This opinion is modified by RI-359
March 2, 1994
A lawyer who has developed a method of locating potential heirs to monies escheating to the State of Michigan may directly contact the potential heirs by letter advising that there may be funds due to the heir and that the lawyer may be retained to assist the heir, provided that the lawyer advises the heir that the funds may be obtained without the assistance of a lawyer.
If an heir retains the lawyer to obtain the funds, the lawyer may charge a modest hourly or flat fee for the prospective work which may be paid out of the recovery.
References: MRPC 1.5, 7.1, 7.3; RI-74, RI-150; C-223; Op 115; MCR 8.121(A); MCL 567.63; Shapero v Kentucky Bar Ass'n, 486 US 466 (1988). C-236 is superseded to the extent inconsistent with this opinion.
A lawyer has developed a method to locate heirs in matters involving money escheating to the State of Michigan due to apparent inability to locate heirs or the apparent abandonment of monies by the rightful owners. Two inquiries are presented: (1) may the lawyer locate the potential heir and directly contact the heir suggesting that there may be funds due them and that the heir should retain the lawyer, and (2) may the lawyer charge a potential heir a 40% contingency fee if retained?
MRPC 7.3 states:
"(a) A lawyer shall not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain. The term solicit includes contact in person, by telephone or telegraph, by letter or other writing, or by other communication directed to a specific recipient, but does not include letters addressed or advertising circulars distributed generally to persons not known to need legal services of the kind provided by the lawyer in a particular matter, but who are so situated that they might in general find such services useful, nor does the term solicit include sending truthful and nondeceptive letters to potential clients known to face particular legal problems as elucidated in Shapero v Kentucky Bar Ass'n, 486 US 466; 108 S Ct 1916; 100 L Ed 2d 475 (1988).
"(b) A lawyer shall not solicit professional employment from a prospective client by written or recorded communication or by in-person or telephone contact even when not otherwise prohibited by paragraph (a), if:
"(1) the prospective client has made known to the lawyer a desire not to be solicited by the lawyer; or
"(2) the solicitation involves coercion, duress or harassment."
Shapero expressly allows direct mail solicitation in such circumstances as described here, as long as the content of the solicitation otherwise complies with MRPC 7.1 and 7.3. In accord, RI-74. To the extent that C-236 places other limitations on direct mail solicitation, it is superseded.
RI-150 provides that the "reasonableness" of a lawyer's fee arrangement with a client must be evaluated on a case by case basis. A lawyer has a continuing duty, prior to billing a client and before collecting a fee to reexamine the reasonableness of the fee in light of subsequent events in the representation. MRPC 1.5 states in part:
"(a) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee. A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. The factors to be considered in determining the reasonableness of a fee include the following:
"(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
"(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
"(3) the fee customarily charged in the locality for similar legal services;
"(4) the amount involved and the results obtained;
"(5) the time limitations imposed by the client or by the circumstances;
"(6) the nature and length of the professional relationship with the client;
"(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
"(8) whether the fee is fixed or contingent.
"(b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.
"(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or by other law. A contingent-fee agreement shall be in writing and shall state the method by which the fee is to be determined. Upon conclusion of a contingent-fee matter, the lawyer shall provide the client with a written statement of the outcome of the matter and, if there is a recovery, show the remittance to the client and the method of its determination. See MCR 8.121."
MCR 8.121(A) limits contingent fees in wrongful death and personal injury cases to one third the recovery. Since this inquiry does not involve a personal injury or wrongful death claim, there is no per se limitation placed upon the contingent fee which may be charged, and the guidelines of MRPC 1.5(a) must be applied.
Op 115 advised that a lawyer advising a client in a workers' compensation matter must inform the client of the alternatives of receiving compensation under the then Workman's Compensation Act or initiating a suit for damages, and may not advise the client to institute litigation merely for the lawyer's profit.
C-223 required a lawyer to "fully and frankly inform the client of available alternatives, including advice that the client may wish to process the no-fault claim without lawyer assistance" Emphasis added. The opinion concluded:
"Where the lawyer advises the client of a right to process a no-fault claim without a lawyer's assistance and the client elects to do that, the prevailing attitude appears to be that the lawyer would not charge any fee. However, the Committee believes that it would not be unethical to charge the client some modest hourly rate for the advice rendered.
"Where the client knowledgeably elects to have the lawyer process a no-fault claim after being informed of the right to do it on his or her own, and the insurer then pays the claim, the Committee believes that a fee for services based on an hourly rate or a contingent fee, if reasonable under all the circumstances would be appropriate."
We note that any person, without assistance of a lawyer, may ascertain whether there exists escheated monies to which the person may be entitled, by inquiring at the State Board of Escheats. MCL 567.63. We also note that the inquirer intends to locate the rightful owners on the lawyer's own time without compensation. The only remaining tasks to complete the prospective client's recovery of escheated funds appear to be (a) alert the prospective client to the opportunity, and (b) submit a claim. Although the sums realized will be of varying amounts, the amount of work to be performed is minimal.
In keeping with previous opinions, therefore, we conclude that the lawyer must explain to the prospective client that the client may obtain the escheated funds without the assistance of a lawyer. If the client nevertheless wishes to retain the lawyer's services, the lawyer may charge a modest fee for the prospective work. Since the lawyer knows the prospective client is entitled to the escheated funds, there is no "contingency" or risk that the lawyer will "lose" the case. Therefore the lawyer may charge a modest hourly or flat fee for the services, which fee may be paid from the escheated funds.