In 2010, Eric Goldman noted copyright claims against political campaigns appear to be on the rise.  He cites (among others):

• Sen. John McCain: See for example, 2008 WL 3849451 or try search (copyright /3 infring!) & TI(mccain /3 john) in federal court filings.

• Robin Carnahan: See 2010 WL 3805284 for complaint and for links to related pleadings.

• Charlie Crist in 2010.  See Gov. Crist’s answer at 2011 WL 2622081 and Mr. Byrn’s complaint at 2010 WL 2833809)

• Sharron Angle in 2010.  See Righthaven’s complaint at 2010 WL 3690541 and Sharron Anlge’s answer at 2010 WL 3968913.

• In 2008,  Sarah Palin caught heat from the band Heart over her use of their song “Barracuda.”  Although it didn’t result in litigation, it did generate a fair amount of press coverage, and even some legal scholarship.  To see examples, try “Sarah Palin” /p barracuda in News or All State and Federal Materials on WestlawNext:

There are, of course, a host of more recent examples.  The Westlaw welcome page has the link to a complaint filed against Newt Gingrich and his presidential campaign by Rude Music, Inc., a company owned by one of the musicians from the band Survivor, alleging that Gingrich’s campaign infringed on the copyright of the classic song “Eye of the Tiger” by using it at his campaign events.  (For the complaint, see 2012 WL 264219).  NBC asked Mitt Romney’s campaign to remove an anti-Gingrich ad featuring Tom Brokaw’s reporting.

I ran the following search on WestlawNext in All State and Federal materials:

Search:  recording song music copyright infring! /s politic! /5 campaign conference event

This search returns over 550 documents, including 75 cases and over 90 trial court docs.

Unfortunately, there’s no perfect search to capture filings of this sort.  If you’re interested in tracking newly-filed campaign-related copyright cases, you might simply run nature-of-suit code for copyright (820) and review results for candidate names.  However, we did review Federal Election Committee’s Campaign Finance data for commonalities among campaign and committee names to come up with the following search.

NOS(820) & PTN(CAMPAIGN DEMOCRATIC DFL REPUBLICAN GOP RE-ELECT! ELECT ELECTION CANDIDA! CHANGE PAC PAF (POLITICAL +3 FUND ACTION) (#FOR +2 GOVERNOR PRESIDENT SENATOR SENATE HOUSE REPRESENT! CONGRESS) VOTE! DFL GOB)

The Search seems to work best on WestlawNext where it delivers 90 results in Federal District Courts.  Use the Filing Date filter on the left to limit results to recent dockets:

Political campaigns of the past have yielded an interesting variety of legal issues surrounding the use of music in the campaign.  Based on the early start we’re seeing with the Rude Music v. Gingrich 2012 case, this promises to be no exception.

Arizona Congresswoman Gabrielle Giffords, who was seriously wounded in a shooting on January 8, 20011 at a constituent event in Tuscon, announced yesterday that she was resigning her seat in Congress to focus more fully on her recovery.

Arizona Rep. Gabrielle Giffords, who became a symbol of Americans’ hope and resilience as she tenaciously recovered from a gunshot wound to the head over the past year, announced Sunday that she is resigning from Congress this week.

. . . .

“I have more work to do on my recovery,” the Democratic congresswoman says in the video. “I’m getting better. Every day my spirit is high,” she says, speaking directly, deliberately and somewhat haltingly. “I will return, and we will work together for Arizona.”

2012 WLNR 1486923

As Rep. Giffords departs Congress, you can check out her legislative legacy on Westlaw using the following resources:

Floor speeches she made are available in the Congressional Record (Database ID: CR)

Search:  SP(Giffords) (189 docs)

The bill tracking for legislation she authored or sponsored during her time in Congress can be found in the Historical Bill Tracking database (billtrk-old).

Search:  au(giffords) & ci(federal) (60 docs)

Examples of her testimony before various committees in Congress can be found in the USTESTIMONY database.

