Fee Basics

by Keith A. Call
Turn to the “Attorney Discipline” section of this or almost any other issue of the Utah Bar Journal, and chances are high you will see one or more cases involving violations of Utah Rule of Professional Conduct 1.5, which deals with fees. In fact, ethical violations involving fee issues comprise a large percentage of complaints lodged with the Bar’s Office of Professional Conduct. See, e.g., Utah State Bar Office of Prof’l Conduct, 2011 Annual Report, available at http://www.utahbar.org/assets/ANNUAL Report2010-2011.pdf (last visited May 31, 2012). Based on my casual review of the “Attorney Discipline” section of recent issues of the Bar Journal, many lawyers seem to be getting into trouble for violating some simple fee basics. Here are some ideas to help keep you safe.
When to Get It in Writing
Rule 1.5(c) requires a written fee agreement for any contingent fee case. The written agreement must be signed by the client and must explain details of how the fee will be calculated. It must spell out any costs that will be deducted from the recovery, how they will be determined, and whether the client will be responsible for them if there is no recovery. At the conclusion of a contingent fee case, the lawyer must provide a written accounting to the client that shows how the remittance to the client is calculated.
Rule 1.5(e)(2) requires a written agreement if lawyers in different firms will be sharing fees. The share each lawyer will receive must be part of the written agreement.
In non-contingent fee situations, Rule 1.5(b) requires the lawyer to communicate the basis or rate of the fee and expenses to the client, “preferably in writing.” This must be done before or within a reasonable time after commencing the representation. There is an exception if you will charge a “regularly represented client” the same rate as you have customarily done in the past.
Don’t forget to clearly communicate any rate changes to your client. Simply increasing your hourly rate on your January invoice each year may not be sufficient, especially if the invoice does not clearly state your hourly rate. See Severson & Werson v. Bolinger, 235 Cal. App. 3d 1569, 1571-72 (Cal. Ct. App. 1991).
Prohibited Contingent Fee Cases
Rule 1.5(d)(2) prohibits contingent fees in criminal defense cases. This rule reflects a concern for conflicts of interest that could arise in a contingent criminal defense case. For example, a lawyer may seek to avoid a plea bargain in order to try to get an acquittal at trial.
Rule 1.5(d)(1) also prohibits contingent fees in most domestic relations matters, reflecting a public policy favoring marital reconciliation and a desire to prevent overreaching in emotionally-charged situations. The comment to the rule clarifies, however, that contingent fees are allowed in connection with post-judgment balances due under child support, alimony, or other financial orders.
Division of Fees
Rules 5.4(a) and 7.2(b) prohibit sharing legal fees with non-lawyers in most situations. In the case of lawyers who are not in the same law firm, Rule 1.5(e)(1) allows fee sharing, but only in proportion to the services performed by each lawyer or in cases where each lawyer assumes joint responsibility for the representation. Rule 7.2(b) prohibits referral fees in most cases.
Make Sure You Earn It and Communicate It
Lawyers’ fees must always be reasonable. Rule 1.5(a) provides a non-exclusive list of factors to be used to determine whether a fee is reasonable. These factors include such things as the time and labor required, the difficulty of the issues involved, fees customarily charged for similar services, results obtained, and the experience, reputation and ability of the lawyer. Many of these factors are very subjective and hard to precisely measure.
Perhaps the most common fee-related complaint lodged against lawyers is that the fee was not earned or was unreasonable. A neighbor of mine recently complained to me about paying a $1000 fee to an immigration lawyer who allegedly did nothing, but kept the fee. My guess is that the breakdown was one of communication more than it was one of dishonesty. A lawyer whose only communication about fees is in the form of an invoice is setting him or herself up for potential problems. Make sure you frequently invite open discussion about your fees and most disputes can be avoided.

Comments are closed.