| LEO Num | Topics | Summary | Date |
ABA-379
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| (analyzing proper billing for time and disbursements; explaining that a lawyer may not bill more than one client for the same time period (such as traveling); a simple bill indicating a dollar figure probably will not contain sufficient disclosure; a lawyer may not bill a client for more time than actually spent on the client’s behalf; unless the client consents after full disclosure, a lawyer may not charge a client for more than the lawyer’s out-of-pocket costs or expenses plus a “reasonable allocation of overhead expense directly associated with the provision of the service”; “It goes without saying that a lawyer who has undertaken to bill on an hourly basis is never justified in charging a client for hours not actually expended. If a lawyer has agreed to charge the client on this basis and it turns out that the lawyer is particularly efficient in accomplishing a given result, it nonetheless will not be permissible to charge the client for more hours than were actually expended on the matter. When that basis for billing the client has been agreed to, the economies associated with the result must inure to the benefit of the client, not give rise to an opportunity to bill a client phantom hours. This is not to say that the lawyer who agreed to hourly compensation is not free, with full disclosure, to suggest additional compensation because of a particularly efficient or outstanding result, or because the lawyer was able to reuse prior work product on the client’s behalf. The point here is that fee enhancement cannot be accomplished simply by presenting the client with a statement reflecting more billable hours than were actually expended. On the other hand, if a matter turns out to be more difficult to accomplish than first anticipated and more hours are required than were originally estimated, the lawyer is fully entitled (though not required) to bill hose hours unless the client agreement turned the original estimate into a cap on the fee to be charged”; “The second set of practices involve billing for expenses and disbursements, and is exemplified by the situation in which a firm contracts for the expert witness services of an economist at an hourly rate of $ 200. May the firm bill the client for the expert’s time a the rate of $ 250 per hour? Similarly, may the firm add a surcharge to the cost of computer-assisted research if the per-minute total charge by the computer company does not include the cost of purchasing the computers or staffing their operation?”; “It is the view of the Committee that, in the absence of disclosure to the contrary, it would be improper if the lawyer assessed a surcharge on these disbursements over and above the amount actually incurred unless the lawyer herself incurred additional expenses beyond the actual cost of the disbursement item. In the same regard if a lawyer receives a discounted rate from a third party provider, it would be improper if she did not pass along the benefit of the discount to her client rather than charge the client the full rate and reserve the profit to herself. Clients quite properly could view these practices as an attempt to create additional undisclosed profit centers when the client had been told he would be billed for disbursements.”; “We conclude that under those circumstances the lawyer is obliged to charge the client no more than the direct cost associated with the service (i.e., the actual cost of making a copy on the photocopy machine) plus a reasonable allocation of overhead expenses directly associated with the provision of the service (e.g., the salary of a photocopy machine operator).”) | 12/6/1993 |
505
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| (The only “nonrefundable” fees are the “quite rare” retainers (often called “true retainers”) — which can be analogized to option contracts. Those: (1) require a lawyer to be available to provide services for a defined period (which will be separately billed at the time), and (2) must be taken into income immediately.
Otherwise, what many lawyers call “retainers” involve “lawyer taking] possession — but not ownership of funds to secure payment for the services the lawyer will render to the client in the future.” Those can include a “flat fee” or “fixed fee” — which must remain in trust until the lawyer performs the agreed-upon work (this sometimes involves “dividing the representation into segments”). Under the ABA Model Rules, those types of fees “cannot be nonrefundable.” Lawyers should use the term “advance” rather than “retainer” in these common circumstances — and “[e]xplain that the sum deposited will be applied to the balance owed for work on the matter, and how and when this will happen” -- such as monthly invoices, “dividing the representation into reasonable segments and providing for withdrawal of a reasonable portion of the deposited fee as the representation progresses, and the fee becomes partially earned.” All but a handful of states require such unearned advance fees to be placed in trust — a few states provide for such “nonrefundable” or “earned on receipt” fees (mentioning Washington, Oregon, Arizona, Florida and New York). Under ABA Model Rule 1.16(d), lawyers must refund any unearned fees when a representation ends (the calculation of which sometimes involves a court’s apportionment). | 5/5/2023 |
1645
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| [WITHDRAWN] A lawyer represented a bank in collecting a loan. Under the terms of the loan, the borrower was obligated to pay the lawyer's fees, and asked for an itemized accounting. The Bar held that the lawyer had no duty to itemize fees to a non-client, even if the non-client is paying the fees (although other provisions of the Code apply whether or not the lawyer is acting in a professional capacity for those with whom the lawyer deals). | 9/8/1995 |
1641
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| A 10% "administrative fee" a lawyer proposes to charge clients in collecting Med Pay would be improper because such collection matters normally are "purely ministerial" and involve no risk that the lawyer would earn no fee at all (such a possibility is one of the justifications for a contingent fee arrangement); an hourly rate or flat fee would not be improper in such circumstances. | 11/28/1995 |
0536
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| A civil rights defense lawyer may raise the issue of attorneys' fees in settlement discussions, and the plaintiff's lawyer may negotiate a fee as part of a settlement as long as the client consents. | 12/7/1983 |
1571
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| A client hired a lawyer who was acting as an independent contractor/associate of a law firm. The retention letter required the client to reimburse the law firm on a quantum merit basis if the client chose to terminate the relationship, and also required the client to pay one-third of any settlement amount to the law firm if negotiations had begun before the relationship was terminated. The individual lawyer left the firm and continued to represent the client. The law firm asserted an attorney's lien on any settlement amount, but refused to provide an itemization of services when requested by the client. The Bar held that the law firm's refusal was improper, and raised a substantial question about its lawyer's fitness to practice law and therefore must be reported to the Bar. | 7/12/1994 |
1370
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| A client paid a retainer to a law firm that later dissolved. The client retained one of the withdrawing lawyers. The Bar held that the former firm must return the unused portion of the retainer. | 7/24/1990 |
0541
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| A collection lawyer may be paid from attorneys' fee awards as long as the lawyer reimburses any award greater than the lawyer's bill. | 2/25/1984 |
1025
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| A collection lawyer whose client does not always take steps to collect on judgments obtained (which include a 25% attorneys' fee provision) may not charge a "flat rate" with the client retaining all amounts that may later be collected, but may arrange to receive 25% of whatever collections the client ultimately makes, and may also arrange for judgments to be entered without the 25% attorneys' fee component (with arrangements to be made later for any enforcement work the lawyer might undertake). [ This LEO was further explained in LEO 1161.] [This Legal Ethics Opinion was overruled to the extent its holding is inconsistent with LEO 1783 which permitted a lawyer representing a lender in collecting on a note containing a provision for the award of 25% attorney's fees of the principal balance due to give the client/lender whatever portion of the 25% was not actually spent on attorney's fees.] | 1/21/1988 |
1676
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| A collections lawyer may not pay a percentage of the lawyer's fee to a company that offers an electronic communications system to facilitate the collections, because it would amount to impermissible fee-splitting with a non-lawyer. This rule would also apply if the company referred collections clients to the lawyer. | 5/16/1996 |
0306
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| A court-appointed lawyer may accept a fee from the client if the lawyer discovers that the client is not truly indigent, as long as the court is informed, the lawyer does not also collect a fee from the court and the client is invited to hire another lawyer if the client wishes. | 11/16/1978 |
1573
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| A court-appointed lawyer may engage a lay corporation as a billing agent in an arrangement under which the lawyer receives an immediate payment from the corporation minus a billing percentage (and the corporation arranges for ultimate reimbursement from the municipality, which sometimes takes months). The lawyer must preserve the client's confidences and secrets, and may provide the corporation only such limited information as it needs. | 12/14/1993 |
