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Kenyon P. Kellogg Jr. (WSBA No. 1482, admitted 1971), of Bainbridge Island, was ordered to receive two reprimands on June 28, 2005, following a hearing. This discipline was based on his conduct between 2001 and 2004 involving failure to adequately communicate the factors involved in determining the charges for legal services at the outset of the representation, attempting to charge an unreasonable fee, and failure to surrender papers belonging to the client upon termination of the representation.
In 2001, Mr. Kellogg was hired by a client to represent him in the anticipated sale of his company. Before being hired, Mr. Kellogg told the client that he could do the work on an hourly basis at a rate of $200 per hour. Mr. Kellogg did not prepare a written fee agreement for his work on the sale of the client’s company. Mr. Kellogg had previously performed work for this client but had never employed a written fee agreement for that work, basing fees on time spent times an hourly rate. For prior legal work, Mr. Kellogg had occasionally reduced the amount of the original billing, but had never increased a bill over the hourly charges. In October 2001, Mr. Kellogg’s invoice to the client totaled $10,160, charged at the $200 per hour rate, which the client promptly paid in full. Mr. Kellogg then told the client that the hourly rate would increase to $300 per hour, to which the client agreed. In November and December 2001, invoices sent to the client totaled $6,420 and $26,970 respectively, charged at $300 per hour. The client promptly paid each invoice in full.
A buyer made a nearly full-price offer for the company, and the sale closed in December 2001. Mr. Kellogg worked long hours in connection with the matter, frequently at night. Mr. Kellogg served as the escrow agent, which required that he hold the purchaser’s and seller’s respective documents until he received confirmation that the wire transfer had been accomplished. On December 31, the client’s comptroller e-mailed Mr. Kellogg seeking an estimate of Mr. Kellogg’s December fees by January 4 in order to complete the client’s 2001 accounting. Mr. Kellogg responded that the sales price achieved included what he termed “a pot of ‘found money’…classic ‘value added’ out of which hopefully to be paid a fair fee,” and that “trying to figure out what is ‘fair’ in such circumstances is a unique experience, and may take a bit longer than January 4th.”
Mr. Kellogg’s next invoice, dated March 25, 2002, covered December 1, 2001, through February 22, 2002. It totaled $89,730, computed at a $300 per hour rate, and contained a blank following the line “Plus a fair fee” for what Mr. Kellogg characterized as the “value added.” The client added $10,270 to the hourly charges of $89,730 for a total of $100,000. In an April 2002 letter transmitting “payment in full,” the client explained why he thought the $100,000 was a fair amount and requested copies of his documents. Mr. Kellogg cashed the check. In May 2002, Mr. Kellogg wrote to his client that he was “very angry” and “your apparent concept of fairness and mine are hundreds of thousands of dollars apart.” Mr. Kellogg promised to “finish my invoice” and asked for final exhibit documents and for reconciliation to the final price “so that I can finish binding your agreement materials.”
In August, Mr. Kellogg reissued his last invoice and filled in the blank following “Plus a fair fee” with $700,000. He noted that $100,000 had been paid and the balance due was $689,730. In September 2002, the client expressed sorrow “that our relationship must apparently end on this note” and requested that all documents pertaining to his company and to himself be sent to him by September 15. The client offered to pay delivery costs. Nothing was delivered by the September 15 deadline. The client renewed his request for the documents in letters sent in October and December 2002. Mr. Kellogg did not respond until February 2003 in an e-mail to his client referencing “two, probably unrelated, pieces of ‘unfinished business’: I need to finish and redeliver our closing documents,” and “You owe me nearly $700K.” The client responded by indicating he would file a complaint with the Bar Association if he did not receive the requested documents by April. Mr. Kellogg did not comply with the deadline, and in May, he e-mailed the client suggesting a meeting in June. Mr. Kellogg added that “he would be happy to interplead or otherwise escrow whatever you believe is properly yours pending a thoughtful final decision on the differences between us.” In June 2003, the client filed a grievance with the Bar Association. In October 2003, the client wrote to Mr. Kellogg, noting the “formal termination of our professional relationship,” and again requested the documents. In January 2004, Mr. Kellogg delivered the documents to his client’s former comptroller.
Mr. Kellogg’s conduct violated RPC 1.4(b), requiring a lawyer to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation; RPC 1.5(a), requiring that a lawyer’s fee be reasonable; RPC 1.5(b), requiring that when the lawyer has not regularly represented the client, or if the fee agreement is substantially different than that previously used by the parties, the basis or rate of the fee or factors involved in determining the charges for legal services and the lawyer’s billing practices shall be communicated to the client, before or within a reasonable time after commencing the representation; RPC 1.15(d), requiring a lawyer to take steps to protect clients’ interests when withdrawing from representation, such as, inter alia, surrendering papers and property to which the client is entitled; and RPC 8.4(a), prohibiting a lawyer from attempting to violate the Rules of Professional Conduct.
Linda B. Eide represented the Bar Association. R. Bruce Johnson represented Mr. Kellogg. Waldo F. Stone was the hearing officer. |