7.4 Professional Responsibility - Fees, Trust Accounts, and Duty to Court

7.4 Professional Responsibility - Fees, Trust Accounts, and Duty to Court

1. Attorney Fees and Contingent Fee Regulations

Under Rule 4-1.5 of the Rules Regulating The Florida Bar, an attorney is prohibited from charging, collecting, or agreeing to an illegal, prohibited, or clearly excessive fee. A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee exceeds a reasonable fee to a degree that is unjustified.

Contingent fees—where the attorney’s fee is dependent on the outcome of the matter—are subject to strict requirements under Florida law:

• Writing Requirement: Every contingent fee agreement must be in writing and signed by the client and each participating lawyer. The agreement must state the method by which the fee is to be determined, including the percentage that will accrue to the lawyer in the event of settlement, trial, or appeal, and whether litigation expenses are to be deducted before or after the fee is calculated.
• Statement of Client’s Rights: Prior to entering into a contingent fee contract, the lawyer must provide the client with a copy of the "Statement of Client's Rights" and obtain the client’s signed acknowledgment.
• Sliding Scale Caps in Personal Injury/Tort Cases: Florida imposes strict limits on contingent fees in personal injury and property damage cases. Under Rule 4-1.5(f)(4):
  • Before the filing of an answer or demand for arbitration: Up to 33.3% of any recovery up to $1 million; 30% of any recovery between $1 million and $2 million; and 20% of any recovery exceeding $2 million.
  • After the filing of an answer or demand for arbitration: Up to 40% of any recovery up to $1 million; 30% of any recovery between $1 million and $2 million; and 20% of any recovery exceeding $2 million.
  • Additional Appeal Fee: An additional 5% may be charged if the recovery is appealed.
• Prohibited Contingent Fees: A lawyer cannot charge a contingent fee in:
  1. A domestic relations matter where the fee is contingent upon the securing of a divorce, the amount of alimony or support, or a property settlement (however, contingent fees are permitted to collect past-due alimony or child support).
  2. Representing a defendant in a criminal case.

2. Client Trust Accounts and Commingling Prohibitions

Under Chapter 5 of the Rules Regulating The Florida Bar, a lawyer must maintain client and third-party funds in a trust account separate from the lawyer’s personal and business accounts.

• No Commingling: Mixing lawyer and client funds is strictly prohibited. The only exception is that a lawyer may deposit their own funds in a trust account in an amount reasonably necessary to pay bank service charges.
• Advances: Advanced fees, costs, and expenses must be deposited into the trust account and may only be withdrawn by the lawyer as the fees are earned or the expenses are incurred.
• Interest on Trust Accounts (IOTA) Program: Nominal or short-term funds belonging to clients or third parties that cannot earn net interest for the client must be placed in a pooled, interest-bearing trust account (an IOTA account). The interest generated on these accounts is automatically transferred directly to the Florida Bar Foundation to fund legal aid and other public interest legal programs.
• Record-Keeping and Retention: Florida has exceptionally strict trust accounting rules. A lawyer must maintain complete trust account records, including ledgers, bank statements, and monthly reconciliations, for at least 6 years after the termination of the representation.

3. Candor to the Tribunal and Client Perjury

A lawyer's duty to advocate zealously for their client is limited by the duty of honest dealing with the judicial system. Under Rule 4-3.3 (Candor to the Tribunal), a lawyer must not knowingly make a false statement of fact or law to a tribunal, fail to correct a material false statement previously made, or fail to disclose controlling adverse legal authority that is not disclosed by opposing counsel.

The most challenging application of this rule occurs when a client intends to commit perjury:

• The Perjury Dilemma: If a lawyer knows that a client intends to testify falsely in a court proceeding, the lawyer must first attempt to persuade the client not to do so.
• Withdrawal: If the client persists, the lawyer must seek the court's permission to withdraw from the representation.
• Mandatory Disclosure: If withdrawal is denied, or if the perjury is discovered after it has occurred, the lawyer must take reasonable remedial measures, including, if necessary, disclosure to the tribunal.
• Rejection of the Narrative Approach: In many states, a criminal defense attorney whose client insists on testifying falsely can use the "narrative approach," where the lawyer allows the client to testify in a narrative format and does not refer to the false testimony during closing arguments. Florida rejects the narrative approach. In Florida, the duty of candor to the tribunal overrides the duty of confidentiality. Under Rule 4-3.3, if a lawyer knows the client’s testimony will be false, they must disclose the perjury to the judge, even if this requires disclosing information otherwise protected as confidential under Rule 4-1.6.