famous rap star: Bent Nikel. Bent has been arrested for the murder of his 3rd wife. As part of the fee agreement, Rhonda, a budding writer, wants to secure the literary rights to the entire story. Bent has no objections to this agreement. As Rhonda's trusty paralegal, you should 84) ______

A) advise Rhonda that you would like to help her with her book.
B) advise Rhonda that she should make Bent pay her for writing his life story.
C) advise Rhonda privately that this agreement is probably a violation of her ethical duties.
D) advise Rhonda that Bent can give her the literary rights so long as the judge approves the agreement.

Question 8

Clara Client has just been presented with a standard representation agreement by the law firm of Yatz & Berger. Clara's first language is German. Although she speaks and reads everyday English quite well, the legal terms in the contract confuse her. Yatz & Berger should

A) have someone in the firm, if possible, or a translator from outside of the firm, explain the terms of the contract thoroughly until Clara has a full and complete understanding of its terms.
B) advise Clara to take the contract home and study it before signing it.
C) have a paralegal explain the most important clauses in the contract to Clara in smaller, plain English words.
D) advise Clara to sign the contract and take her copy home for study.

Question 9

Lauren Lawyer's best friend has become Lauren's client. While discussing the terms of the engagement, Best Friend says: "Oh, Lauren! You and I are such good friends, we don't need a contract. You'll do the work and I'll pay whatever bills you send me." Lauren should

A) urge Best Friend to get the opinion of another lawyer before moving forward without a contract.
B) explain that a written contract is not only standard in relationships between lawyer and client, but are mandatory in most instances.
C) give Best Friend a hug and skip the contract.
D) make a note in the file that Best Friend has waived the written contract requirement.

Question 10

Client Carl is reviewing the representation agreement presented to him by his new lawyer, Lulu. Lulu's agreement provides that her hourly rate is $240 and her paralegal's rate is $100. The contract further provides that "these rates may be adjusted from time to time without notice to the client." This clause is

A) illegal because it is an important part of the contract that appears to be in the sole control of the lawyer.
B) legal, normal, and perfectly fine because it is a clause that many law firms use.
C) probably fine so long as Lulu does not abuse it.
D) legal but bad business practice because it may frighten some clients away.

Question 11

Juno's case has just been settled and she received a check from her lawyer in the amount of $54,356.97. Juno wonders where that peculiar number came from because the case was settled for $100,000. Juno

A) should ask the judge why she didn't get the full amount.
B) should ask the lawyer for an explanation of the amount over the phone.
C) should take it for granted that whatever sum she has gotten is correct because lawyers are bound to deal ethically with their clients.
D) should ask the lawyer for an "accounting" of her case that sets forth all of the expenses and deductions from the $100,000 recovery. She is entitled to an accounting.