The Client-Lawyer Relationship · 10-16% of the exam
5.1.1Fee reasonableness and communication (Rule 1.5(a)–(b))
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- Rule 1.5(a)–(b) — Fee reasonableness and communication
Why
A client rarely knows what legal work should cost, and is bargaining over price with the very person they are trusting to look after them. The fiduciary relationship can't be governed by contract alone.
Plain English
A lawyer may not charge or collect a fee that fails an objective reasonableness test, even with the client's written agreement. The scope and the basis or rate of the fee must be communicated before the representation begins or within a reasonable time after — preferably in writing, and not required at all for a regular client charged on the same basis as before. One of the eight factors carries its own limit: the likelihood that taking the matter will preclude other employment counts only if apparent to the client, so preclusion the client never knew about doesn't weigh.
Rule
Rule 1.5(a)–(b) — Fee reasonableness and communication
A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. Client consent does not override this standard.
Eight reasonableness factors: (1) time, labor, novelty, difficulty, and skill required to perform the service properly; (2) likelihood, if apparent to the client, that accepting the matter forecloses other employment; (3) fee customarily charged locally for similar services; (4) amount involved and results obtained; (5) time limitations imposed by the client or circumstances; (6) nature and length of the professional relationship; (7) experience, reputation, and ability of the lawyer; (8) whether the fee is fixed or contingent.
May bill actual cost of special services (computer research, secretarial overtime) or a reasonable amount agreed in advance; for third-party services, may not exceed actual cost.
May not charge for ordinary overhead.
No double-billing: charging two clients for the same block of time is independently a basis for discipline.
Rule 1.5(b): Before or within a reasonable time after commencing representation, communicate the scope and the basis or rate of fee and expenses, preferably in writing. Some estimate or basis must be provided; claiming it is impossible to estimate is insufficient. Exception: a regular client receiving services on the same basis need not receive a new communication.
Rule 1.5(b) + cmt [1]: any change in the basis or rate of the fee or expenses must be communicated to the client. Comment [1]: modification of an existing fee agreement is permissible under this Rule, but any modification should be reasonable under the circumstances at the time of the modification as well as communicated to and accepted by the client — and a rate increase the lawyer imposes mid-matter is not one the client has accepted.
A lawyer may not demand additional advance payments under threat of ceasing work when the client is at a bargaining disadvantage.
Rule 1.5 comment. A lawyer may accept property in payment for services. The exception: a lawyer may not accept a proprietary interest in the cause of action or subject matter of the litigation as a fee, except as Rule 1.8(i) allows — an attorney's lien authorized by law, and a reasonable contingent fee in a civil case (Chapter 10). A fee paid in property is usually a business transaction with the client, so Rule 1.8(a)'s DRAW (Disclosed in writing · Reasonable opportunity to seek counsel · Advised in writing to seek counsel · Written signed consent to essential terms and the lawyer's role) conditions apply.
Example 1
Ex. 1
Lena signed a $5,000 flat-fee agreement with Tom for a simple will. Mid-drafting, a complex trust structure added forty hours. Without consulting Tom, Lena mailed a supplemental $8,000 invoice. Tom paid. Lena violated Rule 1.5(a): added complexity does not release Lena from her duty to have the modification communicated to and accepted by Tom before she altered the fee. Circle the step Lena skipped: she sent the second invoice without going back to Tom.
Example 2
Ex. 2
Carla billed $16,000 for a corporate filing that took five hours. The client signed the engagement letter and paid without complaint, and Carla argued the agreement insulated her from discipline. It doesn't. Rule 1.5(a) operates independently of contract law; a signed agreement cannot cure an objectively unreasonable fee. Hand Carla back the signed engagement letter and ask what it insulates her from.
The exam will offer you a client's signed agreement as insulation from discipline. Client consent doesn't override Rule 1.5(a)'s independent reasonableness requirement.
The exam will offer you a favorable outcome as proof the fee was justified. A good result is one factor among eight; it doesn't independently validate a fee that failed on other grounds.
The exam will ask whether a fee agreement must be in writing. Among fee agreements, a contingent fee agreement must itself be in a writing signed by the client; an ordinary engagement letter is preferred but not required. Separate writing requirements apply to fee divisions (Rule 1.5(e), confirmed in writing) and to Rule 1.8 transactions — a business transaction with a client (Rule 1.8(a)(3)) and an aggregate settlement (Rule 1.8(g)) also require a writing signed by the client.
Tip
Questions · 2
Q 01ch05-e01
Question 1 of 2 · Rule 1.5(b)
Attorney agreed to prepare a family trust for Client for a flat fee of nine thousand dollars, and the engagement letter stated that figure as the entire charge for the work. Three weeks into drafting, Client's holdings turned out to include a closely held business that added roughly forty hours of tax analysis. Attorney did not telephone or write to Client about the extra work. Instead Attorney finished the trust and mailed a supplemental invoice for eleven thousand dollars, describing the added hours in detail. Client, who had already signed the deeds, paid the invoice in full without objecting. The total charge was within the range other lawyers in the area charge for trust work of that complexity. Is Attorney subject to discipline?
Keys 1 to 4 choose.