Drafting of ethical agreements on legal fees in family law cases (2023)

Clarity and attention to detail are essential in drafting an ethical attorney fee agreement so that the client understands all rights and obligations.


by Evan Marks and Caroline West,
family lawyer
Keep your fee agreements ethical before accepting clients. According to current law, the old rule of multiplying the hourly rate by the number of hours technically reasonably used applies. However, especially in family law cases, appellate courts examine the size of fees in relation to the scope of the issues involved, as well as the tendency to call and criticize lawyers.family matterThis suggests that we may need to start rethinking the way we calculate our fees. Some lawyers don't like to think about this. But it seems we should at least have a conversation if there are alternatives that ensure we get paid and meet our customers' needs. With this in mind, here are our "seven commandments" for writing ethical fee agreements in family law.

1. Don't accept a case where you can't justify your fees

It is unethical to accept that the seriousness of the case, the complexity of the problem or the specific needs of a potential client do not require the expertise of a lawyer at an hourly rate. Rule 4-1.5(a) prohibits attorneys from charging "manifestly excessive" fees[1], and lays out detailed criteria for determining "clearly excessive." Lawyers who practice family law know that this is not a simple calculation, but one that we all need to be aware of. Contracts to pay "manifestly excessive" fees are unenforceable under 4-1.5(d).

2. Fee agreements are not set in stone

(Video) Fee Agreements - Ethics & Reasonableness

A consequence of the above rule is that in most family cases, determinations of reasonable fees are dynamic, not static, if attorney fees are calculated by multiplying the hourly rate by the number of hours spent. If you encounter a situation where the fee amount begins to seem "manifestly excessive" under the criteria of Rule 4-1.5(a), you should consider ways to modify the fee agreement so that you and your client can agree to it. A rule comment stated that "[a] lawyer should discuss alternative billing methods with the client, as appropriate. If events occur during the course of the representation that would make the above estimate materially inaccurate, the client should be offered a factual review, get family attorneys will provide an estimate because of the difficulty in making an accurate estimate.In fact, the amount of time that is reasonably invested will vary with personality andthe conduct of the parties, whether discovery was actually made and whether the parties were able to settle or required a trial. If you don't provide an estimate, you have no moral obligation to update it. However, you should monitor whether the amount you believe is being charged is significantly too high and be prepared to change it if this happens.

3. Get your fee agreement in writing

It is unethical not to communicate clearly with your client about how your rates are set, and the best way to ensure you have communicated clearly is to put it in writing. Although Rule 4-1.5(e) technically states that fee agreements "preferably" be in writing, there is no good reason for an oral fee agreement in a family law case. In the rare event that it is not possible to enter into a written agreement before the start of the performance, any oral agreement should be in writing as soon as possible. The nonrefundable retention fee, sometimes called the "minimum fee," must be in writing.

4. Get your client to sign a fee agreement

A comment to Rule 4-1.5(e) states that the client is not required to sign a fee agreement. As discussed above, prudence and good judgment would say, "Do it anyway." Although our code of ethics does not require it, there is no better way to show that your customer has read the agreement. And there is no "falling" side. If nothing else, it conveys to the client the seriousness of the commitment.

(Video) Ethical Issues in Family Law

5. Contingency fees (mostly) are not allowed in family law matters

Rule 4-1.5(e)(3) states: “Attorneys shall not settle, collect, or receive: (A) fees in domestic affairs cases the payment or amount of which is contingent upon obtaining a divorce orthe amount of alimony or alimony,or location of property instead. . . "The 'much' of the above reference comes from a comment on the rule that contingency fees may be levied "for post-judgment balances owed under support, alimony or other financial orders because such contracts do not involve the same policy problems. "Question: What if every other issue you've dealt with in family law practice amounts to getting a post-trial support percentage or equitable share that doesn't involve the same policy issues?"

