Flatly Unethical

The New Mexico Supreme Court has issued a public censure for an attorney’s handling of a so-called “flat”  fee

Attorney Jason S. Montclare accepted a flat fee from a client in the form of real  property and transferred a half interest in that property to his legal assistant before he had fully earned it, making him unable to return the unearned portion when he was later discharged before completion of the case. Montclare’s actions violated Rule 16- 7 105 NMRA, Rule 16-108 NMRA, and Rule 16-115 NMRA of our Rules of Professional Conduct. We write to issue a public censure and to clarify the rules pertaining to nonmonetary flat fees

The facts

Montclare agreed to represent Wolfgang Bohm, the complainant, in a child support enforcement action brought by the State of New Mexico Human Services Division (State) in which Bohm had been incarcerated for failure to appear. On April 12, 2013, Bohm retained Montclare’s services to obtain his release from jail and  resolve the underlying child support action in exchange for a flat fee consisting of real property located at 101 Round Mountain, Bent, New Mexico. Bohm had transferred the property to Montclare on the preceding day by special warranty deed, which Montclare immediately recorded with the office of the county clerk.  

Montclare commenced work on Bohm’s case and filed a motion for his immediate release from custody. On May 8, 2013, the State stipulated to Bohm’s release without communicating with Montclare.Bohm was released from jail the next day and asked Montclare to return the property. Montclare refused, maintaining that he had earned it, and instead deeded half of the property to his office manager Tracy Perry as payment for her services.

Thereafter, the client experienced difficulty due to the title cloud.

The court

Montclare did present billing records to the Hearing Committee showing the time he spent on the case and calculating the fee he maintained he had earned. The Committee found that these calculations were not credible and consequently that Montclare had not earned the full value of the property. We defer to these findings and conclude that, because Montclare did not earn the full value of the property before transferring an interest to Perry and thereby making it nonrefundable, the property was an unreasonable fee in violation of Rule 16-105(A).

We clarify that the acceptance of a flat fee in the form of real property is not in itself contrary to our Rules of Professional Conduct. An attorney may accept a nonmonetary fee, but regardless of the form it takes any fee must be reasonable and must be refundable until it is fully earned.

The conduct here amounted to a failure to safeguard property.

We issue this public censure as a consequence of Montclare’s actions in accepting a flat fee and transferring a portion of that fee to a third party before he had earned it so that he was unable to refund the unearned portion when requested as is required by our Rules of Professional Conduct. Because Montclare has since made the required payments and filed the necessary documents to transfer all interest in the property back to his former client, we do not impose the previously deferred six- month suspension.

(Mike Frisch)