When a client is willing and able to pay a hefty retainer up front, it is difficult to question the source. To keep that retainer, one must investigate any fact that could cause a reasonable person to question the client’s right to use the funds. Blindly accepting funds could lead to disgorgement, so inquire as to the source of the funds before accepting them in good faith.

In a per curiam decision, the Second Circuit recently joined other circuits in holding that “claims of professional malpractice based on services rendered pursuant to a bankruptcy petition are subject to the bankruptcy court’s original but not exclusive jurisdiction under Section 1334(b) of title 28.”[1] In 2001, Aston Baker (

American Bar Association (ABA) Model Rule 7.3 prohibits a lawyer from soliciting professional employment in person, by live telephone or real-time electronic contact where pecuniary gain is a significant motive and the prospective client is not a lawyer and does not have a family, close personal or prior professional relationship with the lawyer.

It is hard to open a law periodical these days without hearing about the shift from hourly billing to alternative fee arrangements such as flat fees. It may be premature to mourn the demise of the billable hour, but it is nevertheless imperative for lawyers to become familiar with the ethical pitfalls inherent in alternative billing arrangements.