Search: sp(giffords) (24 docs)

December 7 this year marked the 70th Anniversary of the attack on Pearl Harbor which signaled the entry of the United States into World War II.  As a remembrance of that fateful day, the federal government in 1998 enacted 36 USCA 129, establishing National Pearl Harbor Remembrance Day.  In that same act, Congress established the Pearl Harbor Survivors Association.  See 36 USCA 170301 – 170313.

As this is the 70th Anniversary of the attack, the ranks those who were there and experienced the events that day firsthand have begun to dwindle precipitously.

A fraction of the 84,000 U.S. service members who were at Pearl Harbor are alive today to bear witness. The Pearl Harbor Survivors Association counts 2,700 members, a number that grows smaller by the week. The November issue of the association’s quarterly newsletter, the Pearl Harbor-Gram, pays tribute to 44 members who’ve died. And the national president delivers the painful and “inevitable” news: The Pearl Harbor Survivors Association will be dissolved Dec. 31. 

2011 WLNR 25312907

Westlaw actually offers an interesting collection of materials related to the Pearl Harbor attack, including legislation passed in response, secondary sources, and even cases.  To see a good sampling, I ran the following search on WestlawNext in the All Federal jurisdiction:

adv:”pearl harbor” /s attack

You can view a PDF version of the actual Declaration of War at 55 Stat. 795.

The recent storm that  announced the official start of winter here in Minnesota (home of the Reference Attorneys), means it’s time to start preparing for the inevitable slip-sliding slow commute and the fear that you may find yourself in a ditch if you’re not careful.  Minnesota received its first appreciable snowfall of the season just in the last few weeks; yes East Coasters, you beat us to it.  A sampling of the news coverage from the Duluth News Tribune:

The Minnesota State Patrol reported 200 crashes on highways statewide between noon and 2:45 p.m. Saturday. There were 25 injury accidents, but no serious injuries or fatalities.

2011 WLNR 24077968

I ran a few quick searches on WestlawNext, and at least based on the appellate case, it looks like you may be more likely to see a ticket for reckless or careless driving that for something more mundane like failure to yield or stop.

I ran both of the following queries in Minnesota and related Federal materials.

negligen! careless reckless /5 driv! operat! /p slick slippery icy wet snow! /5 road street pavement highway freeway ramp intersection

fail! /10 stop yield /p slick slippery icy wet snow! /5 road street pavement highway freeway ramp intersection

The first result brings me back 69 cases.  The second, only 11.

Interestingly, though, “evidence of skidding on a slippery road, standing alone, is not enough to establish negligence.”  Svercl v. Jamison, 252 Minn. 8, 9, 88 N.W.2d 839, 841 (1958).  The court went on to explain:

To hold otherwise would be to apply the doctrine of res ipsa loquitur in a class of cases where it obviously does not belong. However, in many of the cases of this type, the manner of driving prior to skidding and the control of the car both before and after skidding present a situation where an inference of negligence is permissible. Here, defendant was aware of the fact that there were icy spots on the road and in particular around these curves. He had encountered such ice on the trip to Grand Rapids. He found ice on the curves that he previously had been able to negotiate.

The court concluded:

While evidence of skidding alone is not enough to establish negligence, evidence of speed, the care exercised in controlling the car, knowledge of existing dangerous conditions, and the failure to futher reduce speed under these conditions usually present facts from which a jury can justifiably draw an inference that defendant failed to exercise that degree of care required of him under the existing circumstances. In this case, we cannot say as a matter of law that defendant, having knowledge of the icy conditions then existing, should not have anticipated that he would be likely to slide off the road if he failed to further reduce his speed.

Id.

So it turns out that a slippery road may be enough to relieve liability, but the facts are going to have to break your way.

In fact, you may be better off facing reckless or careless driving because, according to Riley v. Lake, 1972, 295 Minn. 43, 203 N.W.2d 331, failure to yield the right-of-way is prima facie evidence of negligence under Minn. Stat. 169.96.

