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IBA: Eliminate Surprises; Use Caution and Care When Changing Fee Agreements

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Bell James Bell

By James J. Bell

It’s a typical case and the potential client and you have agreed to a flat fee of $10,000 for the entire representation. However, as the case trudges through the system, the case requires more work than expected. You should get paid for the extra work, right?

You awkwardly approach the client, explain the situation and ask for an additional $5,000. There is a pause and then a smile creeps across your client’s face. “Of course you can have an additional $5000!” the client exclaims. After all, the client loves you. He agrees that the case has become a bear, that you are doing an outstanding job and that you have earned even more than the requested $5,000. In fact, he is willing to give you $6,000.

The client dives for his checkbook and hastily writes you a check. You memorialize the entire transaction in writing, it is signed by your client and the additional $6,000 is yours. Just to make sure there are no hard feelings, the client even gives you a hug. Everyone is happy. So there is no way you just violated the Rules of Professional Conduct, is there?

Unfortunately, you have violated the Rules if you failed to advise the client to seek the advice of independent legal counsel before agreeing to the new fee agreement and if you did not otherwise fulfill the requirements of Rule 1.8(a) pertaining to “business transactions” with your client. Some lawyers may be surprised to learn that changing a fee in the middle of a case is considered a “business transaction” by our Supreme Court and Disciplinary Commission. However, because you are about to endure this entire article, you will not be one of those “surprised lawyers.”

The first “surprising” aspect of Rule 1.8(a) is that it never specifically mentions anything about the modification of a fee agreement. That language is reserved for the Comment. Furthermore, the language pertaining to modifications of a fee agreement does not appear in the Comment to the Model Rules of Professional Conduct and therefore, it is unlikely you were taught this topic in law school or tested on this subject on the MPRE. Aren’t surprises wonderful?

The language of Comment states that 1.8(a) “applies when a lawyer seeks to renegotiate the terms of the fee arrangement with the client after representation begins in order to reach a new agreement that is more advantageous to the lawyer than the initial fee arrangement.” Comment to 1.8[1]. To be clear, Rule 1.8(a) “does not apply to ordinary initial fee arrangements between client and lawyer” because there is no established attorney-client relationship. Id. However, once a trusting relationship is established, the Comment to 1.8(a) serves to curb the “possibility of overreaching” by sophisticated lawyers. Id.

So if you still want to change the fee to one that is more advantageous to you, then you must follow 1.8(a) to the letter. This includes “advising the client in writing of the desirability of seeking… the advice of independent legal counsel” and giving the client “informed consent, in a writing signed by the client.” See Rule 1.8(a)(2) and (3) of the Indiana Rules of Professional Conduct. “Informed consent” is a term of art and it is defined in Rule 1.0(e).

Must your client actually get advice from another lawyer? No. The client just has to be advised in writing that it is a good idea to do so. If you are really doing a good job for your client and have truly earned the additional fee, there is no reason to fear that independent counsel will inadvertently interfere with your relationship with your client.

What if the new deal is not more “advantageous” to the lawyer? My advice is to follow 1.8(a) anyway. The practice of law is unpredictable. Cases that are certain to go to trial often settle on the courthouse steps. Difficult transactions can turn out to be simpler than anticipated. When the unexpected happens, it is difficult to look backwards and assess whether a new fee was more “advantageous” to the lawyer. If you follow 1.8(a) before the unexpected happens, you will not have to quibble about who got the better deal.

Unfortunately, if you care about your clients and your reputation, there are many ways to have sleepless nights while engaging in the practice of law. Avoiding the surprises and pitfalls of 1.8(a) is one way to avoid a few of those sleepless nights.•

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  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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