Welcome to the world of direct fee payment, where attorneys can earn money from clients without incurring a fee themselves. However, this arrangement raises important questions about disclosure requirements. In 2018, the Federal Trade Commission (FTC) issued guidance on disclosing requirements for attorneys and non-attorneys eligible for direct fee payment.
What is Direct Fee Payment?
In direct fee payment arrangements, attorneys work directly with clients without paying a fee to themselves. This can include matters such as estate planning, elder law, or personal injury cases. However, when non-attorneys are involved in these arrangements, the rules around disclosure become more complex.
The FTC's Guidance on Disclosure Requirements
According to the FTC, attorneys must disclose their involvement in direct fee payment arrangements to clients. This includes providing a written statement explaining the arrangement and the fees paid by the attorney or non-attorney.
- Numerous jurisdictions require disclosure of direct fee payment arrangements for personal injury cases and elder law matters.
- Some states, like California, also require disclosure in certain types of estate planning matters.
- Non-attorneys must disclose their involvement in these arrangements to clients in writing or orally.
Key Takeaways from the Guidance
The FTC's guidance emphasizes that disclosure requirements should be tailored to the specific circumstances of each case. Attorneys and non-attorneys must carefully review their agreements to ensure compliance with applicable laws.
For attorneys, the key takeaway is that they must disclose their involvement in direct fee payment arrangements to clients. By doing so, they demonstrate transparency and accountability to their clients.