But in any event, you’re probably best off slowing down when the flakes start to fly.

A recent story out on the AP wire highlights the newest phenomenon in trademark filings: the rush to trademark all things Occupy.

In recent weeks, the U.S. Patent and Trademark Office has received a spate of applications from enterprising merchandisers, lawyers and others seeking to win exclusive commercial rights to such phrases as “We are the 99 percent,” “Occupy” and “Occupy DC 2012.”

Organizers of the protest centered in Manhattan’s Zuccotti Park went so far as to file for a trademark of “Occupy Wall Street” after several other applications connected to the demonstrations were filed with the U.S. Patent and Trademark Office.

Wylie Stecklow, a lawyer representing the protesters, said the Oct. 24 filing was done to prevent profiteering from a movement many say is a protest of corporate greed.

“I would like to ensure that this isn’t coopted for commercial purposes,” Stecklow said. “The trademark can be used for noncommercial purposes.”

Stecklow’s application was one of three filed with the U.S. PTO seeking to trademark either “Occupy Wall Street” or “Occupy Wall St.”

2011 WLNR 22941622

All of these filings are available in the TRADEMARKSCAN – All (ALL-TM) database.  A search for all filings for Occupy to date this year yields 10 documents.

You can also limit your search to US filings.  In FED-TM, try

tm(!occupy! !ninety-nine-percent! !99%! !wall-street! !1%! !one-percent!)

Note that with this search, we’re using root expanders at the beginning of each term — wouldn’t want to miss the application for de-occupy.  View your result list as a sortable table and export the data to an Excel file .  This  should allow you to analyze the data.  Here, for example is a pie chart of the 2011 ‘Occupy’ marks organized by international class:

Click to Enlarge

For purposes of this research, however, what’s more interesting is who might be filing these applications and when they’ve been filed.  According to an article from American University Washington College of Law’s Intellectual Property Brief, some second-comers might be 1-percenters.

Fer-Eng Investments appears to be a shell corporation with the only officer named as “The Ferraro-Eng Family Trust.” The names provided on the address refer to Vincent Ferraro and Wee Nah Eng. Interestingly enough, Ferraro, a Stanford Business School grad, is the former Vice-President of Worldwide Marketing for Hewlett-Packard, where he met his wife Wee Nah Eng. Ferraro now serves as the Vice President and Chief Marketing Officer of Global Marketing for Eastman Kodak, and also appears to hold several consulting positions. Now, I don’t know what type of compensation Ferraro receives, but based on his title, position, and impressive (publicly accessible) Linkedin resume, I would be willing to give anyone 10:1 odds that the Ferraro-Eng household is bringing in enough to meet the $380K a year threshold for the “top 1%.”

Coincidentally, there have also been 52 filings for “tea party” in ALLTM.

H.R. 822 is currently wending its way through the halls of Congress.  The bill would essentially grant the same type of state-by-state reciprocity to holders of concealed weapons permits as is granted to holders of state driver’s licenses.

In its current form, it reads:

Sec. 926D. Reciprocity for the carrying of certain concealed firearms

‘(a) Notwithstanding any provision of the law of any State or political subdivision thereof, related to the carrying or transportation of firearms, a person who is not prohibited by Federal law from possessing, transporting, shipping, or receiving a firearm, and who is carrying a government-issued photographic identification document and a valid license or permit which is issued pursuant to the law of a State and which permits the person to carry a concealed firearm, may carry a concealed handgun (other than a machinegun or destructive device) that has been shipped or transported in interstate or foreign commerce, in any State, other than the State of residence of the person, that-

             ‘(1) has a statute that allows residents of the State to obtain licenses or permits to carry concealed firearms; or

             ‘(2) does not prohibit the carrying of concealed firearms by residents of the State for lawful purposes.

‘(b) A person carrying a concealed handgun under this section shall be permitted to carry a handgun subject to the same conditions or limitations that apply to residents of the State who have permits issued by the State or are otherwise lawfully allowed to do so by the State.

