ABA Issues New Ethics Opinion on Changing Fees During Representation
WASHINGTON, Sept. 07, 2011— U.S. lawyers are free to modify existing fees during representation, but they must be reasonable as well as communicated and accepted by the client. A new ethics opinion, issued by an American Bar Association committee, provides guidance on changes in fees.
“Periodic, incremental increases in a lawyer’s regular hourly billing rates are generally permissible if such practice is communicated clearly to and accepted by the client at the commencement of the client-lawyer relationship and any periodic increases are reasonable under the circumstances,” said Formal Opinion 11-458, from the ABA Standing Committee on Ethics and Professional Responsibility. “Modifications sought by a lawyer that change the basic nature of a fee arrangement or significantly increase the lawyer’s compensation absent an unanticipated change in circumstances ordinarily will be unreasonable.”
Fee arrangements between clients and lawyers will sometimes need to change, and contracts generally outline these rules. However, even when clients have given consent, any modifications to the fee will be scrutinized once the client-lawyer relationship has developed and the client is being represented, the formal opinion said. As a result, fee changes will have to be justified and explained to the client.
Some of the reasons that a client might feel compelled to accept a lawyer’s proposal to modify an existing fee agreement even though he would not want to agree to it include: because it is burdensome to change lawyers during a representation; because the client might fear the lawyer’s resentment; or because the client might believe that the proposal is meant to promote his or her interests.
The opinion notes that, though the only one specific reference in the Model Rules of Professional Conduct regarding changes to fee arrangements is in Rule 1.5(b), which states that: “Any changes in the basis or rate of the fee or expenses shall also be communicated to the client,” it does not mean the lawyer is only obligated to provide notice.
In some cases, a client’s acceptance of a modified fee arrangement may be inferred from the circumstances, such as when lawyers who bill by the hour increase their rates incrementally from time to time.
“Such billing practices, if communicated clearly to clients at the commencement of the client-lawyer relationship, generally are permissible,” the opinion continued.
The ABA Standing Committee on Ethics and Professional Responsibility periodically issues ethics opinions for the guidance of lawyers, courts and the public interpreting and applying the ABA Model Rules of Professional Conduct to specific issues of legal practice and client-lawyer relationships. Opinions are dated to reflect when committee members voted, rather than the publication date.
With nearly 400,000 members, the American Bar Association is the world’s largest voluntary professional membership organization. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.
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