0700
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| A deceased lawyer's estate may collect a portion of a fee that "fairly represents" the services rendered by the lawyer before the lawyer died. | 5/22/1985 |
1132
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| A discharged lawyer must provide a complete accounting to the former client for all advanced fees (overruling LEO 431 to the extent it is inconsistent). | 11/16/1988 |
1390
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| A divorce client grants a deed of trust on the marital home to a lawyer to secure the payment of attorneys' fees. Because the divorce has not been concluded and the spouses are quarreling over their interests in the house, this arrangement impermissibly gives the lawyer a proprietary interest in the divorce action and may not be cured by consent. | 3/12/1991 |
1667
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| A fee agreement under which a client must pay an additional $500 if the lawyer must institute collection proceedings to recover an unpaid fee would be unethical, because such an automatic collection fee could exceed the unpaid balance. A fee agreement is not like a normal contract, and even an agreed-upon term can violate the Code. A fee's reasonableness is not judged solely at the time of the agreement, because "the occurrence of events not contemplated by the parties at the outset of the representation may also be relevant to the reasonableness of the fee." It would not be improper to include in the fee agreement a provision for the recovery of reasonable attorneys' fees if the lawyer must sue to collect an unpaid fee. | 7/8/1996 |
ABA-392
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| A for-profit corporate employer may not share in fees generated by one of its in-house lawyers (above the level required to reimburse the corporation for any expenses incurred) and may not share in any court-ordered fees above the level required to reimburse the corporation. | 4/24/1995 |
1766
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| A former federal worker hired a lawyer on an hourly basis to pursue an administrative disability retirement benefit case, but later used another lawyer under a contingency arrangement. The client fired the second lawyer after successfully obtaining a lump sum payment and a lifetime monthly annuity from the government, but before all of the necessary paperwork was completed. The Bar indicates that the propriety of the lawyer's conduct depends on the facts. Even if the client agrees, a lawyer may not charge an unreasonable fee. A contingent fee arrangement is appropriate if there is an "actual risk of nonpayment and a res from which the fee can be paid." A client and lawyer may enter into a "mixed" contingent fee arrangement in which the lawyer combines an hourly rate with a percentage of the res if successful. A lawyer may sue a former client for unpaid fees, but may not seek a larger fee if the client challenges the original fee request (if there is no basis for the increase). A lawyer fired before completing a contingent fee case may only recover in quantum meruit (the Bar indicates that a trier of fact must determine if that general rule applies to this situation. | 9/25/2002 |
ABA-420
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| A law firm hiring a contract lawyer may either bill his or her time as: (1) fees, in which case the client would have a "reasonable expectation" that the contract lawyer has been supervised, and the law firm can add a surcharge without disclosure to the client (although some state bars and courts require disclosure of both the hiring and the surcharge); or (2) costs, in which case the law firm can only bill the actual cost incurred “plus those costs that are associated directly with the provision of services” (as explained in ABA LEO 379). | 11/29/2000 |
0999
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| A law firm may allow clients to pay with a credit card, as long as all payments are deposited in a trust account and the lawyer does not withdraw any fees until deposit checks have cleared. | 11/13/1987 |
1735
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| A law firm may employ independent contractor lawyers under the following conditions: whether acting as independent contractors, contract attorneys or "of counsel," the lawyers must be treated as part of the law firm for confidentiality and conflicts of interest purposes; the firm must advise clients of any "mark-up" between the amount billed for the independent contractor lawyers' services and the amount paid to them if "the firm bills the amount paid to the Attorney as an out-of-pocket expense or disbursement," but need not make such disclosure to the clients if the firm bills for the lawyers' work "in the same manner as it would for any other associate in the Firm" and the independent contractor lawyer works under another lawyer's "direct supervision" or the firm "adopts the work product as its own;" the independent contractor lawyers may be designated as "of counsel" to the firm if they have a "close, continuing relationship with the Firm and direct contact with the firm and its clients" and avoid holding themselves out as being partners or associates of the firm; the firm must disclose to clients that an independent contractor lawyer is working on the client's matter if the lawyers "will work independently, without close supervision by an attorney associated with the Firm," but need not make such disclosure (and obtain consent)if the "temporary or contract attorney works directly under the supervision of an attorney in the Firm;" the firm may pay a "forwarding" or "referral" fee to the independent contractor lawyers for bringing in a client under the new Rules. | 10/20/1999 |
1562
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| A lawyer and client agree to submit a fee dispute to a local bar association fee arbitration committee. If the lawyer acted unethically in charging the fee or failing to explain the fee to the client, the lawyer's submission to arbitration does not in itself save the lawyer from being reported to the Bar under DR 1-103(A). Although the Bar declines to indicate whether the lawyer acted unethically in the fee matter, it rules that any member of the fee arbitration committee concluding "upon a substantial degree of certainty" that the lawyer's misconduct violates DR 1-103(A) must report the conduct, "without unreasonable delay," to the Bar. Failure to do so would violate DR 1-103(A). | 2/8/1994 |
0936
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| A lawyer and client may enter into a retainer agreement providing that if fired the lawyer will receive a standard hourly rate for the hours worked before termination. | 6/16/1987 |
0432
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| A lawyer appointed to represent an indigent inmate may later represent the inmate on a retained basis. | 10/16/1981 |
1673
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| A lawyer attempting to locate former clients to whom trust money is owed may use some of the trust money to compensate an investigator aiding in the search, as long as the compensation is reasonable and explained to the located clients (hiring an investigator is not a necessary step, because "due diligence is all that is required of an attorney trying to locate a client"). | 5/16/1996 |
1744
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| A lawyer employed by a non-profit organization and a private practitioner who sometimes handles cases pro bono for the non-profit organization may share court-awarded attorneys’ fees with the organization (although it would be unethical for a lawyer who accepts a pro bono case to charge or collect a contingent fee for the representation). The court’s review of the fees and the fact that the client is not paying the fees eliminate any worry about fee-sharing or overreaching by the lawyers. | 6/27/2000 |
1563
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| A lawyer in a civil rights case has a contingent fee arrangement with the plaintiff. The lawyer may ethically include the court-awarded attorneys' fees in considering the plaintiff's award from which the lawyer calculates the contingent fees. The court-awarded attorneys' fees are not considered "fees" for purposes of the fee-splitting rules. | 12/14/1993 |
1588
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| A lawyer involved in arranging a real estate transaction has not violated the Code, because the lawyer did not attempt to represent both the buyer and the seller, and fully disclosed that the lawyer might receive a percentage of the purchase price as a fee. Canon 9 did not apply, because the "appearance of impropriety" language "applies only in the limited context of . . . former judges, former government attorneys, and attorneys' improper influence upon a tribunal, legislative body, or public official." | 6/14/1994 |
1581
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| A lawyer may accept a fee or commission for referring clients to a company which buys notes and other forms of commercial paper secured by real estate, as long as there is full disclosure and consent and the lawyer does not represent the client in connection with the company's purchase of the note. | 2/8/1994 |
1593
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| A lawyer may accept compensation in the form of corporate stock for legal services as long as: "he feels his independent professional judgment will not be affected by his status as a stockholder;" the client consents after full disclosure; and the transaction "is not unconscionable, unfair or inequitable when made." [Under Rule 1.8(a), a lawyer may not enter into a "business transaction" with a client unless the client is given an opportunity to seek independent advice, and there has been full disclosure and consent in writing.] | 4/11/1994 |