‘(c) In a State that allows the issuing authority for licenses or permits to carry concealed firearms to impose restrictions on the carrying of firearms by individual holders of such licenses or permits, a firearm shall be carried according to the same terms authorized by an unrestricted license or permit issued to a resident of the State.

‘(d) Nothing in this section shall be construed to preempt any provision of State law with respect to the issuance of licenses or permits to carry concealed firearms.’

2011 CONG US HR 822

Currently, every state in the country, save Illinois and the District of Columbia provide some means by which its residents may lawfully carry a concealed firearm.  Some are considered “Shall Issue” states (See Minn. Stat. 624.714).  Others are “May Issue” (NY Penal 400.00).  Still others practice what has been termed “Constitutional Carry” where no permit is required.  Even among the states that fall into the Shall Issue and May Issue categories, the actual practices and requirements for the permit vary greatly.

This new legislation would provide some standards across the country for those who have permits to carry a firearm to lawfully carry subject to the laws of the state they are currently in, much the same way drivers are required to follow the laws of the states they visit. 

But the carrying of firearms is undoubtedly a more hot button issue than driving across state lines.

In fact, a similar bill was introduced in the last session of Congress, but 2009 CONG US HR 197 died in committee.  The current bill has already cleared its first hurdle, but there are undoubtedly many more issues to come.

Tracking

To keep up with the track of this bill, I set up a WestClip in CONG-BILLTX and BILLTRK using:

“HR 822” (right-to-carry /10 reciprocity)). 

That same query has generates over 230 hits in ALLNEWS:

(“hr 822″ (right-to-carry /10 reciprocity))

For a full breakdown of the states’ laws regarding lawful carrying of a firearm, this search may be a good start: 

TE,PR,CA(lawful! legal! permit /s carry! /s firearm pistol)

 I ran this in All States in WestlawNext and got 381 results.  You can also use ST-ANN-ALL on Westlaw.com. Alternatively, on WestlawNext, simply try

conceal and cary firearm

Then, choose statutes and filter by state.

The Firearms Law Deskbook (FALDB ) may also be a helpful source on either  Westlaw.com or WestlawNext for a wide variety of issues related to firearms, including issues related to state and federal regulation.

[Editor's Note: The Firearms Law Deskbook by Stephen P. Halbrook includes a great 50-state survey of gun laws in the appendix.  See FALDB APP A. The publication is current throught the 2011 updates.]

[Editor's Note: Many Reference Attorneys are tracking cases of personal interest. Today, we begin adding the category, RefAtty Case to posts whose central focus is not necessarily research. Instead, these posts represent the legal stories that keep our colleagues awake at night. Of course, we'll continue to include relevant research references.]

Every so often, a case comes along that gives us in the profession a moment of pause. When I read the story of this case, I had one of those moments.

The city of Lee’s Summit announced today that it will pay a $15.5 million settlement to Ted White, a businessman wrongly convicted of sexual misconduct.

. . . .

After five years in prison, White won a $16 million judgment when a federal jury decided that a Lee’s Summit detective conspired with White’s wife to get White convicted of child sexual abuse charges. The detective, who is no longer with the department, later married White’s former wife.

2011 WLNR 14565472

The docket for White’s lawsuit is available in the Western District of MO dockets, Docket No. 4:05CV00203.

And for court opinions related to White lawsuit:

Database: MO-CS-ALL or Missouri State and Related Federal on WestlawNext Search: ti(white & mckinley) (13 docs)

In the 13 years this ordeal has been going, White has been through four trials and numerous appeals, he’s been a fugitive from justice, and spent five years in prison. All of this arose from what appears to be a highly suspect police investigation of White’s ex-wife’s allegations of sexual assault by White against his daughter.

The detective investigating the charges was carrying on an affair with the wife of the suspect he was investigating. He told his chief of police about the affair, but was allowed to stay on the case. Only after White was convicted and imprisoned were he and his attorney told of the affair by a co-worker of his ex-wife. According to lawsuit filings, prosecutors had known about the affair but had failed to disclose it to the defense.

