(Un)Reasonable Fees

Quick:  which is correct?

Vermont’s Rules of Professional Conduct specifically

  • A.   require reasonable fees;
  • B.   prohibit unreasonable fees.

It might be a distinction without a difference, but when crafting the #fiveforfriday quiz or trivia-style CLE events, there are only so many ways to ask the same questions over and over again.  So, it’s a question to which I’ve resorted often.

The answer?

B. prohibit unreasonable fees.

It’s Rule 1.5(a):

“A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.”

The rule goes on to list “[t]he factors to be considered in determining the reasonableness of a fee.”  Notably, those factors DO NOT include “whether the client agreed to it.”

Ultimately, the Vermont Supreme Court determines whether an attorney’s fee violates Rule 1.5.  As the Court explained in paragraph 16 of this decision, a lawyer charged with violating Rule 1.5 will not find safety in the harbor named “but the client signed a contract agreeing to my fee.”

  • “This argument demonstrates [the lawyer’s] failure to comprehend the effect of Vermont Rules of Professional Conduct 1.5(a);  lawyers, unlike some other service professionals, cannot charge unreasonable fees even if they are able to find clients who will pay whatever a lawyer’s contract demands.”

I found myself thinking of the Court’s statement earlier today when I read about the law firm that sought a $9.75 million “bonus fee” in a divorce case.  The Chicago Tribune and the ABA Journal reported the story.

Per the Chicago Tribune, the firm “sought the bonus fee under a 2015 retainer agreement with [the client], which allowed for additional fees beyond the hourly bill to cover such things as ‘time and labor required, the novelty and difficulty of the questions involved, the skills requisite to perform the legal services properly.’ ”

The judge denied the request.  She also referred the matter to Illinois disciplinary authorities after concluding that the fee was unreasonable.

I’ve not seen the court’s decision or the firm’s contract with its former client.  However, I was struck by the report that the fee agreement “allowed for additional fees beyond the hourly bill to cover such things as ‘time and labor required, the novelty and difficulty of the questions involved, the skills requisite to perform the legal services properly.’ ” (emphasis added).

In Vermont, the first factors listed among those to be considered in determining the reasonable of a fee appear in Rule 1.5(a)(1).  They are:

  • “‘time and labor required, the novelty and difficulty of the questions involved, the skills requisite to perform the legal services properly.”

It’s not clear to me that quoting the rule creates any safer of a harbor than the client’s signature on the fee agreement.  That is, a court will decide whether the amount billed is justifed by the time and labor, the novelty & difficulty, the skills required to perform the services, or any of the other factors listed in Rule 1.5(a).

For now, I think it’s important for Vermont lawyers to remember that, even when the client agrees to a fee, the fee remains subject to review for reasonableness.

Errrrrr, I mean, for unreasonableness.

Dollar Sign

 

 

 

 

 

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