0449
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| A lawyer may arrange for a medical expert to provide technical assistance on a contingent fee basis, because the ban on contingent fee arrangements applies to expert witnesses, not consultants. | 4/13/1982 |
1178
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| A lawyer may charge a "retainer or periodic payment . . . to ensure his availability to the client . . . as consideration for the lawyer's unavailability to potential adversary parties." However, such a retainer is different from "advance legal fees," which are "fees paid in advance for services on a specific matter" and therefore remain the property of the client until ultimately earned by the lawyer. | 2/13/1989 |
1322
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| A lawyer may charge a "retainer" to "insure the attorney's availability and as consideration for the lawyer's unavailability to potential adverse party" where the client seeks to secure the lawyer's employment "for representation of his interests in any matter which may arise in the future." On the other hand, a "specific sum paid at the time an employment agreement is entered into" to "secure the lawyer's legal services for a specific . . . matter" is "deemed to be an advanced legal fee which has been entrusted to the lawyer" but which still belongs to the client. Here, the "non-refundable retainer" was improper "since funds which are entrusted to a lawyer by a client for the lawyer's services on a specific matter are deemed to be 'advanced legal fees' and belong to the client."A lawyer may not insist that a prospective client sign an agreement permitting the lawyer to keep any work product, because the work product belongs to the client. | 2/27/1990 |
0426
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| A lawyer may charge a client interest on unpaid balances assuming that the client has consented to such an interest arrangement at the beginning of the attorney-client relationship. | 8/14/1981 |
0642
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| A lawyer may charge a client interest on unpaid bills as long as: the client had earlier agreed to the arrangement; the client is capable of paying but desires to defer payment for the client's own convenience; the interest rate is legal; and the client can pre-pay without penalty. | 1/16/1985 |
1748
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| A lawyer may charge a contingent fee for representing a criminal defendant in a civil forfeiture proceeding seeking to recover seized property because: the proceeding is civil rather than criminal; it “involves a res out of which a contingent fee could be paid;” and the outcome is uncertain. | 8/28/2000 |
0365
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| A lawyer may charge a contingent fee in a personal injury case, but may not enter into an agreement under which the client might be obligated to pay a percentage of a settlement amount the lawyer recommends but the client rejects. | 4/3/1980 |
0664
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| A lawyer may charge a contingent fee in a worker's compensation case as long as the Industrial Commission approves the fee. | 2/27/1985 |
1056
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| A lawyer may charge a fixed percentage overhead fee for miscellaneous expenses. In litigation matters, clients' payment of advanced costs and expenses may be contingent on the outcome. | 3/22/1988 |
1247
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| A lawyer may charge interest on overdue bills if the client agrees to the arrangement, is able to pay and is not penalized for pre-payment. | 6/13/1989 |
1595
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| A lawyer may charge interest on unpaid cost and expense balances as long as: the costs and expenses are reasonable and adequately explained to the client; the lawyer and the client agreed to the interest arrangement before the interest is imposed; any deferment of payment is for the client's convenience; the interest rate complies with state law; and the client may prepay the balance without penalty. | 6/14/1994 |
1696
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| A lawyer may collect a contingent fee in arranging for a client to recover medical payments under the tortfeasor's insurance as long as "the services of an attorney are reasonably necessary to secure the payments from the insurance company." | 3/7/1997 |
0585
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| A lawyer may deposit earned fees into the lawyer's general operating account. | 6/14/1984 |
0734
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| A lawyer may endorse a check made payable to the client and collect fees from it if the lawyer has been unsuccessful in locating the client. | 11/1/1985 |
0558
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| A lawyer may engage in a "barter" arrangement in which the lawyer renders services in return for other goods, as long as: the lawyer does not share legal fees (in cash or in kind) with any non-lawyers; the client consents; the legal fees are reasonable; and the lawyer keeps the legal fees in a trust account (or segregated in the case of goods) until the fees are earned. [Under Rule 1.8(a), a lawyer may not enter into a "business transaction" with a client unless the client is given an opportunity to seek independent advice, and there has been full disclosure and consent in writing.] | 4/10/1984 |
0496
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| A lawyer may forward a court-awarded attorney's fee to the client if the lawyer has already deducted the contingent fee from the amount awarded. | 1/18/1983 |
0408
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| A lawyer may make a gift on the client's behalf of a portion of a contingent fee paid by the client. | 4/6/1981 |
1306
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| A lawyer may not enter into a contingent fee arrangement with a merchant's association that plans to bring collection actions on behalf of its individual members, because the automatic contingent fee arrangement between the lawyer and the intermediary (association) might prevent the lawyer and the client from considering or entering into an alternative arrangement, thus usurping the normal relationship between the lawyer and client. | 1/19/1990 |
1764
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| A lawyer may not enter into a fixed fee retainer arrangement in which a finance company pays the lawyer the fixed fee amount (minus a discount) at the beginning of the case, with the client being responsible for making monthly payments to the finance company for the full fee amount plus interest, because the discount retained by the finance company at the beginning of the case amounts to impermissible fee-sharing; any advanced fee must be kept in the lawyer's trust account until the lawyer has "performed the corresponding services." | 5/6/2002 |
0650
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| A lawyer may not enter into an agreement in which advanced fees will be placed in an interest-bearing account, with both interest and principal being paid to the lawyer. | 1/3/1985 |
0242
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| A lawyer may not handle a criminal appeal on a contingent fee basis. | 4/10/1974 |
1117
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| A lawyer may not sue a current client for unpaid fees unless "fraud" or "gross imposition" are established. | 4/7/1988 |
1318
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| A lawyer may practice law and operate a consulting firm out of the same office as long as the activities are kept separate and clients consent after full disclosure. The lawyer may send out one bill for both services as long as the bill fully discloses the separate services. | 2/1/1990 |
ABA-374
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| A lawyer may share court-awarded fees with a pro bono organization the lawyer is representing. | 6/7/1993 |
0995
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| A lawyer may sue a former client for an unpaid legal bill, but may not write the former client's supervisor unless the revelation is necessary to determine the reasonableness of the fee. | 11/12/1987 |
0498
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| A lawyer may take a promissory note from a client as evidence of a fee as long as the amount and terms are reasonable; the lawyer may assign or discount the note if the client consents; the lawyer must place in the trust account any amounts paid before the fee is earned. | 2/15/1983 |
0842
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| A lawyer may withdraw from representing a client who does not pay the lawyer's bills. | 9/23/1986 |
1325
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| A lawyer may withdraw from representing a corporation which refuses to pay its bills, defames the lawyer and threatens the lawyer with physical danger. The lawyer may then sue the former client for past-due bills. [The lawyer requesting the opinion practices in another country. The choice of law issues are now governed by Rule 8.5 -- although the conclusion seems consistent with every state's ethics rules.] | 2/27/1990 |
0681
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| A lawyer must account to a client upon request for any fees paid for future services. | 4/10/1985 |
0992
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| A lawyer must provide clients with the basis or rate of a fee, and should let a court decide whether fulfilling such a duty to a former client outweighs any prejudice the lawyer claims would occur in a companion case. | 11/4/1987 |
0817
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| A lawyer must retain funds in identifiable accounts until resolution of a dispute between two lawyers over the fee amount. | 9/19/1986 |
0646
