Flat Fee Trend Leads To Uptick In Complaints
In recent years, lawyers have looked for ways to thrive in difficult economic times. Among other things, many have changed the way they charge for their services. Instead of billing by the hour, some charge flat fees for services.
And that, it would appear, is opening a can of ethical worms.
As Stephen Conover, who represents attorneys in disciplinary matters put it, "there's an uptick in lawyers who are using fixed fees," so naturally there will be some lawyers who will get into trouble, "because they aren't managing [those funds] properly."
Consider the case of John J. O'Brien Jr., who recently received a written reprimand from the Statewide Grievance Committee after he charged a $10,000 flat fee to handle a lawsuit and then an extra $6,000 when the case went to the appellate stage.
It all started back in 2007, when Laura Chiulli hired O'Brien, who practices in Wethersfield, to represent her in a civil lawsuit. In one case Chiulli was involved in, her family business, Advanced Home Builders, was being sued for nonpayment of construction materials and labor costs to another company during the construction of a Rocky Hill subdivision.
Records indicate that O'Brien provided Chiulli with a written fee agreement, as required under Practice Book rules. In that August 2007 agreement, O'Brien said he would represent Chiulli "for a non-refundable flat fee of $10,000." His fee agreement also contained language about a $5,000 "success fee," which was the sole discretion of the client to pay or not pay.
The flat fee, according to the agreement, did not include court costs or representation for any appeal. Chiulli signed the agreement, and paid O'Brien his fee. Over the next several months, she paid an additional $4,060 for court costs.
A trial was held, which resolved some of the issues in dispute. Afterward, Judge Trial Referee Richard Rittenband ordered both sides to submit briefs on the remaining legal issues. In April 2008, O'Brien told the Chiulli he would not work on those briefs until she paid him more money. According to the client, O'Brien said his continued services would cost an additional $6,000.
Chiulli initially refused to pay, noting the flat fee agreement. She eventually relented, and the civil case was ultimately resolved. But then Chiulli filed a complaint with the Statewide Grievance Committee last year, which resulted in an investigation.
So what did the attorney do wrong?