Ultimately White won a re-trial, which resulted in a hung jury. A third trial won him an acquittal.

Trial number four found White on the offensive. He sued the former detective, his ex-wife, and the city of Lee’s Summit, MO, the detective’s employer. The city agreed to indemnify the detective as part of an agreement to be dropped from the suit, but later reneged on that agreement when White won a $16 million jury verdict, arguing that a city ordinance prohibited the city from indemnifying an employee for a violation of someone’s civil rights. After White and his attorneys cried foul, and a federal judge threatened a crime fraud hearing, the city reached a settlement with White to pay him $15.5 million.

This case is an interesting look into many different aspects of the legal system, the good and the bad. It’s worth the read. The following research references will work on Westlaw.com or WestlawNext.

Other Research References

For court opinions from the criminal case: Database: MO-CS or Missouri on WestlawNext Search: ti(white) & sexual! (25 docs)

News articles:

From the Kansas City Star (Westlaw Database ID KCSTAR) Search: “Ted White” (141 docs)

From the ALLNEWS database: Search: “ted white” & “lee summit” (44 docs)

In what it claims is the first offering of its kind in the world, a Chinese company, Sunshine Insurance Group Corporation, is offering an insurance policy for virtual property owned in cyberspace.  The company seeks to fill what, I presume, is a market void in the offering of coverage for property held in fee simple absolutely imaginary.

The market for role playing games has proven to be a profitable one, with users buying the games, paying monthly access fees, and in many cases, using real money to purchase property and items in the virtual realm.  It only stands to reason that the people putting that money out want to know that their interests are protected.  According to China Daily (database identifier CHDY), the company seeks to create the virtual property insurance amid an increasing number of disputes between online game operators and their customers, often related to the loss or theft of players’ “virtual property” such as “land” and “currency.”

A Sunshine Insurance spokesman said the insurance will help to reduce operating risks for online gaming companies, as the companies which purchase the insurance will be covered to compensate customers in the event of lost or stolen property.

The spokesman said that the insurance agreement is also a landmark achievement for the insurance industry, as it marks the industry’s first foray into the online gaming sector.

7/7/11 WRLDNWSC 07:49:02

So does a gamer have an insurable interest in his pretend property?

According to Couch on Insurance, they just might!

Generally, a person has an insurable interest in a property whenever he or she would profit by or gain some advantage from the property’s continued existence or suffer some loss or disadvantage by its destruction.  If the insured would sustain a loss by the destruction of the insured property, it is immaterial whether he or she has any title in, lien upon, or possession of, the property itself.  Any right that may be enforced against the property and that is so connected with it that its injury or destruction will cause loss is an insurable interest.  Thus, any interest in property, legal or equitable, conditional, contingent, or absolute is insurable.  Even a mere right to use property is insurable, and the lack of an obligation to pay rent is inconsequential to the property’s insurability.

3 Couch on Ins. § 41:11

So if the loss or destruction of your Abandoned Greatsword puts you at a disadvantage against the trolls and goblins, you might be able to collect!  I wonder if this means I can carry full coverage on my Mario Kart?

Other References

See also this from Robert Paul Norman:

This article discusses some of the insurance issues arising from e-commerce conducted under traditional insurance products and reviews the new policies being promulgated for cyberspace.

Virual Insurance Risks, Brief, FALL 2001, at 14, 15

Undoubtedly the recent revelations regarding “Operation Fast and Furious” conducted by the Bureau of Alcohol, Tobacco, and Firearms raises a whole host of legal issues.  But one in particular that surfaced in a new report the other day sparked my interest. 

A piece in the Washington Times on July 6th contained this snippet:

In the letter Tuesday to Mr. Holder, Mr. Grassley and Mr. Issa said they were “disappointed” that the Justice Department failed to tell Mr. Melson he had the right to choose a voluntary interview rather than participate with counsel representing the department’s interests.