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| A lawyer must return any part of a retainer fee that has not been earned. | 1/16/1985 |
1653
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| A lawyer presented two hypotheticals in which a divorce client unable to pay a lawyer's bills might assign proceeds of the sale of the client's domicile. The Bar held that such arrangements improperly give the lawyer a proprietary interest in a cause of action and are barred unless: "the final order or decree has been entered, conclusively adjudicating all issues with respect to the use, possession, division and sale of such property;" the client consents after full disclosure; the transaction is fair and reasonable ("giving consideration to the client's sophistication, ability to pay, and feasibility of other methods of fee payment"); and the "client is advised that he or she may seek independent counsel to review the transaction and is afforded an opportunity to do so, if the client so elects." [Under Rule 1.8(a), a lawyer may not enter into a "business transaction" with a client unless the client is given an opportunity to seek independent advice, and there has been full disclosure and consent in writing.] | 9/21/1995 |
1643
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| A lawyer represented a client in a divorce. After the representation ended, the former client filed for bankruptcy. The former client listed the lawyer's bill as a debt, but failed to list assets that were included in the publicly filed divorce property settlement agreement. The Bar held that the existence of these assets could still be a secret "despite the fact that others share the same information or the information is a matter of public record." The lawyer may therefore only reveal the fraud on the bankruptcy court if the lawyer's duty of confidentiality was outweighed by some other duty. The lawyer had no such other duty here, because the fraud: (1) did not occur during the course of the attorney-client relationship; and (2) did not relate to the subject matter of the representation. Furthermore, the lawyer may not reveal the confidences "to establish the reasonableness of his fees" because the client did not dispute the fees. The lawyer therefore may not reveal the fraud on the bankruptcy court. As the Bar explained it, "the protection of client confidences and secrets is so fundamental to the attorney-client relationship that any exceptions to the bedrock principle must be strictly limited." | 9/8/1995 |
1640
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| A lawyer representing a claimant in a worker's compensation matter must negotiate a pro rata contribution to the lawyer's fee from each treating physician. Such fee negotiations do not give rise to the expectation of confidentiality, so the lawyer may be adverse to one of the treating physicians in a malpractice claim even if the lawyer negotiated a fee matter with that treating physician (as long as the malpractice claim was not discussed). | 6/9/1995 |
0823
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| A lawyer representing a client in collection cases may reimburse the client for time spent by the client's employees in administrative and clerical matters, although it would be best for the client to periodically bill the lawyer for the services rather than have the client offset the services against attorneys' fees. | 9/19/1986 |
1783
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| A lawyer representing a lender in collecting on a defaulted note that included a provision requiring the borrower to pay attorney's fees equal to 25% of the principal balance due may give the client/lender any portion of the 25% that exceeds the actual cost of the legal services. The 25% attorney's fee provision is "an agreed upon contract term" which provides "commercial certainty for all parties." Allowing the nonlawyer client/lender to receive a portion of the 25% does not threaten the "independent judgment of an attorney from improper nonlawyer interference," and therefore does not amount to an unethical sharing of legal fees with a nonlawyer [overruling LEOs 534, 835 and 1025 to the extent that they are inconsistent]. | 12/22/2003 |
1095
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| A lawyer suing a former client for a fee is free to answer discovery about the lawyer's fees and services. | 6/14/1988 |
1807
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| A lawyer who has not been paid may: (1) garnish any of the former client's money being held in the trust account of a successor lawyer (the money should not be called a "retainer" which involves the payment of money "to insure the attorney's availability for future legal services" and must therefore not be placed in a trust account because it is earned upon payment); (2) undertake discovery of documents relating to the client's payments to the successor lawyer, although the discovery "should not seek more confidential information from the new attorney than is necessary for collection." | 9/20/2004 |
0248
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| A lawyer who receives double payment from a client and a third party must disclose the double payment. | 9/18/1974 |
0577
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| A lawyer who represents a cable television franchisee may accept as legal fees a proprietary interest in the franchise as long as the client consents. [Under Rule 1.8(a), a lawyer may not enter into a "business transaction" with a client unless the client is given an opportunity to seek independent advice, and there has been full disclosure and consent in writing.] | 4/30/1984 |
1691
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| A lawyer who takes a case from the Legal Aid Society on a pro bono basis but later negotiates a fee agreement without advising the Legal Aid Society has engaged in a "clear misrepresentation." | 12/9/1996 |
1620
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| A lawyer works for 2 1/2 years representing a plaintiff in a contingent fee personal injury case. The client then discharges the lawyer and agrees to pay the lawyer on a "quantum meruit" basis. The client asks for a total of the fees owed, but the discharged lawyer wants to wait until settlement or trial. The lawyer must furnish the former client the "basis or rate" of the quantum meruit fee, but the Bar indicates that the timing of the disclosure is a matter of law beyond the Bar's jurisdiction. | 11/29/1994 |
1751
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| A non-profit lawyer referral service operated by a local bar association may require that participating lawyers pay the service a percentage of fees that they collect from individuals referred to the lawyer by the service, as long as the percentage is reasonable. | 5/7/2001 |
0425
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| A real estate buyer's lawyer may not impose a fee upon the seller unless the seller and the seller's lawyer consent. | 8/14/1981 |
1220
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| A real estate lawyer may not include an amount on the closing statement for a title insurance premium fee if part of the amount is for legal fees, unless there is full disclosure. | 4/3/1989 |
1636
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| A Virginia firm bills its clients for the firm's costs, as well as costs incurred by foreign law firms. The Virginia firm does not place the client reimbursement checks in its trust account, and sometimes reimburses the foreign law firms many months later.If the Virginia firm has already paid the foreign law firm for its costs, then the Virginia firm may place the client's reimbursement checks in its operating account. However, the reimbursement checks must be placed in the trust account if the foreign law firms have not yet been reimbursed. Likewise, the Virginia firm may not use the clients' reimbursement checks for other purposes, but instead has an ethical duty to immediately pay the foreign law firms. | 4/19/1995 |
0186-A
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| A Virginia lawyer can allow their clients to pay attorneys fees using credit cards, with certain limitations. [Overruled in Virginia LEO 1848 (4/14/09) to the extent they are inconsistent] | 6/18/1981 |
487
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| ABA LEO 487 (6/18/19) (A successor lawyer replacing a contingent fee arrangement lawyer must advise the client of the former lawyer’s claim for fees against any recovery (under a quantum meruit standard, a termination amount specified in the previous contingent fee arrangement, or some other arrangement). Such a claim arises if a client fires the contingent fee lawyer without cause or the contingent lawyer justifiably withdraws. Those standards vary by state, but lawyers' justifiable withdrawal includes examples such as an “obligation to withdraw due to unforeseen conflict of interest . . . unanticipated costs and expenses of litigation . . . client refused to comply with discovery obligations.” The successor lawyer may include such an explanation of the predecessor lawyer's right to a fee in the new contingent fee arrangement or separately. Such successive representations do not implicate simultaneous representation provisions such as ABA Model Rule 1.5(e) fee division provision, including that Rule’s requirement that all counsel assume “joint responsibility” for the matter – which “entails financial and ethical responsibility for the representation as if the counsel were associated in a partnership." Although the client in this situation involving successive contingent fee representations “cannot be exposed to more than one contingent fee when switching attorneys,” ABA Model Rule 1.5(a) "supports the conclusion that client consent is required to divide the fee at the end of the case.” Thus “successor counsel may not disburse fees claimed by that [predecessor] counsel absent the client’s consent.” Successor counsel may or may not represent the client in dealing with predecessor counsel, which should be specified in the fee agreement. Among other things, successor counsel undertaking that task “cannot charge the client for work that only increases the successor counsel’s share of the contingent fee and does not increase the client’s recovery.” Given successor counsel’s interest “in a portion of the proceeds,” the arrangement must also include the client’s informed consent to that conflict. Both successor and predecessor counsel must protect client confidences, and predecessor counsel may not communicate directly with the former client “without successor counsel’s consent under Rule 4.2.” Successor counsel must hold in trust any disputed amounts. | 6/18/2019 |
