Bell/Gaerte: 3 things to know about fixed fees arrangements

July 31, 2013
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By James J. Bell and K. Michael Gaerte

Recently, businesses have been seeking “alternative fee arrangements” from the law firms they hire. Many of these alternative fee arrangements involve the use of “fixed fees,” which is a fee “an attorney charges for all legal services in a particular matter, or for a particular discrete component of legal services” Matter of Kendall, 804 N.E.2d 1152 at 1157 (Ind. 2004). While a fixed fee has many advantages, including predictability, a fixed fee carries some disciplinary risks. Before you enter into a fixed-fee agreement, here are three things you need to know.

1. A reasonable fee can become unreasonable over the course of a representation

Rule 1.5(a) of the Indiana Rules of Professional Conduct states that a fee must be “reasonable.” This subjective term guides a lawyer’s fee. Often, a fee that seems “reasonable” at the beginning of the case can take less work than what the lawyer and the client originally anticipated. In such a circumstance, can the attorney receive a windfall? Not necessarily.

In the Matter of Gerard, 634 N.E.2d 51 (Ind. 1994), an attorney contracted with an elderly woman to recover assets thought by the client to be lost or stolen. The attorney agreed to receive one-third of the recovered amount. There was no evidence that the attorney knew that the collection of his client’s assets would be a simple task when he entered into the fee agreement. However, as it turned out, the attorney easily located approximately $450,000 worth of assets and kept approximately $160,000 as a fee. Id. at 52.

The Indiana Supreme Court held that the attorney should not have retained such a fee “beyond the point in time when it should have been apparent to him that it was in excess of a reasonable fee.” Id. 52. Specifically, the court concluded that the attorney:

“did not renegotiate his fee after realizing his client’s entitlement to the certificates was not seriously in doubt, but instead … accepted the inflated contingency fee. Such action is fraudulent. … Implicit in [the] retention of the excessive fee was the false representation that the service he provided to [the client] roughly corresponded with the amount of compensation.” Gerard, 634 N.E.2d at 53.

Based on this, when an attorney enters into a fixed fee, the attorney should continue to evaluate the fee relative to the amount of work involved during and after the case to determine whether the fee is reasonable.

2. Don’t change the fee in the middle of the case without consulting Rule 1.8(a)

What if the fixed fee turns out to be unfair to the attorney? Can the attorney change the fee in the middle of the case? Yes, provided the attorney follows the guidance in Rule 1.8(a) and its comment.

Rule 1.8(a) pertains to business transactions with a client and never specifically mentions the modification of a fee agreement. The language regarding fee modification is reserved for the comment, which 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.

An attorney who wishes to change a fee to one that is more advantageous to the lawyer must “advis[e] the client in writing of the desirability of seeking … the advice of independent legal counsel” and give 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).

What if the attorney believes the new deal is not more “advantageous” to the lawyer? The attorney may want to follow 1.8(a) anyway. The practice of law is unpredictable. For example, cases that are certain to go to trial often settle on the courthouse steps. When the unexpected happens, it is difficult to look backward and assess whether a new fee was more advantageous to the attorney. If the attorney follows 1.8(a) before the unexpected happens, that attorney will not have to quibble about who got the better deal.

3. Fixed fees are almost always refundable

What if the attorney-client relationship terminates before the end of the case? What does the attorney do for a refund? When the attorney bills hourly, the refund calculation is easy. Just calculate your hours and refund the unearned advanced fees. However, in a fixed-fee scenario, the calculation can be tricky.

If the attorney has agreed to take a client from point A to point B and the attorney has not yet arrived at point B, then the attorney likely owes a refund. A more complicated question is how much of a refund should the attorney give? The answer lies largely in the “reasonableness” analysis contained in Rule 1.5. The refund amount may also be determined by how close the representation was to coming to a conclusion.

Moving forward: Evaluation is key

Fixed fees have many advantages. However, cases are unpredictable, and it is difficult to predict what a “reasonable” fee will be at the outset of a representation. Throughout a representation, an attorney should continue to evaluate whether a fee is reasonable. If the fee turns out to be unreasonable, a refund or a modification of the fee may be appropriate. However, if the agreement is to be modified, the attorney should pay close attention to the requirements of Rule 1.8.•


James J. Bell and K. Michael Gaerte are attorneys with Bingham Greenebaum Doll LLP. They assist lawyers and judges with professional liability and legal ethics issues. They also practice in criminal defense and are regular speakers on criminal defense and ethics topics. They can be reached via email at or The opinions expressed are those of the authors.


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  1. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  4. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  5. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.