RULE 1.5 FEES
(a) A lawyer's fee lawyer shall be
reasonable not make an agreement for, charge, or collect an
unreasonable fee or an unreasonable amount for expenses. 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, rate, or amount of the fee and expenses for which the client will be responsible 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 other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must identify any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination, including itemization of expenses.
(d) A lawyer shall not enter into an arrangement for, charge, or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or
(2) a contingent fee for representing a defendant in a criminal case.
(e) A division of fee between lawyers who are not in the same firm may be made only if:
(1)Thethe division of fee is in proportion to the services performed by each lawyer or each lawyer, by written agreement, assumes joint responsibility for the representation;
(2)Afterafter consultation, the clientdoes not objectconsents in writing to the participation of all the lawyers involved; and
(3)Thethe total fee is reasonable.
(f) A lawyer may charge for work performed by a legal assistant.
(g) A lawyer may not split legal fees with a legal assistant nor pay a legal assistant for the referral of legal business. A lawyer may compensate a legal assistant based on the quantity and quality of the legal assistant's work and value of that work to a law practice. The legal assistant's compensation may not be contingent, by advance agreement, upon the outcome of a case or upon the profitability of the lawyer's practice.
Comment
Reasonableness of Fee and Expenses
[1] Paragraph (a) requires that lawyers charge fees that are reasonable under the circumstances. The factors specified in (1) through (8) are not exclusive. Nor will each factor be relevant in each instance. Paragraph (a) also requires that expenses for which the client will be charged be reasonable. A lawyer may seek reimbursement for the cost of services performed in-house, such as copying, or for other expenses incurred in-house, such as telephone charges, either by charging a reasonable amount to which the client has agreed in advance or by charging an amount that reasonably reflects the cost incurred by the lawyer.
Basis, Rate or Amount of Fee
[2] When the lawyer has regularly represented a client, they
ordinarily Ordinarily, when the lawyer
has regularly represented a client, they will have evolved an understanding
concerning the basis or
rate of the fee. In a new client-lawyer lawyer-client relationship,
however, an understanding as to
the fee fees and expenses must should be promptly
established. It is not necessary to recite all the
factors that underlie the basis of the fee, but only those that are directly involved in its
computation.
It is sufficient, for example, to state that the basic rate is an hourly charge or a fixed amount or
an
estimated amount, or to identify the factors that may be taken into account in finally fixing the
fee.
When developments occur during the representation that render an earlier estimate substantially
inaccurate, a revised estimate should be provided to the client. Generally, it is
desirable to furnish
the client with at least a simple memorandum or copy of the lawyer's customary fee
arrangements
that states the general nature of the legal services to be provided, the basis, rate or total amount
of
the fee and whether and to what extent the client will be responsible for any costs, expenses or
disbursements in the course of the representation. A written statement concerning the
fee terms of
the engagement reduces the possibility of misunderstanding. The written statement may be
a copy
of the lawyer's customary fee schedule or a simple memorandum setting forth the basis, rate or
amount of the fee.
[3] Contingent fees, like any other fees, are subject to the reasonableness standard of paragraph (a) of this Rule. In determining whether a particular contingent fee is reasonable, or whether it is reasonable to charge any form of contingent fee, a lawyer must consider the factors that are relevant under the circumstances. Applicable law may impose limitations on contingent fees, such as a ceiling on the percentage allowable, or may require a lawyer to offer clients an alternative basis for the fee. Applicable law also may apply to situations other than a contingent fee, for example, government regulations regarding fees in certain tax matters.
Terms of Payment
[4] A lawyer may require advance payment of a fee, but is obliged to return any
unearned portion.
See Rule 1.16(e). A lawyer may accept property in payment for services, such as an ownership
interest in an enterprise, providing this does not create a conflict of interest. However, a
fee paid
in property instead of money may be subject to special scrutiny because it involves
questions
concerning both the value of the services and the lawyer's special knowledge of the value of the
property the requirements of Rule 1.8(a) because such fees often have the essential
qualities of a
business transaction with the client.