ABA-468
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| Although ABA Model Rule 1.17 allows lawyers to sell their law firms as long as they "cease to engage in the practice of law," "it seems reasonable to conclude that the transition of pending or active client matters from a selling lawyer or firm to a purchasing lawyer or firm need not be immediate or abrupt." Lawyers may assist in the transition of "active client matters for a reasonable period of time after the closing of a sale," but "neither the selling lawyer or law firm nor the purchasing lawyer or law firm may bill clients for time spent only on the transition of matters." | 10/8/2014 |
0480
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| An in-house lawyer's employer may not charge and collect for work the lawyer does for third parties, unless the payment is a reimbursement for the actual cost of the legal services and the lawyer receives the fee. | 9/20/1982 |
ABA-389
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| As long as the client consents after full disclosure, a lawyer may work for a contingent fee even if: the client can afford to pay on another basis; liability is clear and some recovery is anticipated from the beginning; the percentage of the contingent fee depends on the stage of the matter or the size of the award; the contingent fee covers an amount that was the subject of an earlier rejected settlement offer. | 12/5/1994 |
0710
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| As long as the client consents, a lawyer may charge a predetermined percentage of a legal fee for administrative costs. In litigation matters, clients' payment of advanced costs and expenses may be contingent on the outcome. | 4/10/1985 |
0748
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| As long as the client consents, a lawyer may place the client's funds in an interest-bearing account and apply the interest to pay the lawyer's fees. | 12/30/1985 |
0834
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| As long as the client consents, a lawyer may refer clients to the lawyer's spouse (a financial planner). The lawyer may not disclose the clients' identity to the spouse without the clients' consent. A lawyer may employ a collection agency to help collect past-due fees, but should not disclose any more information than the agency would need to collect the fee. | 9/23/1986 |
1648
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| Because "any lawyer's bill which charges fees or costs for work not actually performed is fraudulent," a lawyer may not secretly add a "value" factor above the fee determined by the hourly rate for time spent. | 11/28/1995 |
1883
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| Because a Chapter 7 bankruptcy lawyer has "largely earned" her fee before filing a bankruptcy petition, the filing date is a "reasonable benchmark" for distribution of a fixed fee from the lawyer's trust account. Lawyers may therefore ethically withdraw the fixed fee from the lawyer's trust account immediately before filing the petition, thus avoiding: (1) the trust account funds becoming the trustee's assets; and (2) the lawyer becoming the estate's creditor. | 7/23/2015 |
0186-B
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| Charging interest on unpaid bills is not per se unethical, but an "automatic imposition of a uniform finance or interest charge" ignores a "personal element of the attorney-client relationship." The following would be required before the lawyer could ethically charge interest: the lawyer and client "have reached an agreement as to the amount of attorneys' fees to be charged, the client is capable of paying the same but desires that the payment be deferred for the client's convenience;" " the client at all times has the right to prepay any remaining balance of the fee without penalty;" the lawyer may not charge interest on any fees that remain unearned; "there is a reasonable expectation that a client has the ability to pay the agreed upon fee and the interest thereon;" should a fee dispute arise, "every effort should be made to work out an amicable resolution of differences which arise between the attorney and client."A lawyer may not "sue a client for a fee unless to prevent fraud or gross imposition by the client." Overall, the Bar indicated that use of a credit card "is a preferable alternative to charging interest for the financing of legal fees." | 6/18/1981 |
1899
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| Clients and their lawyers can agree on a reasonable “conversion clause” indicating how the lawyer will be compensated if the client terminates a fixed fee agreement without cause (rather than relying just on a quantum meruit process that requires a terminated lawyer’s legal action against the former client). Unlike the scenario with “conversion clauses” in contingent fee arrangements, the fixed fee setting has no expected recovery, and a “conversion clause” cannot result in the lawyer receiving more than the fixed fee itself. As long as the arrangement is reasonable and fully explained to the client, such a “conversion clause” might use “benchmarks” based on the “amount of work” done at certain stages of a fixed fee representation. | 1/6/2023 |
ABA-484
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| Clients who on their own or on their lawyers' advice arrange for a finance company, broker or bank [referred to in this LEO summary as "finance company"] to finance their legal fees may use one of several arrangements in which such finance companies provide money to the clients or directly to the lawyers, with various fees or charges deducted from such payments or paid by the lawyers. Lawyers participating in such financing arrangements: (1) must fully explain to their clients the lawyers' relationship with the finance companies (including whether the lawyer represents them); how the money arrangements will work; the finance companies' communications to the lawyers about the money flow; "the cost and benefits of the transaction to the client"; the lawyers' payment terms; whether the proceeds will go to the client; "whether the lawyer will charge a higher fee" resulting from the finance arrangement; the lawyers' confidentiality duty when dealing with the finance companies; the effect of the financing arrangement on clients' rights in any later disputes with the lawyers; "any other factor that the lawyer knows or reasonably should know to be material to the financing of the representation"; (2) may limit the representations' scope under Rule 1.2 so that the clients must make such arrangements; (3) "may wish to advise the client" that the finance company will not affect the lawyers' judgment (although such a lawyer "generally has no obligation to inform the client" of the lawyers' professional independence because "unlike litigation funding or financing, a legal fee lender in the scenarios described . . . has no direct financial interest in the outcome of the matter, and therefore no incentive to attempt to influence the lawyer's advice, strategy, or tactics"); (4) must assure that the fee is reasonable, including any fee that is increased by the finance arrangement, and must inform the clients of any higher fee resulting from the arrangement; (5) must deposit the flat fee loan proceeds as the pertinent state rules require (noting that some states permit lawyers to treat flat fees as earned upon receipt and therefore place them in operating accounts, while other states consider such flat fees advance payments that must be held in trust), and under either approach must refund any unearned funds if the representation ends before the lawyer has completed the work; (6) may reveal client confidential information to the funding company only as permitted by ABA Model Rule 1.6; (7) must consider any ABA Model Rule 1.7(a)(2) "material limitation" conflicts, such as conflicts between clients' interest and the lawyers' interest in being paid, or if the lawyers represent the finance company (lawyers may avoid such conflicts by not advising clients about such payment option to use, or may obtain clients' informed consent to the representation despite such a "material limitation" conflict; (8) must deal with any conflicts that could arise if the lawyers had previously represented the finance companies. Any finance companies' charges, deductions when paying the clients or the lawyers, etc. do not constitute fee sharing, but rather are "basically an administrative fee" similar to credit card companies' "merchant fee." Any such fee financing arrangements made with an entity in which lawyers have "an ownership or other financial interest" trigger lawyers' disclosure and consent requirements under ABA Model Rule 1.8. | 11/27/2018 |
0586
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| Even if the lawyer has approved the form of the letter, a lawyer may not allow the client to use the lawyer's letterhead and signature stamp to send collection demand letters. A lawyer may forward to the client any court-awarded attorneys' fees as long as they are a direct reimbursement for services rendered to the client. | 6/14/1984 |
1898
