In re Lehat reads like a law school final exam. The facts are a little unclear (be sure to read the opinion) as to some issues, but the facts seem to be as follows:
The lawyer was doing trademark work for the office, but was not registered to prepare patent applications. He acquired a client through a legal services program provider he worked for who needed a patent filed on an improvement to a hair weave system. (If you have seen my picture, or me, you will know I am not its target audience.) Rather than simply refer her to a patent lawyer, or get a proper fee division agreement (e.g., he would receive fees in proportion to the work, which would have not been much) he took $5,000 from the client. He paid $3,000 to a practitioner to prepare the case, who later returned $2200 of it, saying that he had really earned $800. The practitioner thus had $4,200. He did not put any part of the $4,200 he kept into his trust account, but deemed it a “relationship fee” that was earned upon payment.
The client brought a state action seeking refund of the $5,000 and the lawyer took the position that the $4,200 was his. He seemed to assert both that he was reasonably billing $1,000/hour as a “relationship attorney” and that the $5,000 was a flat fee that was predicated on 5 hours work at $1,000 per hour.
The OED did not agree. Based upon mitigating factors, it gave him a public reprimand and ordered him to return the money.
It is interesting to me for two reasons. One is: only a reprimand? The second is that the opinion discusses the distinction between a general retainer — earned upon payment, and is paid simply for the lawyer to be available in the future, at which time he’ll bill his hourly rate — and a special retainer, which we usually think of as an advance on fees, which goes into the trust account and is drawn down as the money is earned.