How Did Mr Cunningham Pay For His Legal Services

In the opening scene of the movie "To Kill a Mockingbird" — and in a subsequently scene in the book past Harper Lee — customer Walter Cunningham brings a pocketbook of hickory nuts to lawyer Atticus Finch as payment for the latter's help with the sometime's entailment. At present that I am a lawyer myself, I understand non only what entailment is (and why, as young Picket Finch commiserates with Mr. Cunningham later, "entailments are bad" and take "a long time sometimes", Ch. 15), but likewise the value of accepting castling as a means of payment for legal services.

My first barter experience was with my first customer. My long-time hairdresser and her husband had a property issue, and so I helped them understand and protect their rights. They paid a greenbacks deposit and we agreed that part of their remaining payment would be a few haircuts from her and some tomatoes and other produce from their garden. An unexpected frost killed off the tomatoes, merely I ended up getting two haircuts, some other vegetables, and a check for $75.

My second barter feel was not planned. A trust administration for a surviving spouse took much more than of my time than either of us had predictable, and the deceased spouse had died with a lot more debt than the surviving spouse knew about. I reminded my client that she had once mentioned that she did not know what to practise with all her article of furniture, since she would be moving to a smaller identify. We agreed, in a written amendment to the representation understanding, to commutation furniture for a portion of my pecker. A few of the pieces plant immediate new life — I used her old dining tabular array equally my role desk for the next five years — merely I will admit that a few were "mercy barters" that still bide their time in my garage. Likewise, I dubiety Atticus Finch needed all those hickory nuts.

The California Rules of Professional Conduct do not specifically accost barter, so attorneys must align their barter income with all of the rules regarding fees. As with greenbacks compensation, the fee cannot be unconscionable and should be proportional to the value of the services performed. CRPC 4200. A written agreement conspicuously stating the barter terms, even for representation expected to incur expenses less than $1,000.00, should assist avoid questions of improper gifting (Run into CRPC 4-400 and Bus. & Prof. Lawmaking §6148).

All attorneys should avoid obtaining an interest in property that is adverse to the client's involvement unless the transaction is fair, the client understands that the interest is adverse, the agreement is in writing, and the client is advised in writing that he may have the agreement reviewed past an independent chaser. CRPC iii-300. In fact, this potential exists whatsoever time an chaser reserves the right to place a lien on the client'south property. Maybe the near unusual form of bartering is obtaining title to property past foreclosing on a lien. Christin Winkler-Muñoz of San Diego Tax Grouping, LLC, says that appellate attorneys ofttimes include a lien confronting a motorcar or firm as a key part of the fee understanding. If the attorney ends up taking title to the property, that is a non-cash exchange for legal services — barter.

Ane potential obstruction to bartering in certain circumstances is new Rule of Professional Carry i.15 (constructive November ane, 2018), requiring advance fees to be held in trust, in most circumstances. What if the attorney needs plumbing services now and agrees to perform legal services for the plumber at a later date? Can a bartered service be held in a client trust business relationship? Perhaps the written fee agreement could state that the barter income is an advanced flat fee for services, and that if the legal services are not completed by a certain date, the attorney volition "refund" the unearned fee past paying greenbacks for the plumbing? This is how an ethics committee of the Connecticut Bar Association recommended dealing with advance barter in lite of that state'south rules (CBA Informal Stance 15-04, July 15, 2015). With no such guidance for California, the chaser should perform the legal services first, with the barter income in appurtenances or services being received in one case the legal fee is earned. The fee agreement should clearly state whether the chaser must take the proffered goods or services (what if my client had tried to requite me those frozen tomatoes?) and what alternatives the client has for payment if he cannot uphold his end of the barter bargain by a certain fourth dimension.

I exercise know of one attorney who was stiffed on a barter, when the client was non happy with the legal representation and refused to perform the agreed upon cosmetology services. We accept the same adventure with our cash clients, deciding how much work to exercise before securing our payment in advance. For my estate planning clients, it is easy for me to start piece of work with a cash deposit and accept barter as part of the final payment. The utility of bartering volition vary with the circumstances.

One friend of mine was shocked, even dismayed, that I would barter. I could not empathize his indignation until I realized that he could non distinguish non-cash transactions from fraud. He could only see barter equally an attempt to hibernate one'south income. Every bit with greenbacks payments, I issue a receipt for the goods or services received and make sure the value is entered in my billing arrangement. Barter income should be deemed for like cash; information technology is non a discount organization or a way to avoid reporting income.

The IRS understands that barter is alive and well and has forms for reporting barter income, whether through exchanges (run across sidebar) or i-on-one. Enquire your revenue enhancement professional for details.

I go along to barter as the opportunities arise. Sometimes, as with the fictional Walter Cunningham and my very existent client with the piece of furniture, it is because the client truly cannot pay cash for my services. Other times, information technology is because I recognize that a customer has goods or services that she might exist interested in exchanging. So far, no i has offered me hickory basics.

This article was originally published in the May/June 2018 issue of San Diego Lawyer.