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| Given cryptocurrency’s “extreme fluctuation” and other factors, there is “a great deal of risk undertaken by the lawyer and/or the client” when dealing with cryptocurrency. Lawyers may accept cryptocurrency as an advance fee for legal services, as long as the arrangement satisfies Virginia Rule 1.8(a)’s requirements, and is “agreed to by the client ... after being informed of its implications [including the risk of cryptocurrency being lost or stolen, the absence of FDIC insurance, etc.] and given the opportunity to seek the advice of independent counsel, all of which is confi1med in writing.” Lawyer’s acceptance of cryptocurrency as payment for an earned fee is not a “business transaction” with the lawyer governed by Virginia Rule l.8(a)). | 9/19/2022 |
1848
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| Having received an opinion from Virginia's Attorney General, the Bar approves Virginia lawyers passing along to their client the transactional costs/merchant fees charged by a credit card company when the client uses a credit card -- as long as the lawyer explains the process to the client before the client uses the credit card. Such transactional/service fees may be deducted from the lawyers' trust account, but lawyers using best practices should arrange for the fees to be deducted from the lawyers' operating account. Lawyers must "monitor and personally replace any escrow funds that are subject to a charge back" by a credit card company -- and lawyers using best practices should arrange for any charge backs to come from the lawyers' operating account rather than trust account. | 4/14/2009 |
1187
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| If a client has received notice and does not dispute the fees, a lawyer may deduct fees owed from a previous case at the time of settling a contingent fee case. [Deducting fees from an unrelated matter would almost surely require the client's consent.] | 1/4/1989 |
0974
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| If a lawyer is granted permission to withdraw as counsel, the lawyer may sue the former client for fees "should it be determined that a gross imposition has been made upon the lawyer's practice due to the client's failure to pay the fee" [The lawyer should be free to sue the former client for fees under normal contract rules; the "gross imposition" standard should apply only if the lawyer wants to sue a current client for unpaid fees.] | 10/9/1987 |
0214
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| If the client asks for it, a lawyer must supply an itemized breakdown of legal fees, costs and other expenses. | 6/2/1972 |
0773
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| In litigation matters, clients' payment of advanced costs and expenses may be contingent on the outcome. A lawyer may pay amounts received in collection cases to the client, with the lawyer keeping only what is awarded as attorneys' fees. A lawyer may receive a monthly retainer for collection work, but must pay back any amount of the retainer that exceeds the funds recovered. | 4/3/1986 |
1838
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| In-house lawyers can provide legal services to their employer's sister corporation, as long as the lawyers provide "independent professional judgment" on behalf of the sister company "free of any interference or direction" from the lawyer's employer, and as long as the lawyers do not share the sister company's confidences with their employer. The Bar explained (1) that "discharging this duty of confidentiality to [the sister corporation] may require [the lawyers] to work off site, at a physically separate office, rather than on the premises of [their employer]"; (2) that the lawyers must be conscious of possible conflicts between their clients, and should address conflicts "with a letter of representation that outlines who the lawyer would continue to represent, if either, in the event of a conflict"; (3) that the lawyers' employer can charge and collect legal fees from the sister corporation for the lawyers' work, as long as the amount is a simple reimbursement, and the employer does not earn any "direct or indirect profit for legal services provided." | 5/10/2007 |
1016
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| It is not per se unethical for a lawyer and bookkeeper to set up a company that handles law firms' billings, but they must be careful not to violate the ethics rules. | 12/21/1987 |
1461
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| It is per se unreasonable for a lawyer to take a contingent fee for obtaining medical expenses from an insurance company when the client could have obtained the expenses without the lawyer's help. | 4/13/1992 |
ABA-427
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| Lawyers acquiring security interests in client property to secure the payment of fees must comply with the rules governing business transactions with clients (although fee agreements themselves generally do not require such compliance). Lawyers executing on the security may only obtain a reasonable fee. Lawyers taking possession of property under such an arrangement must comply with trust account procedures. Lawyers may not retain collateral "exceeding the reasonable fee plus the reasonable costs of preserving and realizing on the security," despite any state law allowing the exercise of greater rights. | 5/31/2002 |
ABA-425
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| Lawyers and clients may agree to arbitrate fee and malpractice disputes, but: the client would have to be independently represented if the agreement limits the lawyer's possible liability (for instance, by precluding punitive damages that would be available in a lawsuit); the lawyer must explain "the possible adverse consequences as well as the benefits" of such an arrangement, such as the client's waiver of jury trial, broad discovery and appellate rights, the details of arbitration process and the possibility that the client may have to pay fees and costs of arbitration. | 2/20/2002 |
1705
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| Lawyers and clients may amend fee agreements as long as they do not involve "undue influence or coercion by the lawyer." A lawyer may enforce an amended fee agreement prepared after the client in extensive litigation over a cloud on a real estate title indicated that the client could not continue to finance the litigation as originally agreed and instead offered to pay an additional $25,000 upon successful completion of the litigation "in consideration of payment not being made as originally agreed." The change from an hourly-based contract to a contingent fee agreement was not improper because: the outcome was uncertain; the client could not continue to finance the litigation otherwise; and success would produce a "res" out of which to pay the fee. The extra $25,000 to be paid upon successful completion of the litigation was based on the lawyer's agreement to delay collection of the outstanding fees until the case ended. | 11/21/1997 |
ABA-458
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| Lawyers and their clients can renegotiate fee agreements in the course of a representation, but "modifications of existing fee agreements are usually suspect because of the fiduciary nature of the client lawyer relationship." Any new fee arrangement must be reasonable. "An explanation of the lawyer's proposed modification of a fee arrangement, including the advice that the client need not agree to pay the modified fee to have the lawyer continue the representation, is necessary to enable the client to make an informed decision about the client's ability and willingness to pay the modified fee for continued representation." The client's consent to a new fee arrangement can be inferred in some situations, as with a lawyer's incremental increase in billing rates. Lawyers may not "unilaterally impose" a "success fee" premium, and must comply with contingent fee rules. Lawyers "seeking new or additional security for payment under an existing fee agreement" must comply with the rules governing lawyers doing business with their clients. | 8/4/2011 |
1850
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| Lawyers frequently outsource legal and non legal support services to lawyers and non-lawyers. Examples include “reproduction of materials, database creation, conducting legal research, case and litigation management, drafting legal memoranda or briefs, reviewing discovery materials, conducting patent searches, and drafting contracts” (but do not include a scenario in which a lawyer “is working under the direct supervision of lawyers in the firm and has full access to information about the firm’s clients, and therefore is associated with the firm”). Lawyers who engage in such outsourcing must comply with four duties. First, such lawyers must “exercise due diligence in the selection of lawyers or nonlawyers,” must take reasonable steps to assure that they comply with the lawyers’ ethical rules, must review their work “on an ongoing basis,” and must “remain ultimately responsible for [their] conduct and work product.” Lawyers arranging for overseas outsourcing “should” enter into a written agreement confirming these steps. Second, lawyers who hire “a temporary lawyer to work on a client’s matter” must advise the client. Similarly, such lawyers “must obtain informed consent from the client if the lawyer is outsourcing legal work to a lawyer or nonlawyer who is not associated with or working under the direct supervision of a lawyer in the firm that the client retained, even if no confidential information is being shared outside of the firm.” Third, lawyers “must secure the client’s consent in advance” if they will share “confidential client information” with a lawyer or non-lawyer who is not “associated with the firm nor directly supervised” by a firm lawyer. Lawyers should obtain written confidentiality agreements, and “should also ask the nonlawyer whether he or she is performing services for any parties adverse to the lawyer’s client.” Fourth, lawyers charging clients for outsourced work as a disbursement must disclose any mark-up. Under ABA LEO 379 (12/6/93), lawyers need not disclose any mark-up or staffing agency fee if they outsource to lawyers or non-lawyers working “under the direct supervision of the lawyer such that they are considered ‘associated’ with the firm.” | 1/12/2021 |