Now to me, this poses that classic law school professional responsibility query:  Who is the client?  When a Department of Justice lawyer represents the head of a government agency at a Congressional hearing, who is the client?  Is it the administration at whose pleasure the attorney serves, the DOJ, the ATF, or the individual himself?

Turning to a quick plain language search of All Federal materials on WestlawNext,

client of federal government attorney (14) Content: Overview Jurisdiction: All Federal

 perhaps the most interesting guidance comes from the CFR.

 Attorneys employed by any component of the Department of Justice who participate in any process utilized for the purpose of determining whether the Department should provide representation to a federal employee, undertake a full and traditional attorney-client relationship with the employee with respect to application of the attorney-client privilege.    

28 C.F.R. § 50.15(a)(3).

 Under the circumstances described in section 50.15, where a government official has been “sued, subpoenaed, or charged in his individual capacity” and “when the actions for which representation is requested reasonably appear to have been performed within the scope of the employee’s employment and the Attorney General or his designee determines that providing representation would otherwise be in the interest of the United States,” the individual is the client.  So Ken Melson, acting director of the ATF would be the client in a hearing before Congress.

But what if Melson is ultimately determined to be the one responsible and he now faces criminal charges stemming from this program?  Again, section 50.15 provides an answer, but it doesn’t really lay the question to rest.

Representation generally is not available in federal criminal proceedings. Representation may be provided to a federal employee in connection with a federal criminal proceeding only where the Attorney General or his designee determines that representation is in the interest of the United States and subject to applicable limitations of § 50.16. In determining whether representation in a federal criminal proceeding is in the interest of the United States, the Attorney General or his designee shall consider, among other factors, the relevance of any non-prosecutorial interests of the United States, the importance of the interests implicated, the Department’s ability to protect those interests through other means, and the likelihood of a conflict of interest between the Department’s prosecutorial and representational responsibilities. If representation is authorized, the Attorney General or his designee also may determine whether representation by Department attorneys, retention of private counsel at federal expense, or reimbursement to the employee of private counsel fees is most appropriate under the circumstances.

28 C.F.R. 50.15(a)(4)

If the prosecuting division indicates that the employee is the subject of a federal criminal investigation concerning the act or acts for which he seeks representation, the litigating division shall inform the employee that no representation by Justice Department attorneys will be provided in that federal criminal proceeding or in any related civil, congressional, or state criminal proceeding. In such a case, however, the litigating division, in its discretion, may provide a private attorney to the employee at federal expense under the procedures of § 50.16, or provide reimbursement to employees for private attorney fees incurred in connection with such related civil, congressional, or state criminal proceeding, provided no decision has been made to seek an indictment or file an information against the employee.

28 C.F.R. 50.15(a)(8)

The Department can’t represent an individual it knows it intends to prosecute.  But what if it doesn’t know and the Congressional hearing provides the impetus for the charges?  That opens a whole new can of worms.

All in all, with so many questions and problems swirling around this issue, if I were in Melson’s shoes, I think I’d be giving a long hard look at 28 C.F.R. 50.16 - Representation of Federal employees by private counsel at Federal expense.

Minnesota, where the Reference Attorneys are located and where many of us have practiced, currently allows for the retainer of a lawyer by means of a nonrefundable retainer fee.  In fact, here in Minnesota it’s not uncommon for solo practitioners, particularly those practicing in areas such as criminal defense or estate planning, to use such retainer agreements almost exclusively.  Under the current writing of Minnesota Rules of Professional Conduct Rule 1.5:

All agreements for the advance payment of nonrefundable fees to secure a lawyer’s availability for a specific period of time or a specific service shall be reasonable in amount and clearly communicated in a writing signed by the client.

There is no requirement that the fee be held in a trust account, and if the client terminates the representation, often times that means forfeiture of the retainer as well.

