“Non-Legal Work,” Billing, Discipline, Questions

By William Wernz posted 05-20-2019 09:11

  

A March 20, 2019 public discipline petition includes an “unreasonable fee” charge, “Respondent's conduct in billing M.G.T.'s estate for non-legal work including tax preparation and accounting at his standard $200 hourly attorney rate violated Rule 1.5(a), MRPC.”[1] The client signed a fee agreement, providing an hourly fee of $200, “for ALL time you spend on my case.” However, the client discharged the lawyer and hired a non-lawyer “tax professional,” whose standard hourly rate was $100. From the petition, it appears to be the position of the Office of Lawyers Professional Responsibility (OLPR) that if a non-lawyer is available to provide a “non-legal service” for a certain rate, it is “unreasonable” for a lawyer to charge substantially more for the service.

 In 2018, in another matter, OLPR sent an investigative inquiry to respondent’s counsel (the author), “A review of your client's engagement letter states that his representation was in connection with a marital dissolution matter. However, billing records detail that the majority of fees are associated with telephone conferences.  Please be clear about the actual legal work that [your client] performed.”  The “however” appears to imply that attorney-client “telephone conferences” are not “actual legal work” in connection with a possible marriage dissolution.

The 2019 petition and the 2018 inquiry present two related but distinct issues. The petition appears to indicate that, for work that both lawyers and other professionals may lawfully perform, the billing rates of the latter provide a benchmark for billing rates of the former. Because the petition is a formal, public document, co-signed by the OLPR Director, the allegations regarding fees appear to be OLPR’s official position.

On the other hand, the 2018 inquiry implies that a core legal service – conferring with clients – is, somehow, not “actual legal work.” This would be an obvious error. However, the inquiry was signed only by an Assistant Director and may be just a poor choice of words. Accordingly, the petition will be given more consideration here.

OLPR’s apparent positions are important. Non-lawyer professionals and other providers offer many services that lawyers also provide. Competitors frequently charge less than lawyers. OLPR’s positions raise many questions, regarding “actual legal work” and “non-legal work.”

First, the Rules contemplate lawyers providing, as part of their regular practice, services that some might call – but not accurately – “non-legal.” The Rules approve a lawyer – as an integral part of legal services – providing advice on, “moral, economic, social, and political factors that may be relevant to the client’s situation.”[2] Many clients value their lawyers’ services for this very reason. A lawyer may serve as a wise and versatile counselor, not merely a legal technician. Contrasting “actual legal work” with attorney-client conferences betrays a misunderstanding of the practice of law. Divorce clients are well known for calling lawyers, bending their ears, and seeking advice on a wide range of subjects. Responding to these client needs is the actual legal work of the lawyer.

A second question is whether it is unethical for a lawyer to charge more than a non-lawyer “professional” would charge for the same work. The second question entails a third question, viz. when the work is actually the same.

Is a lawyer’s preparation of an estate tax return a “non-legal” service? Rule 5.7, Minn. R. Prof. Conduct (MRPC) defines “law-related services” as, “services which might reasonably be performed in conjunction with and in substance are related to the provision of legal services and which are not prohibited as the unauthorized practice of law when provided by a nonlawyer.” Such services, “include providing title insurance, financial planning, accounting, trust services, real estate counseling, legislative lobbying, economic analysis, social work, psychological counseling, tax preparation, and patent, medical, or environmental consulting.[3]

What ethics issues arise in providing “law-related” services? Eleven comments to Rule 5.7 answer the question at length. These comments do not mention fees. However, the comments do raise questions. When the Court adopted Rule 5.7, did it intend that reasonable fees for “tax preparation” and other law-related services are determinable by reference to the rates set by non-lawyer competitors? If tax preparation and other law-related services may “reasonably be performed in conjunction with and in substance are related to the provision of legal services,” is it not reasonable for attorneys and clients to agree that a lawyer’s standard hourly rate will apply both to legal and to law-related services?

Another question is how to determine whether the services of the lawyer and non-lawyer are the same and of comparable value. Rule 5.7 expressly recognizes that law-related services are often interconnected with legal services, both in substance and in rendering of the services. The non-lawyer’s services, in contrast, must be separated from legal services, because the non-lawyer may not lawfully provide such services. A non-lawyer’s advice is not protected by the attorney-client privilege and is less likely to be protected by the work-product doctrine. The non-lawyer’s advice may not take account of various legal factors that may bear on the subject. The non-lawyer is not bound by the Rules of Professional Conduct regarding various matters, including advance retainers, confidentiality, and conflicts of interest. The Client Security Fund protects the client only if services are provided by a lawyer. The non-lawyer has a competitive advantage in not paying attorney registration fees and bar dues.