1645
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| Lawyers have no ethical duty to provide an “itemized accounting” of fees to non-clients who pay the lawyer. In contrast, lawyers must provide their clients “an itemized breakdown of legal fees” (declining to decide whether an attorney-client relationship existed between a borrower and a lawyer retained by the bank to handle a loan-related issue.) | 9/8/1995 |
1739
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| Lawyers may accept or pay referral fees as long as the clients consent (although it would be best for lawyers' advertisements not to mention their willingness to pay for referrals). | 4/13/2000 |
ABA-418
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| Lawyers may accept stock in lieu of or in addition to a client's cash payment for services, but the following rules apply to such arrangements: the arrangements must satisfy the ethics standards for "business transactions" with clients [in Virginia, the requirements include a written explanation of the transaction and written client consent]; determining if the fee is "reasonable" focuses "only [on] the circumstances reasonably ascertainable at the time of the transaction"; the lawyer must fully explain the possible conflicts that might arise (such as diminution in client control of the corporation and ways in which the lawyer's personal interests in the stock value might affect the lawyer's professional judgment); the lawyer should describe the services to be rendered, and whether the stock acquisition is in the nature of an investment, a direct payment for services or a true "retainer" paid for the lawyer's availability; even though it is not required by the Model Rules, the lawyer should recommend that the client seek independent advice; if a corporation's main asset consists of a claim in litigation, the stock might be a prohibited "proprietary interest" in litigation; a lawyer's ownership of a client's stock does not create an inherent conflict of interests because both share an interest in the corporation's success; in the case of conflicts (as when a lawyer's ethical duty requires disclosure of adverse facts that will affect the stock price), the lawyer must subordinate any economic self-interest in favor of the ethics duty, and obtain the client's consent to be involved in rendering advice if there might be a material conflict; in the case of a severe conflict (as when the stock is the lawyer's major asset), the lawyer might be incapable of rendering legal advice; a lawyer-shareholder cannot challenge the client's termination of the lawyer.Some law firms have adopted policies about stock ownership in firm clients, such as: assuring that the percentage of stock ownership in a client is a non-material amount; requiring that a firm lawyer other than the main client contact decide any issues involving conflicts; transferring billing and supervisory responsibility to a lawyer with no stock ownership in the client. | 7/7/2000 |
ABA-451
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| Lawyers may outsource "legal or non-legal support" services as long as they bear various ethics requirements in mind -- mentioning outsourcing to foreign lawyers as only one example of outsourcing, along with "the use of a local photocopy shop" to copy documents, retaining a "document management company" in litigation, using third party vendors "to provide and maintain a law firm's computer system" and reliance on a "legal research service" to conduct research. Lawyers arranging for such outsourcing must ultimately assure competent service by anyone assisting in the lawyer's work for the client. Lawyers' duties under ABA Model Rule 5.1 and 5.3 "apply regardless of whether the other lawyer or the nonlawyer is directly affiliated with the supervising lawyer's firm" -- despite the reference to "a firm" in ABA Model Rule 5.1 Comment [1]. Lawyers arranging for the outsourcing must adequately investigate the people who will be conducting the outsourced work (including even such issues of confidentiality as "recycling and refuse disposal procedures." Lawyers arranging for overseas outsourcing should assess such issues as: the foreign lawyers' legal training and dedication to "core ethical principles" similar to U.S. lawyers, the possibility of confidential materials being seized in "judicial or administrative proceeding" and other threats to confidentiality. Lawyers arranging for outsourcing may have to alert their clients, if the outsourcing services will be performed independently of the lawyer (referring to ABA LEO 356, which deals with temporary lawyers). Because "ordinarily" the lawyer will not exercise a "high degree of supervision and control" over the work that is being performed, the lawyer generally will have to provide notice to their clients. Lawyers providing confidential client information to a third party may do so only with the client's consent, and the "implied authorization" to reveal client confidences in performing legal services "does not extend to outside entities or to individuals over whom the firm lacks effective supervision and control." Lawyers must be very careful to assure confidentiality, and "[w]ritten confidentiality agreements are . . . strongly advisable in outsourcing relationships." In fulfilling their duty to "minimize the risk of potentially wrongful disclosure," lawyers arranging for the outsourcing "should verify that the outside service provider does not also do work for adversaries of their clients on the same or substantially related matters." In charging fees for the outsourced work, lawyers should comply with the standards articulated in ABA LEO 420. Lawyers may generally add a surcharge to the cost paid to those performing outsourced work (without notice to the client), as long as the total fee is reasonable. Lawyers deciding to pass the cost along to the client as a disbursement may not mark up the cost, but may only bill the client the actual cost "plus a reasonable allocation of associated overhead, such as the amount the lawyers spent on any office space, support staff, equipment, and supplies for the individuals under contract." In the case of outsourced services, the overhead cost may include "a reasonable allocation of the cost of supervising those services if not otherwise covered by the fees being charged for legal services." Lawyers arranging for outsourcing must avoid assisting anyone in the unauthorized practice of law, although generally there should be no UPL problem if lawyers performing the outsourced work assist the lawyers (who remain ultimately responsible for the work) and do not hold themselves out as being admitted in the jurisdiction. | 7/9/2008 |
ABA-476
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| Lawyers seeking to withdraw as counsel of record because they are not being paid must "err on the side of non-disclosure" of their grounds for seeking withdrawal. Courts "have differed widely" as to information they require before considering such a withdrawal motion, and should work with lawyers to minimize the required disclosure. Lawyers "could": (1) seek withdrawal without disclosing any client confidences; (2) if unsuccessful, respond to courts' insistence for some additional information by requesting an in camera or under seal process; and (3) publicly disclose client confidences only if the court orders such disclosure. | 12/19/2016 |
Virginia-1885
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| Lawyers violate some ethics rules but not other ethics rules if they participate in a for-profit attorney-client matching service ("ACMS") under which the ACMS: advertises "without the lawyers input" fees for limited scope services to be provided by the lawyer; collects the fee, deposit it in the lawyers' operating account after the lawyer completes the work; withdraws a "marketing fee" which is set by the ACMS and based on the legal fee. Such an arrangement: (1) would violate the ethics rules governing limited scope representations, unless the lawyer and the client agree on the limitation rather than simply allowing the ACMS to define the scope in advance; (2) might involve an unreasonable fixed fee, unless the lawyer conducts "an independent assessment" of the advertised fee's relationship to the work; (3) would violate lawyers' ability to safeguard the unearned fixed fee; because the fee initially goes to the ACMS (a lay entity) and not to a trust account, and therefore could be vulnerable to the ACMS's creditors, cannot be refunded if that would be required, etc.; (4) would violate the fee-split rule because there is a "direct linkage" between the lawyer's fee and the ACMS's entitlement to compensation (in contrast to advertising fees which are not based on the legal fee amount); would violate the prohibition on lawyers giving lawyers or nonlawyers "anything of value" to recommend the lawyer (because the ACMS's marketing fee is not a legitimate advertising expense, but instead is "a sum tethered directly to her receipt, and the amount, of a legal fee paid by a client". | 11/8/2018 |
ABA-356
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| Temporary lawyers must comply with all ethics rules arising from a lawyer's representation of a client, but depending on the facts (such as whether the temporary lawyer "has access to information relating to the representation of firm clients other than the clients on whose matters the lawyer is working") may not be considered "associated" with law firms for purposes of the imputed disqualification rules (the firm should screen such temporary lawyers from other representations). Lawyers hiring temporary lawyers to perform "independent work for a client without the close supervision of a lawyer associated with the law firm" must obtain the client's consent after full disclosure. Lawyers need not obtain the client's consent to having temporary lawyers working on the client matters if the temporary lawyers are "working under the direct supervision of a lawyer associated with the firm." Lawyers need not advise clients of the compensation arrangement for temporary lawyers "assuming that a law firm simply pays the temporary lawyer reasonable compensation for the services performed for the firm and does not charge the payments thereafter to the client as a disbursement." | 12/16/1988 |