Minnesota seems on par with other states in this respect.  See, e.g., In re Connelly (2002) 203 Ariz. 413, 55 P.3d 756 (Ariz. 2002) (stating because a non-refundable flat fee reflects a balancing of the risk to both client and lawyer, a flat fee can be larger than the fee generated by hourly rates without being excessive under the rules of professional conduct under Ariz. R. Prof. Cond. Rule 1.5); FL ST BAR Rule 4-1.5.  But see, CO ST RPC Rule 1.5 (“Nonrefundable fees and nonrefundable retainers are prohibited.”) (effective July 1, 2011); In re Stephens, 2006, 851 N.E.2d 1256  (Ind. 2006) (holding nonrefundable retainer provision of attorney’s malpractice employment agreement with client violated rule of professional conduct requiring that a lawyer’s fee be reasonable, as it locked client to attorney, thereby chilling client’s right to terminate the representation under Ind. R. Prof. Cond. Rule 1.5).

However the Minnesota Supreme Court recently opted to change language of Rule 1.5.  Under the new wording:

A lawyer may charge a flat fee for specified legal services, which constitutes complete payment for those services and may be paid in whole or in part in advance of the lawyer providing the services. If agreed to in advance in a written fee agreement signed by the client, a flat fee shall be considered to be the lawyer’s property upon payment of the fee, subject to refund as described in Rule 1.5(b)(3). Such a written fee agreement shall notify the client: (i) of the nature and scope of the services to be provided; (ii) of the total amount of the fee and the terms of payment; (iii) that the fee will not be held in a trust account until earned; (iv) that the client has the right to terminate the client-lawyer relationship; and

(v) that the client will be entitled to a refund of all or a portion of the fee if the agreed-upon legal services are not provided. . . . .

(3) Fee agreements may not describe any fee as nonrefundable or earned upon receipt but may describe the advance fee payment as the lawyer’s property subject to refund. Whenever a client has paid a flat fee . . . and the lawyer-client relationship is terminated before the fee is fully earned, the lawyer shall refund to the client the unearned portion of the fee. If a client disputes the amount of the fee that has been earned, the lawyer shall take reasonable and prompt action to resolve the dispute.

Minn. R. Prof. Cond. 1.5(b)(1) (effective July 1, 2011) as amended by MN ORDER 11-0005.

While not prohibiting nonrefundable language as expressly as Colorado, one can’t help but wonder if the de facto application of this amendment will have the same result. 

Under the new language of the rule, the nonrefundable fee is considered “the lawyer’s property subject to refund.”  The lawyer must return the unearned portion of the fee to the client if the relationship is terminated prior to the fee being fully earned.  This is where things get tricky…

How exactly does one know when a fee has been fully earned?  A typical flat-fee retainer would state a dollar amount for services to be performed, but not necessarily an hourly rate by which that would be computed.  Seemingly, though, such an hourly arrangement would be the only way to determine if the attorney has earned the fee on a quantum meruit basis upon termination of the relationship. 

As an illustration, if an attorney were to charge a flat, nonrefundable $2,000 retainer to represent a client in connection with a first-offense DWI, go into court for the initial appearance, get an offer for a diversionary program, and help his client enter a plea that day.  How would that attorney be able to establish a right to the full amount of the retainer if no hourly amount had been agreed upon for the purposes of such calculation?  And if that is the method of choice for the determination, is that not a de facto hourly retainer agreement, but with a cap on the amount the attorney can earn in the event the case proceeds to trial?

And then comes the issue of the impact on the lawyer’s accounting practices.  Presumably many attorneys working on flat-fee arrangements treated a nonrefundable retainer as money in the bank.  Literally.  But now, as the rule specifies that it is the lawyer’s property subject to refund, would the prudent lawyer put the money in trust so as to avoid an accounting headache should a refund be necessary?  Moreover, does the typical solo attorney used to working on flat fees have the facilities or business practices to track when a fee is earned so as to keep track of refunds?

Certainly this amendment to the rule raises some questions.  It will be interesting to see how this plays out over the next few years as attorneys adapt.

Additional Research References: