1.5: Fees

Contingent Fees

• A contingent fee may be charged except in matters where it is prohibited by law or paragraph (d).
• A contingent fee agreement must be in writing, signed by the client, and state the method of fee determination, including percentages and expenses.
• The agreement must notify the client of any expenses they will be liable for, regardless of the outcome.

Reasonableness of Fees and Expenses

• A lawyer must charge fees and expenses that are reasonable under the circumstances.
• Factors to consider when determining reasonableness include:
  • Time and labor required
  • Novelty and difficulty of the questions involved
  • Skill required to perform the service
  • Likelihood of precluding other employment
  • Fee customarily charged in the locality
  • Amount involved and results obtained
  • Time limitations imposed by the client or circumstances
  • Nature and length of the professional relationship
  • Experience, reputation, and ability of the lawyer
  • Whether the fee is fixed or contingent

Basis or Rate of Fee

• A lawyer must establish an understanding with the client regarding the basis or rate of the fee and expenses.
• This understanding should be promptly established in new client relationships.
• A written statement concerning the terms of the engagement reduces the possibility of misunderstanding.

Terms of Payment

• A lawyer may require advance payment of a fee, but must return any unearned portion.
• A lawyer may accept property in payment for services, but this may be subject to Rule 1.8(a) requirements.
• An agreement may not be made whose terms might induce the lawyer to improperly curtail services or perform them in a way contrary to the client's interest.

Prohibited Contingent Fees

• A lawyer may not charge a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement.
• This provision does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under support, alimony or other financial orders.

Division of Fee

• A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm.
• The division of fee must be in proportion to the services performed or based on joint responsibility for the representation.
• The client must agree to the arrangement, including the share each lawyer will receive, and the agreement must be confirmed in writing.
• Joint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.

Test your knowledge on legal ethics by exploring the factors to be considered in determining the reasonableness of a fee for legal services. Learn about the importance of time, labor, skill, and other key considerations in fee agreements.