1812
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| The arrangements between lawyers and clients are "unique and not governed solely by principles that govern ordinary commercial contracts." Although lawyers and clients may agree on an alternative fee that applies when a client discharges a lawyer without cause from a contingent fee arrangement, the alternative must meet the reasonableness standard: when entered into; when the client terminates the lawyer; and when the client obtains a recovery in the lawsuit. A lawyer discharged from a contingent fee arrangement without cause normally recovers under a quantum meruit standard if the retainer agreement is silent, or contains an alternative fee arrangement that would result in an unreasonable fee. The following retainer agreement sentence is improper and misleading because it "actually appears to attempt to set an hourly rate for a quantum meruit analysis" rather than indicating that the lawyer will seek quantum meruit compensation based on the referenced hourly rate: "In the event Client terminates this agreement, the reasonable value of Attorney's services shall be valued at $200 per hour for attorney time and $65 per hour for legal assistant time for all services rendered." The following retainer agreement sentence is improper and misleading because it does not fully explain "under what circumstances law may permit the attorney to elect compensation based on the agreed contingent fee or any settlement offer made to client prior to termination": "In the alternative, the Attorney may, where permitted by law, elect compensation based on the agreed contingency fee for any settlement offer made to Client prior to termination." | 10/31/2005 |
1161
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| The conclusion in LEO 1025 was based on the fact that the lawyer had already obtained a judgment on the account balance and the 25% attorneys' fees; different facts might lead to a different conclusion. | 10/20/1988 |
0510
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| The labels of payments as "retainers" or "guaranteed minimum fees" are not dispositive, and any payment for fees not yet rendered must be placed in a trust account and not removed until the services are rendered. | 3/30/1983 |
ABA-373
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| The Model Rules permit a "reverse" contingent fee based on the amount of money a client saves through a lawyer's efforts. | 4/16/1993 |
1489
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| There is nothing per se improper with a lawyer borrowing money from a client, as long as there has been full and adequate disclosure, the transaction is not "unconscionable, unfair or inequitable when made" and "all doubts regarding the sufficiency of the disclosure [are] resolved in favor of the client." It would be improper for a lawyer to repay the loan by undisclosed credits applied to the client's bill. [Under Rule 1.8(a), a lawyer may not enter into a "business transaction" with a client unless the client is given an opportunity to seek independent advice, and there has been full disclosure and consent in writing.] | 11/16/1992 |
1712
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| This is a comprehensive opinion dealing with temporary lawyers ("lawyer temps"). A lawyer temp is treated like a lateral hire for conflicts purposes (although lawyer temps who are not given "broad access to client files and client communications" could more easily argue that they had not obtained confidences from firm clients for which they had not directly worked). As with lateral hires, screening lawyer temps does not cure conflicts. Lawyer temps may reveal the identity of other clients for which they have worked unless the clients request otherwise or the disclosure would be embarrassing or detrimental to the former clients.Paying a staffing agency (which in turn pays the lawyer temp) does not amount to fee-splitting because the agency has no attorney-client relationship with the client and is not practicing law (the New York Bar took a different approach, suggesting that the client separately pay the lawyer temp and agency). If a firm lawyer closely supervises the lawyer temp, the hiring of lawyer temps need not be disclosed to the client. A lawyer must inform the client before assigning work to a lawyer other than one designated by the client.Because "a law firm's mark-up of or surcharge on actual costs paid the staffing agency is a fee," the firm must disclose it to the client if "payment made to the staffing agency is billed to the client as a disbursement, or cost advanced on the client's behalf." On the other hand, the firm "may simply bill the client for services rendered in an amount reflecting its charge for the Lawyer Temp's time and services" without disclosing the firm's cost, just as firms bill a client at a certain rate for associates without disclosing their salaries. In that case, the "spread" between the salary and the fees generated "is a function of the cost of doing business including fixed and variable overhead expenses, as well as a component for profit."Because the relationship between a lawyer temp and a client is a traditional attorney-client relationship, the agency "must not attempt to limit or in any way control the amount of time a lawyer may spend on a particular matter, nor attempt to control the types of legal matters which the Lawyer Temp may handle." Agencies may not assign lawyer temps to jobs for which they are not competent. | 7/22/1998 |
1606
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| This LEO describes the principles governing attorney fees, emphasizing that fee contracts "are not construed as are other commercial contracts." Among other things, "all fees must be reasonable." Because the client "retains the absolute right to discharge the lawyer at any time for any reason or without reason," a discharged lawyer may only recover in quantum meruit for services rendered - valued by looking at the "reasonable value of the services rendered, not to the benefit received by the client." A lawyer must return all unearned fees if the representation ends. A "retainer" is not a pre-payment for legal services, but rather a payment made to insure a lawyer's availability for future legal services. There may be no non-refundable advance legal fee. Even if a lawyer and client agree to a fixed fee, the lawyer must return any unused portion if the representation ends (using a quantum meruit approach). Contingent fees can be used in family law matters only in "extremely rare situations." [Rule 1.5(d)(1) and Comment [3a] codify the circumstances in which lawyers may handle family law matters on a contingent fee basis.] [Approved by the Supreme Court of Virginia 11/2/16]. | 11/22/1994 |
1515
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| This LEO outlines the principle governing a lawyer acting as executor or trustee: a pre-existing attorney-client relationship is not necessary, but is one factor showing the propriety of the lawyer's selection. The lawyer must fully disclose the fees that will be charged (preferably in writing) and "has a duty to suggest that the client investigate potential fees of others who might otherwise provide such services." A lawyer acting as executor or trustee may hire the lawyer's own law firm to represent him or her as long as there is full disclosure (including "the general compensation to be paid to the law firm") and consent (if the client is already dead, the beneficiaries can consent). A lawyer acting as a fiduciary is governed by the Code. A lawyer may solicit designation as a fiduciary as long as there is no overreaching or fraud. (Approved by the Supreme Court 2/1/94) | 2/1/1994 |
ABA-399
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| This Opinion provides ethics guidance for lawyers whose work is funded by the Legal Services Corporation. | 1/18/1996 |
ABA-419
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| This opinion withdraws the following ABA LEOs dealing with advertising and the use of credit cards to pay a lawyer’s bill: 320, 338, 1120, 1176. | 7/7/2000 |
1188
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| Unless the client consents after full disclosure, a divorce lawyer may not accept an increase in compensation as part of a settlement agreement. | 1/26/1989 |
0262
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| Unless the client consents, a lawyer may not use funds paid to the lawyer as agent for the client to satisfy an unpaid legal bill. | 6/6/1975 |
1039
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| Unless the defendant consents, a lawyer may not represent a plaintiff in a personal injury action when the defendant had earlier consulted with the lawyer's partner about a possible representation, even if the firm was never retained, no fees were charged and the partner remembers nothing about the substance of the consultation. Relying on LEO 186-B, the Bar reiterated its opposition to imposition of an automatic finance charge on unpaid bills. Such finance charges are permissible "if the client has agreed to the amount of the attorney's fee, is able to pay, but desires payment be deferred for his convenience," and if the client "agrees to the terms [of the finance charges], retains the right to prepayment without penalty, and is not accessed [sic] a finance charge on fees prior to the time that the fees are earned by the attorney." | 2/17/1988 |