Washington Lawyer - November/December 2024 - 8

PRACTICE MANAGEMENT
What In re Alexei Means
for Earning Advance Fees
By Dan Mills
I
t is now the law of the District
of Columbia that, " absent an
agreement specifying to the
contrary[,] an attorney earns a
flat-fee payment only upon completion
of all the enlisted services. "
In re Michael Alexei was decided August 1, 2024,
less than three months after oral argument before
the D.C. Court of Appeals. The court announced
its interpretation of Rule 1.15 (safekeeping
of property) for the first time, clarifying
an issue previously addressed in In re Mance
(980 A.2d 1196 (D.C. 2009)).
As I discussed in the July/August 2024 issue of
Washington Lawyer, under Mance attorneys can
transfer funds held in the IOLTA to their ownership
once the legal services are performed.
Lawyers can do this by tying the earning process
to stages of the case, passage of time, or
another method that is reasonable.
Alexei's conduct in collecting an advance fee
in an immigration representation and earning
it while the representation unfolded, without
addressing when and how the advance fee
was earned in the fee agreement, required the
court to determine precisely when an attorney
earns an advance fee within the meaning of
Rule 1.15(e).
The court has determined that if a fee agreement
does not specify when and how an advance
fee is earned during the representation,
it may be earned " only upon completion of the
entirety of the solicited services. " In its ruling,
the court concluded that Alexei did not violate
Rule 1.15(a), even though the same conduct
could be deemed a violation if it occurs after
the issuance of this opinion.
Unless a lawyer wants to wait until all the work
is complete to earn the advance fee, a fee
8 WASHINGTON LAWYER
* NOVEMBER/DECEMBER 2024
agreement must have language - the earning
mechanism - that outlines when and how the
advance fee will be earned during the representation.
The
earning mechanism can be tied to stages
of the case or passage of time. Alternatively, attorneys
may use an hourly rate not to exceed
the flat fee, so long as the chosen method is
reasonable and articulated clearly and precisely
in the fee agreement.
I have always interpreted Mance as requiring a
clear and precise earning mechanism and have
provided this guidance in all consultations and
programs about fee agreements and trust accounting
since 2009. It is a safe and clientfriendly
practice.
Alexei avoided discipline as a result of the
court's decision. He faced disbarment in the
proceeding and was charged with violating
several rules relating to competence, skill, care,
charging an unreasonable fee, making false
statements to Disciplinary Counsel, and misappropriating
client funds.
The Hearing Committee found that Disciplinary
Counsel " failed to prove any of the charged violations
by clear and convincing evidence " and
recommended the charged violations be dismissed.
The Board on Professional Responsibility
agreed and dismissed all the charges.
Disciplinary Counsel appealed only the Board's
decision that Disciplinary Counsel had failed to
prove by clear and convincing evidence that
Alexei engaged in reckless or intentional misappropriation,
a violation of Rule 1.15(a).
Given the novelty of the court's holding and
the circumstances of the case, the court applied
this new law prospectively " so as not to reach
whether Mr. Alexei's conduct or any other similar
fee agreements predating the issuance of this
opinion violated Rule 1.15. " Said the court:
Although we hold that, as a default rule, advanced
fees are earned upon the completion
of all the legal services associated with
the fees, we also concluded that In re Mance
did not resolve this question. Accordingly,
we " announce this interpretation of the rule
for the first time. " In re Mance, 980 A.2d at
1199. In bar disciplinary cases like this, we
have seen fit to apply such holdings " prospectively. "
Id. To be sure, our holding here is
not the same sea change that In re Mance
was. But, as both Mr. Alexei and the Board
point out, D.C. Bar Ethics Opinion 355, which
at least for a time was published on the D.C.
Bar's website, interpreted In re Mance to permit
attorneys to earn advanced fees before
the completion of the legal services. See
D.C. Bar. Comm. on Legal Ethics, Opinion No.
355, at 342 (2010) ( " Mance does not address
whether a lawyer may transfer some portion
of a flat fee from a trust account to an operating
account prior to the conclusion of a
representation where there is no agreement
between the lawyer and the client . ... A
lawyer who has charged a client, for example,
two thousand dollars for the preparation
of an estate plan has under most circumstances
earned some portion of the fee
when the lawyer sends the client a set of
draft documents. " ). Although this opinion
was later removed from the D.C. Bar website,
it reflects the ambiguity following In re
Mance on this question and may have guided
attorneys who read it at the time but did
not notice its withdrawal.
If you have concerns about whether your fee
agreement complies with Alexei and Mance,
read the case (No. 23-BG-0591) and contact the
D.C. Bar Practice Management Advisory Service
for a free and confidential assessment.
D.C. Bar practice management advisors Dan Mills
and Kaitlin McGee can be reached at dmills@dcbar.
org and kmcgee@dcbar.org, respectively.
Washington Lawyer - November/December 2024

Table of Contents for the Digital Edition of Washington Lawyer - November/December 2024