6. Client secrets become complicated in the computer age

Rule 4-1.6(a) limits a lawyer's ability to "disclose" information about representation without the client's informed consent, except in limited circumstances. This used to mean not discussing files with anyone outside the office, not opening files in collaborative areas, and not gossiping about clients at the community water cooler. But what does it mean to "disclose" information in the age of email, digital records and cloud computing? We know that most of these technologies have passwords, encryption and other systems in place to keep them as confidential as possible. But given the limitations of these systems, is our customers' information as secure as ethically required? The answer is probably no. This has resulted in certain practices requiring informed consent in fee agreements. Depending on your office system, you must consider whether the following terms should be included in your fee agreement:

  • The Client expressly agrees to receive and respond to communications from his office at a private and secure email address (ie not accessible to his spouse) and confirms the exact email address at which he is authorized to communicate. If certain forms of communication (i.e. invoices) must be delivered per post or on paper, this must be clearly stated. Unless your client is self-employed and therefore an employer, communicating with your client via their work email address, which may be owned by the employer, is discouraged.
  • Customers expressly agree to destroy paper originals as part of a paperless practice where you scan and destroy some documents that arrive at your office in paper format. One option is to state that you only store digital files and offer to have the originals sent to the customer.
  • Customer expressly agrees to use any technology that significantly compromises confidentiality, including document storage on certain smartphones, cloud computing services, and digital recording services.

We are in an era where the way we communicate has changed drastically and therefore the way we communicate has also changed drastically. Given that “[a] lawyer is implicitly authorized to disclose information about a client when relevant in the course of the representation, except at the order of the client… to limit that authority to[2]The above informed consent clause serves as an invitation to a potentially ethical (but certainly ethically relevant) discussion with our customers about how they will limit our use of new technology to limit their risk of breach of confidentiality. the purpose of educating ourselves and our customers, all the better.

(Video) Lawyer Fees & Legal Ethics pt. 1 - Model Rule 1.5

7. Keep the customer's mind off the sand

Sometimes clients see closing the case as an opportunity to renegotiate fee agreements for past due balances. To prevent this, your rate agreement should include a provision requiring customers to read all bills and notify your company in writing of any suspected billing issues within a specified reasonable time, and additional provisions should be made in the event of failure to do so. with regard to the correctness, justice and accuracy of the law. By requiring the client to bring these matters to his attention in a timely manner, this clause will protect him from claims that the client did not know how expensive litigation was and that unnecessary or unauthorized work was done.

In conclusion, family lawyers should always remember that there are three parties to every fee agreement: your firm, the client and the court. While in most cases a court will never see your fee agreement, you can be sure that it will be reviewed if a dispute arises. Clarity and attention to detail are essential for customers to be fully aware of all their rights, responsibilities and obligations. The reasonableness of the amount charged is also a factor. A well-drafted ethical fee agreement can serve as your road map to earning well-deserved fees and will ensure a satisfied client who will refer you for years to come.

__________________________________________________________________________________

Evan R. Marks og Carolyn W. WestCo-practice family law at an "AV" rated law firmMarks & West, Pensilvania.in Miami, Florida. Mr. Marks has been board certified by the Florida Bar Association in matrimonial and family law since 1995 and served as chair of the Florida Bar Association Family Law Section in 2003-04. Mr. Marks is a frequent speaker on family law and professional ethics.

(Video) Attorney Fee Agreements ~ Gary Finklea

Reprinted with permission

________________________________________________________________________________
[2]ABA Model Rule 1.5 uses the term "unreasonable fee" instead of "manifestly excessive" as provided in the Florida Rule

[2] Comment to Rule 4-1.6, Rules of the Florida Bar.

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(Video) Legal Fees Explained

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FAQs

What factors determine the reasonableness of a fee? ›

Factors to be considered as guides 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.

What is a legal fee agreement? ›

An hourly fee agreement is a contract between a client and the law firm wherein attorneys and para-professionals charge the client by the hour for legal services. Each attorney, paralegal, or legal assistant who works on a case records his or her time for each task.

What can an attorney charge as cost in a contingency fee arrangement with his client in Texas? ›

Contingency fee arrangements are most common in personal injury cases and the amount is a percentage of the settlement in the case. A typical percentage is anywhere between 33.33% and 40%. Usually, a lawyer will charge a fee of 33.33% pre-suit (before trial) and 40% if the case goes into litigation.

