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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. by the time anybody gets to such files they will probably have been totally vacuumed anyways. they're pros at this at universities. anything to protect their incomes. Still, a laudable attempt. Let's go for throat though: how about the idea of unionizing football college football players so they can get a fair shake for their work? then if one of the players is a pain in the neck cut them loose instead of protecting them. if that kills the big programs, great, what do they have to do with learning anyways? nada. just another way for universities to rake in the billions even as they skate from paying taxes with their bogus "nonprofit" status.

  2. Um the affidavit from the lawyer is admissible, competent evidence of reasonableness itself. And anybody who had done law work in small claims court would not have blinked at that modest fee. Where do judges come up with this stuff? Somebody is showing a lack of experience and it wasn't the lawyers

  3. My children were taken away a year ago due to drugs, and u struggled to get things on track, and now that I have been passing drug screens for almost 6 months now and not missing visits they have already filed to take my rights away. I need help.....I can't loose my babies. Plz feel free to call if u can help. Sarah at 765-865-7589

  4. Females now rule over every appellate court in Indiana, and from the federal southern district, as well as at the head of many judicial agencies. Give me a break, ladies! Can we men organize guy-only clubs to tell our sob stories about being too sexy for our shirts and not being picked for appellate court openings? Nope, that would be sexist! Ah modernity, such a ball of confusion. https://www.youtube.com/watch?v=QmRsWdK0PRI

  5. LOL thanks Jennifer, thanks to me for reading, but not reading closely enough! I thought about it after posting and realized such is just what was reported. My bad. NOW ... how about reporting who the attorneys were raking in the Purdue alum dollars?

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