Back to the Basics: Contingent Fees

Sometimes a column must get back to the basics and discuss legal ethics without reference to music, tv, movies or sports.

As a result of a few seminars I’ve taught over the past few weeks, I’d like to get back to the basics of contingent fees.

Rule 1.5(a) prohibits lawyers from agreeing to, charging, or collecting unreasonable fees and expenses.  Contingent fees, and expenses in contingent fee cases, are subject to the rule.

In addition, Rule 1.5(c) states that a contingent fee agreement:

  • MUST be in a writing that is signed by the client;
  • MUST state the method by which the fee is to be determined, including:
    • the percentage that will accrue to the lawyer in the event of settlement, trial or appeal;
    • the litigation & other expenses that will be deducted from any recovery; and,
    • whether such expenses will be deducted before or after the contingent fee is calculated.
  • 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 the conclusion of a contingent fee matter, a lawyer:

  • MUST provide the client with a written statement showing the outcome of the matter and, if there is a recovery, the remittance to the client and the method by which it was determined.

Lawyers are NOT allowed to agree to, charge, or collect:

  • a contingent fee in a criminal case;
  • a fee that is contingent upon the securing of a divorce; or,
  • a fee that is contingent upon the amount of spousal maintenance or support, or property settlement in lieu thereof, in a domestic relations matter.

However, lawyers may use contingent fees in domestic relations matters that involve the collection of:

  • spousal maintenance or support due AFTER a final judgment has been entered; or,
  • child support and maintenance arrearages due AFTER a final judgment has been entered, provided that the court approves the reasonableness of the fee agreement.

In other words, contingent fees are okay in some POST-JUDGMENT divorce & custody matters.

So, there you have it.  The basics of contingent fees.

Of course, speaking of “back to the basics,” this is not one of those columns sans reference to music, tv, movies or sports.  Who could forget the Barden Bellas and their version of Back to the Basics in Pitch Perfect 2?

Pitch Perfect 2

 

 

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