What factors are considered when an attorney or law firm determines what legal fees to charge a client? ›

The attorney's reputation; The type of fee arrangement – whether it is fixed or contingent; The client or case's time limitations; and. The time and skill required to competently represent the client.

Why are contingency fees unethical? ›

Additionally, the rules of professional ethics prohibit attorneys from working on contingency in family law or criminal law cases, because this would appear to condone or even encourage divorce or criminal activity.

What is an unconscionable fee? ›

Unconscionable fees means charges or bills for treatment submitted for services performed that are unreasonable charges for those services as compared to the usual and customary charges by a chiropractor or by a health care provider other than a chiropractor for the same or similar services in the locality where the ...

What do most lawyers charge for a contingency fee? ›

That said, the most common lawyer contingency fee average ends up being 33%, or ⅓ of the total earnings of a case, but can go up to 40% (in some jurisdictions) as the complexity and risk involved in taking the case increases.

How do defendants usually pay attorneys on the basis of a contingent fee agreement? ›

In a contingent fee arrangement, the lawyer agrees to accept a fixed percentage (often one-third to 40 percent) of the recovery, which is the amount finally paid to the client. If you win the case, the lawyer's fee comes out of the money awarded to you.

What does a contingency fee arrangement mean? ›

Contingency Fee. The term “contingency fee” refers to a type of fee arrangement in a case in which an attorney or firm agrees that the payment of legal fees will be contingent upon the successful outcome of the case.

Are legal fees different than costs? ›

Attorney fees are like wages; they are a charge for the time and labor of attorneys and their staff, such as paralegals. Fees do not include certain out-of-pocket costs (case costs) that are incurred as part of a legal case. Case costs are expenses on third parties — i.e., people other than the lawyers.

Are legal fees included in cost basis? ›

Your cost basis typically includes: The original investment you made in the property minus the value of the land on which it sits. Certain items like legal, abstract or recording fees incurred in connection with the property.

Are legal fees an expense or liability? ›

Legal fees that are deductible

Fees that are ordinary and necessary expenses directly related to operating your business (should be entered on Form 1040, Schedule C). Fees for resolving tax issues, advice or preparation of tax forms related to your business (should be included on Form 1040, Schedule C).

What must be in an enforceable fee agreement? ›

To have an enforceable fee-sharing agreement, you must meet each of the following requirements: Written fee agreement between the lawyers. Have all the lawyers receiving a fee sign the client's retainer agreement or other writing acknowledging the fee division. Written disclosure to client.

What is the fee agreement between a lawyer and a plaintiff called? ›

Primary tabs. A contingency fee is a form of payment to a lawyer for their legal services. In contrast to a fixed hourly fee, in a contingent fee arrangement lawyers receive a percentage of the monetary amount that their client receives when they win or settle the case.

Are legal fees 1099? ›

Payments to lawyers will be reported on a tax Form 1099-NEC or Form 1099-MISC even if they are an Limited Liability Company taxed as a corporation (legal services are the exception to the general rule to not report payments made to a corporation).

What is the typical percentage of a contingency fee? ›

Contingency Fee Percentages

Contingent fees can vary from attorney to attorney and case to case. The average cost of a contingency is between 30% – 60% depending upon the number of possible wins for a client, the strengths of the case, or other factors. Contingencies fees can be up to 50% and 15% in large cases.

In which situation is a contingent fee not allowable? ›

The following is an example of a circumstance where a contingent fee would not be permitted: 1. Preparing an amended federal or state income tax return for a client claiming a refund of taxes because a deduction was inadvertently omitted from the return originally filed.

Are contingent fees ethical? ›

It is ethical to charge contingent fees as long as the fee is appropriate and reasonable and the client has been fully informed of the availability of alternative billing arrangements.

What are the three elements of an unconscionable contract? ›

A contract can be unconscionable in any one of the following circumstances: Undue influence. Duress. Unequal bargaining power.

