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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. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  2. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  3. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

  4. Diversity is important, but with some limitations. For instance, diversity of experience is a great thing that can be very helpful in certain jobs or roles. Diversity of skin color is never important, ever, under any circumstance. To think that skin color changes one single thing about a person is patently racist and offensive. Likewise, diversity of values is useless. Some values are better than others. In the case of a supreme court justice, I actually think diversity is unimportant. The justices are not to impose their own beliefs on rulings, but need to apply the law to the facts in an objective manner.

  5. Have been seeing this wonderful physician for a few years and was one of his patients who told him about what we were being told at CVS. Multiple ones. This was a witch hunt and they shold be ashamed of how patients were treated. Most of all, CVS should be ashamed for what they put this physician through. So thankful he fought back. His office is no "pill mill'. He does drug testing multiple times a year and sees patients a minimum of four times a year.

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