The Court has said that, “the right to enter into fee arrangements with an attorney is protected by Minn. Stat. § 549.01, which provides, in part, that ‘(a) party shall have an unrestricted right to agree with his attorney as to his compensation for services, and the measure and mode thereof.’”[4] However, the Court has disciplined attorneys for unreasonable fees, sometimes even where a client agreed to the fee.

Another allegation of the 2019 petition is that respondent charged legal fees for services such as, “downloading files, copying paperwork, mailing documents, e-filing documents, and recalculating figures from financial statements.” Billing at attorney rates for clerical services is unreasonable, regardless of client agreement. Similarly, billing for meetings that are “essentially personal and social in nature” is unreasonable.[5]

Without surrendering its inherent authority to regulate the practice of law, the Court has also accorded great weight to statutes that bear on the practice of law. Rule 1.5(a), MRPC (reasonable fees), qualifies the otherwise “unrestricted” right granted by MSA 549.01, but due weight also must be given to the contractual freedom that has been both prescribed by statute and generally approved by the Court.

The client may well not wish to be told that, although the client desires that the law firm handle all the client’s work, the firm must farm out certain discrete tasks, because the firm cannot compete on price with non-lawyer providers. The client may prefer the atmosphere of the law firm’s conference rooms and the familiarity of the firm’s lawyers to contracting with strangers. If OLPR seeks to impose new limits on the generally “unrestricted” statutory right of the client to contract for legal services, it should recognize that some clients will regard the position as intrusive and even harmful.

The Rules of Professional Conduct address “reasonable” fees through factors gleaned from case law: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required; (2) whether the retention will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer; and (8) whether the fee is fixed or contingent.[6] A comment to Rule 1.5 adds, “The factors specified in (1) through (8) are not exclusive. Nor will each factor be relevant in each instance.” The Rules do not identify as factors relevant to the reasonableness of fees whether the services may be performed by non-lawyers.

More generally, “reasonable” means, “the conduct of a reasonably prudent and competent lawyer.”[7] For many years, good lawyers have, where appropriate, billed law-related services at customary rates. Legal assistants or junior associates may perform some law-related services, such as tax preparation and accountings, at lower rates than those of supervising partners.

For nearly fifty years, OLPR and the Lawyers Board have declined to investigate most complaints of unreasonable fees. Since 1973, OLPR has referred almost all fee complaints to fee arbitration.[8] In 1987, the Lawyers Board adopted “Summary Dismissal Guidelines,” which also referred almost all fee complaints to fee arbitration.[9] Similarly, a brochure on the current OLPR website advises complainants to consider fee arbitration because, “Most routine fee disputes are best resolved outside [OLPR].”

Has OLPR taken the general position that law-related services, including tax preparation, are “non-legal?” Does OLPR generally regard lawyers’ “telephone conferences” as distinct from “actual legal work?” Evidence from one count of a petition and one investigative inquiry suffices to raise the questions but not to answer them.

If OLPR is taking general positions on either of these issues, it would be best to publicly announce, describe, explain, and justify the positions. The Lawyers Board and the MSBA could then consider both the merits of the positions and whether amendment to the Rules of Professional Conduct or its comments would be desirable. Lawyers would then be informed prospectively of any change in Minnesota standards for determining reasonable fees.


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[1] In re Miller, A19-0501, March 20, 2019 Petition for Disciplinary Action, para. 49. The petition alleges Miller’s representation of the estate was incompetent in several ways, but the only stated basis for the unreasonable fee allegation above is that a legal fee was charged for “non-legal” services.

[2] Rule 2.1, MRPC.

[3] Rule 5.7(b); Rule 5.7 cmt. 9.

[4] Cont’l Cas. Co. v. Knowlton, 232 N.W.2d 789, 796 (Minn. 1975) citing Kittler & Hedelson v. Sheehan Properties, Inc., 203 N.W.2d 835 (1973).

[5] In re Simmonds, 415 N.W.2d 673, 676 (Minn. 1987) (Suspension for misconduct including fees that were unreasonable in several different ways.)

[6] Rule 1.5(a)(1)-(8), MRPC. The rule is paraphrased here.

[7] Rule 1.0(i) MRPC.

[8] R.B. Reavill, Professional Responsibility and Discipline, Bench & B. of Minn., Apr. 1973.

[9] William J. Wernz, Summary Dismissal Guidelines, Bench & B. of Minn., May/June 1987.

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