[5] An agreement may not be made whose terms might induce the lawyer
improperly to curtail
services for the client or perform them in a way contrary to the client's interest. For example, a
lawyer should not enter into an agreement whereby services are to be provided only up to a
stated
amount when it is foreseeable that more extensive services probably will be required, unless the
situation is adequately explained to the client. Otherwise, the client might have to bargain for
further
assistance in the midst of a proceeding or transaction. However, it is proper to define the extent
of
services in light of the client's ability to pay. A lawyer should not exploit a fee arrangement
based
primarily on hourly charges by using wasteful procedures. When there is doubt whether
a
contingent fee is consistent with the client's best interest, the lawyer should offer the client
alternative bases for the fee and explain their implications. Applicable law may impose
limitations
on contingent fees, such as a ceiling on the percentage.
Contingent Fees
[6] Paragraph (d) prohibits a lawyer from charging 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 to be obtained. 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 because such contracts do not implicate the same policy concerns. Contingent fee agreements must be in a writing signed by the client and must otherwise comply with paragraph (c) of this Rule.
Division of Fee
[7] 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. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist. Paragraph (e) permits the lawyers to divide a fee on either the basis of the proportion of services they render or by agreement between the participating lawyers if all assume responsibility for the representation as a whole and the client is consulted and does not object. It does not require disclosure to the client of the share that each lawyer is to receive. A lawyer should refer a matter only to a lawyer whom the referring lawyer reasonably believes is competent to handle the matter. See Rule 1.1.
[8] Paragraph (e) does not prohibit or regulate division of fees to be received in the future for work done when lawyers were previously associated in a law firm.
Disputes Over Fees
[9] If there is a fee dispute, a lawyer should consider submitting to
the an established arbitration
procedure established by the bar. Law may prescribe a procedure for
determining a lawyer's fee,
for example, in representation of an executor or administrator, a class or a person entitled to a
reasonable fee as part of the measure of damages. The lawyer entitled to such a fee and a lawyer
representing another party concerned with the fee should comply with the prescribed procedure.
Fees for the Services of Legal Assistants
[10] In cases involving fixed fees or contingent fees, the total fees are agreed upon
in advance and
there should be no separate charge for legal assistant services. In matters charged on the basis of
"fee for service" or "charge by the hour", a lawyer may include separate charges for work
performed
by legal assistants or otherwise include legal assistant hours in calculating the amount of fees to
be
charged. In Missouri v. Jenkins, 491 US 274 (1989),
the Court held in setting a reasonable lawyer's
fee under 28 U.S.C. § 1988 that it was It may be
appropriate to include a charge for legal
assistant services, and that it was appropriate to value such services at "market rates"
rather than
"actual costs" to the lawyer.
[11] In such instances, the The lawyer should disclose to
the client, either at the outset of the
representation or at the point during the representation when the lawyer determines a legal
assistant
should be used, that the lawyer proposes to use a legal assistant and obtain the client's agreement
to any separate charges for legal assistant services.
[12] A lawyer may not split fees with a legal assistant, whether characterized as
splitting of
contingent fees, "forwarding" fees or other sharing of legal fees. Furthermore, a legal
assistant may
not be compensated on a contingent basis for a particular case or paid for "signing up" clients for
a legal practice. The linchpin of the prohibition is the lawyer's
obligation is to pay the legal assistant
regardless of the outcome of the case according to the employment
agreement . There is no general
prohibition against a lawyer who enjoys a particularly profitable period
recognizing the contribution
of the legal assistant to that profitability with a discretionary bonus. Likewise,
a lawyer engaged
in a particularly profitable speciality of legal practice is not prohibited from
compensating the a
legal assistant who aids materially in that a practice more
handsomely than the with compensation
greater than that generally awarded paid to legal
assistants in the geographic area working in less
lucrative law practices.
Reference: Minutes of the Professional Conduct Subcommittee of the Attorney Standards Committee on 02/03/84, 03/16/84, 05/23/84, 06/27/84 and 07/27/84; Minutes of Joint Committee on Attorney Standards Meetings of 06/13/95, 09/15/95, 12/01/95, 06/11/96, 11/15/02, 11/19/04, 06/14/05.