What are the two types of unconscionability in contracts? ›

Two general types of potentially unconscionable provisions are exculpatory clauses and disclaimers / limitations of warranty liability. Exculpatory clauses are clauses which release a party from liability for injuries that he causes.

What are the 3 points to define unconscionable conduct? ›

The three elements of unconscionable conduct are as follows: Element 1 – There must be a special disadvantage between the parties. Element 2 – There must be an unconscientious taking of that advantage. Element 3 – The defendant is unable to establish that the transaction was fair, just, and reasonable.

What are the pros to contingent fees? ›

Advantages of Using Contingency Fees

Contingency fees are especially helpful because they allow for quality legal representation in the many instances where someone has been injured due to another person's negligence but cannot currently financially cover attorney costs.

Is the process of obtaining information from an opposing party before trial? ›

To begin preparing for trial, both sides engage in discovery . This is the formal process of exchanging information between the parties about the witnesses and evidence they ll present at trial. Discovery enables the parties to know before the trial begins what evidence may be presented.

Which of the following is a disadvantage of a contingency fee agreement? ›

The main problem with a contingency fee agreement is that it could cost the plaintiff more than standard hourly rates for a lawyer if the case settles quickly.

What type of case may be taken on a contingency basis? ›

As such, contingency fees are only used in cases where money is being claimed: personal injury, medical malpractice, wrongful death, workers' compensation, disability, and some employment law claims, for example.

What are examples of contingent fees? ›

A contingent fee is a form of compensation that is only paid when a specific objective has been achieved. For example, a contingent fee arrangement could pay an accountant $50,000 when the business plan he constructs is used in the successful sale of securities by a client.

What is the definition of a reasonable fee? ›

Reasonable fees means transaction, rental, or other periodic charges which are directly related to the cost of furnishing a particular service, and which are proportionate to actual usage of the service by all persons using the service competing in the same market area and may include a return on invested capital and ...

What are reasonable and necessary costs? ›

Reasonable and necessary costs means expenditures that, in nature and amount, do not exceed what an ordinarily prudent person would incur in the conduct of a competitive business.

What does determine fees mean? ›

Determination Fee means the applicable fixed fee for undertaking a Determination as referred to at Paragraph 2.12 and as specified in Table 1 of Annex 2 (Cases, Fixed Fees and Hourly Rates (Controlled Work);

What are reasonable attorney fees in California? ›

The average hourly rate for a lawyer in California is between $90 and $483 per hour.

What are excessive fees? ›

WHAT IS EXCESSIVE FEE LITIGATION? When an excessive fee claim is filed, plan participants allege that plan fiduciaries failed in their duty to maintain appropriate documentation, pay only reasonable management fees, and ensure optimal investment performance.

What are reasonable expenses examples? ›

Reasonable Expenses will include costs of fees, meals, lodging and transportation. These are to be itemized in the request for reimbursement.

What is reasonable value in law? ›

Reasonable value. Reasonable value means that figure which represents the amount a reputable and qualified appraiser, unaffected by personal interest, bias, or prejudice, would recommend to a prospective purchaser as a proper price or cost in the light of prevailing conditions.

What 2 types of costs are never relevant to a decision? ›

Two broad categories of costs are never relevant in decisions: 1. Sunk costs. 2. Future costs that do not differ between alternatives.

What are the four types of costs? ›

Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

What are the three basic costs? ›

There are three major types of expenses we all pay: fixed, variable, and periodic.

What is your fee structure? ›

A fee structure is a chart or list highlighting the rates on various business services or activities. A fee structure lets customers or clients know what to expect when working with a particular business.

What is the difference between a fee and a charge? ›

A fee is a compensantion paid for an act or service performed by someone. A charge is an amount paid for other items. For example, if you rent a car, you could have to pay a fueling fee for the act of taking the car to the station and fueling it, and a fuel charge for the actual fuel used.

What are the characteristics of a fee? ›

A fee is a fixed price charged for a specific service. Fees are applied in a variety of ways such as costs, charges, commissions, and penalties. Fees are most commonly found in heavily transactional services and are paid in lieu of a wage or salary.

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