Vol. 76, No. 9, September 2003

Supreme Court Orders

• Order 01-15
• Order 03-04

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Stipulated Reversal or Vacatur of a Lower Court Decision

In the matter of the creation of a provision regarding stipulated reversal or stipulated vacatur of a lower court decision

Order 01-15

On Oct. 22, 2002, the court held a public hearing on a petition filed by the Judicial Council seeking to amend Wis. Stat. § (Rule) 809.18 in order to clarify that a lower court decision may not be reversed or vacated by the parties' stipulation as a condition of dismissal of an appeal. The court has considered the presentations made at the public hearing.

IT IS ORDERED that the petition is granted in part and denied in part as follows:

Section 1. Section 809.18 of the statutes is amended to read:

809.18 Voluntary dismissal. An appellant may dismiss a filed appeal by filing a notice of dismissal in the court or, if the appeal is not yet filed, in the trial circuit court. The dismissal of an appeal by the appellant or by agreement of the parties or their counsel does not affect the status of a lower court decision, the status of a cross-appeal, or the right of a respondent to file a cross-appeal.

Section 2. IT IS ORDERED that further amendment of Wis. Stat. § (Rule) 809.18 is denied.

IT IS ORDERED that these amendments shall be effective the date of this order.

IT IS ORDERED that notice of this amendment of Wis. Stat. § (Rule) 809.18 be given by a single publication of a copy of this order in the official state newspaper and in an official publication of the State Bar of Wisconsin.

Dated at Madison, Wis., this 2nd day of July, 2003.

By the court: Cornelia G. Clark,

Clerk of Supreme Court

Written Communication on Fees; CLE Ethics Credits

In the matter of Amendment of Supreme Court Rule 20:1.5(b) and Creation of Supreme Court Rule 20:1.5(e) regarding written communication on fees and the Amendment of Supreme Court Rule 31.02 regarding continuing legal education credits for ethics.

Order 03-04

On April 11, 2003, the Wisconsin Courts Fee Arbitration Study Committee filed a petition seeking to amend Supreme Court Rule 20:1.5 regarding fees under the Rules of Professional Conduct for Attorneys and Supreme Court Rule 31.02 regarding continuing legal education credits for ethics. Pursuant to the proposed amendments for Rule 20:1.5 an attorney must provide the client a written explanation of the services anticipated, the basis for calculating the fee, and the estimated amount of the fees where it is likely the legal representation would likely result in a fee of $1,000 or more, and must provide a written explanation and response to a client's challenge of a fee for legal services. The Committee also seeks to amend Rule 31.02(2) to require continuing legal education related to fees and the financial relationship between lawyers and clients.

IT IS ORDERED that a public hearing on the petition shall be held in the Supreme Court Room in the State Capitol, Madison, Wis., on Wednesday, Oct. 22, 2003, at 9 a.m.

IT IS FURTHER ORDERED that the court's conference in the matter shall be held promptly following the public hearing.

IT IS FURTHER ORDERED that notice of the hearing be given by a single publication of a copy of this order and of the petition in the official state newspaper and in an official publication of the State Bar of Wisconsin not more than 60 days nor less than 30 days before the date of the hearing.

Dated at Madison, Wis., this 30th day of June, 2003.

By the court:

Cornelia G. Clark, Clerk of Supreme Court

Petition

PREAMBLE: Even the most careful and professional attorney will, from time to time, experience disagreements with clients regarding the payment of fees and expenses. Resolution of such disputes can prove costly, time consuming and, occasionally, embarrassing. Such disputes may also create tensions or generate publicity that reflects unfavorably on the profession.

Recognizing the above facts, and as a service for their members and the public, both the Milwaukee Bar Association and the State Bar of Wisconsin have maintained fee arbitration programs for decades.

The fee arbitration programs, though binding, require the voluntary participation by both the client and attorney. In some instances, clients have applied for arbitration only to have the attorneys decline to participate. Various individuals have suggested that the occasional unwillingness of attorneys to participate in arbitration reflects negatively on the profession and inappropriately disadvantages the public. Those same individuals have recommended that the Supreme Court of Wisconsin mandate participation in fee arbitration for Wisconsin attorneys.

Addressing the issues raised, the court created the Wisconsin Courts Fee Arbitration Study Committee by Order No. 00-15 dated Nov. 9, 2001, and charged the committee to:

• Identify advantages and disadvantages and strengths and weaknesses of mandatory and voluntary fee arbitration programs.
  
  
• Review and analyze the operation of existing fee arbitration programs, including those of the State Bar of Wisconsin, the Milwaukee Bar Association, and the Office of Lawyer Regulation.
  
  
• Propose a fee arbitration system or systems for Wisconsin.

