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Rules of Professional Conduct

Read the Rules of Professional Conduct for Attorneys

….lawyers do not unfairly charge their clients. Rather, they simply do not dispense legal services efficiently.

James D. Fellers

American lawyer; president, American Bar Association, Los Angeles Times, May 30, 1975

American Bar Association’s Rules of Professional Conduct

Rule 1.5 Fees

The legal profession has indicated in its operative canons of ethics that the principal responsibility for the representation of people unable to afford legal fees ought to be placed on the profession itself .... The bar has a fundamental responsibility to undertake that which its own set of ethics imposes. And we do think it somewhat troublesome that a bar whose members' total gross income now substantially exceeds $20 billion a year needs to lobby for a wholly Federally funded program in order to exercise its own responsibility.

Michael J. Horowitz, American lawyer, New York Times, June 28, 1981

Attorneys have an absolute duty serve their clients and the ABA Model Rules of Professional Conduct (the “Model Rules”) which have been adopted by virtually all 50 states, require lawyers to serve their clients with competence (Rule 1.1), diligence (Rule 1.3) and loyalty. This means that lawyers must avoid, or at least disclose, ways in which the attorney’s interests may conflict with those of the client. See, generally, Model Rules 1.6-1.8.

The attorney-client relationship is also an enterprise, with the attorney typically entitled to demand payment from the client for services rendered. This relationship necessarily creates the potential for conflict. No matter how much the client may appreciate the attorney’s work, it would always be in the client’s best interests to avoid paying for it. Similarly, as much as the attorney may be motivated by genuine respect and admiration for the client, the attorney could always be paid more. Fortunately, the rules of professional ethics recognize this potential for conflict.

The very factors that make attorneys’ services valuable – their knowledge of the law and the specialized training that leads their clients to place trust in them – lead to special scrutiny of attorneys’ payment relationships. The attorney-client relationship is a fiduciary relationship and, just as in other fiduciary relationship, the attorney’s dealings with the beneficiary – the client – are subject to special legal scrutiny. As one Illinois court has put it:

The law places special obligations upon an attorney by virtue of the relationship between attorney and client. Those obligations are summed up and referred to generally as the fiduciary duty of the attorney. They permeate all phases of the relationship, including the contract for payment.

Neville v. Davinroy, 41 Ill.App.3d 706, 355 N.E.2d 86 (1976). In the modern era, the interplay between lawyers’ fiduciary duties and their interest in getting paid is rarely the subject of whimsical judicial oversight instead, it is embodied in ethical rules.

As seen below, the Model Rules (and their state counterparts) seek to avoid potential difficulties with rules that place broad limits on fee agreements and on how attorneys may pursue claims for payment, while also affording attorneys means of ensuring that clients satisfy their payment obligations. Those rules are not complicated, and should be understood by attorneys to ensure that they are not only paid for their efforts, but they also do not take more than they have deserve. The principal source of ethical restrictions on attorney-client fee arrangements is Model Rule 1.5, which provides, in full, as follows:

Client-Layer Relationship

(a) A lawyer shall 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) The scope of the representation and the basis or rate 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, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.

(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 clearly notify the client of 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.

(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 a fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;

(2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and

(3) the total fee is reasonable.

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