Flat (Fee) Busted

A recommendation of an Illinois Hearing Board

Respondent charged a flat, non-refundable fee for representation concerning Medicaid issues. In five cases, Respondent’s clients could not pay the fee upfront but owned a house. Respondent had the client execute a promissory note, agreeing to pay the fee upon the future sale of the house, and a mortgage against the house to secure the promissory note. Respondent did not inform the clients of the conflict of interest in these transactions, advise the clients of their right to obtain independent legal advice or insure that the clients understood Respondent’s role in the transaction. In two such matters, after the client died, Respondent’s firm represented the client’s estate in probate proceedings, even though Respondent held a mortgage on the house, which was an estate asset, and the mortgage was paid out of the proceeds from the sale of the house. In one matter, Respondent collected the full $15,000 fee, even though the client died before Respondent had performed any significant services under the contract.

The Hearing Board found Respondent acquired a pecuniary interest adverse to that of his clients, without proper disclosure and informed consent, improperly represented the estates despite a conflict with his own financial interests and collected an unreasonable fee. The Hearing Board recommended that Respondent be suspended for sixty (60) days and until he makes restitution.

The board also recommends restitution for unreasonable fees. (Mike Frisch)