The committee met repeatedly, studied the issues and formulated recommendations, which it submitted in a written report to the Wisconsin Supreme Court on Nov. 5, 2002. Representatives of the committee presented an oral report to the court on Dec. 18, 2002. At the conclusion of the oral report, the court suggested that the committee reduce its recommendations to a formal petition. Pursuant to the court's suggestion, the committee submits the petition stated below.

Petition

The Wisconsin Courts Fee Arbitration Study Committee petitions the Supreme Court of Wisconsin to adopt the following amendments to Supreme Court Rule 20:1.5, Fees, under the Rules of Professional Conduct for Attorneys.

SECTION 1.

20:1.5 (b) of the Supreme Court Rules is amended to read:

20:1.5 (b) When the lawyer has not regularly represented the client, and it is reasonably foreseeable that the anticipated representation will result in a fee of $1,000 or more, the lawyer shall, within a reasonable time after commencing the representation, communicate to the client in writing: (1) the anticipated scope of the lawyer's work; (2) the basis or rate of the fee, including whether the fee will be charged on an hourly, contingency, or other basis; (3) an estimate of fees payable to the lawyer as a result of the representation; (4) the availability of fee arbitration programs; and (5) if an agreement requires one or more payments to the lawyer prior to, or substantially contemporaneous with, the commencement of the representation or periodically during the course of the representation, the purpose and effect of each payment and its impact on the fees and expense reimbursement ultimately payable by the client.

During the course of the representation, the lawyer shall provide the client regular, periodic accountings of the fees, except for contingent fee matters, and reimbursable expenses accrued to date and, if the fee estimate required above becomes substantially inaccurate, the lawyer shall timely provide a revised estimate to the client.

Commentary: In its report, the committee proposes no fundamental change in the fee arbitration systems now functioning in Wisconsin but does propose the changes recommended in this petition. The committee believes the court would best meet the community's needs by addressing the causes of fee disputes rather than adjusting remedies. The committee believes that the court could address the causes by requiring (a) better communication with clients regarding fees upon beginning (and during) the representation, (b) more complete communication to clients at early stages in fee disputes and (c) better education of attorneys regarding their responsibilities in relation to fees and billing. The committee has identified Rule changes addressing each of the three areas as explained in the following paragraphs.

Information provided the committee indicates that many fee disputes arise from different understandings between clients and lawyers regarding the calculation of fees and their ultimate amount. As a result, the committee believes that the number of fee disputes would diminish with better communication at the initiation of representation. Except in contingency fee cases, SCR 20:1.5 currently encourages, but does not require, written communication regarding fees. The committee recommends amending SCR 20:1.5 so that, when the anticipated representation will likely result in a fee of $1,000 or more, early in the representation the lawyer must provide the client a written explanation of the services anticipated, the basis for calculating the fee and the estimated amount of the fees. It also recommends requiring the lawyer to explain the effect of any retainer paid, regularly to advise the client regarding the accumulation of fees and expenses during the course of the representation and, if necessary, to update the fee estimate originally given.

SECTION 2.

20:1.5 (e) of the Supreme Court Rules is created to read:

20:1.5 (e) If a client, or former client, questions or challenges in writing the fee due for a lawyer's services - including, but not limited to, by applying for fee arbitration - the lawyer shall, in a timely manner, respond in writing to the client, or former client, stating the lawyer's position and explaining the basis for the fee charged.

Commentary: Clients have expressed indignation and frustration at some attorneys ignoring complaints or inquiries regarding fees. That reaction strains the lawyer-client relationship and stains the profession. As a result, the committee recommends an addition to SCR 20:1.5 requiring an attorney's written explanation of the fee charged when a client or former client questions or disputes a bill in writing. The lawyer's response dignifies the client's objection and may lead to the resolution of the fee dispute. Though an oral response may suffice in many instances, a written response memorializes the lawyer's compliance with the revised Rule and provides a basis for future dispute resolution activity.

SECTION 3.

31.02 (2) of the Supreme Court Rules is amended to read:

31.02 (2) A lawyer shall attend a minimum of 3 of the 30 hours required under sub. (1) on the subject of legal ethics and professional responsibility in every reporting period; except for lawyers who practice only as employees of governmental bodies, in every two consecutive reporting periods, a minimum of 1 hour required by the first clause of this sub. (2) shall relate to fees and the financial relationship between lawyers and clients.

Commentary: Current continuing legal education regarding ethics does not emphasize and, in many respects, ignores the lawyer's rights and responsibilities regarding fees. Lawyers may satisfy the biannual requirement of ethics training without ever discussing fees. The lack of understanding in this area and outright ignorance increases the incidence of fee disputes. As a result, the committee recommends that mandatory continuing legal education regarding ethics include discussions of fees and financial relationships between lawyers and clients.

Respectfully submitted this 9th day of April, 2003.

By the Wisconsin Courts Fee Arbitration Study Committee: Donald J. Christl, Chair

Wisconsin Lawyer