When a new lawyer takes over a contingent-fee case from a prior lawyer, do the fee-splitting rules apply, and what must the client be told?

Plain-English summary

The opinion addresses a successor lawyer's obligations when a client discharges one contingent-fee lawyer and hires another from a different firm, and there is later a monetary recovery. A client may terminate a lawyer at any time, but a discharged contingent-fee lawyer may have a claim, often in quantum meruit, for the value of work performed, so the prior lawyer's potential interest in the eventual fee does not simply disappear.

The opinion's central distinction is that Rule 1.5(e), the fee-division rule, does not apply. It explains, quoting Comment [7], that "Rule 1.5(e) is limited to situations where two or more lawyers are working on a case simultaneously, not sequentially." When a client discharges one lawyer and retains another, there is no referring lawyer and no concurrent representation, so the 1.5(e) procedures, including the "joint responsibility" option, do not fit; requiring them would burden the client's right to discharge counsel.

Instead, the opinion grounds the successor's duties in Rule 1.5(a), (b), and (c). The fee must be reasonable, and because neither lawyer performed all the services needed to obtain the result, the opinion states that "a client cannot be exposed to more than one contingent fee when switching attorneys." The successor must communicate the basis of the fee and put a contingent-fee agreement in a signed writing; an agreement silent on the prior lawyer's potential claim "is inconsistent with these requirements of Rule 1.5(b) and (c)." The successor also "may not disburse fees claimed by [prior] counsel absent the client's consent."

The opinion notes related duties: if the successor negotiates with the prior lawyer over the fee on the client's behalf, that role implicates Rule 1.7 and requires the client's informed consent to the conflict; both lawyers remain bound by Rule 1.6 confidentiality in any fee dispute; and on recovery the successor must handle funds under Rule 1.15, holding any disputed portion in trust until the dispute is resolved by consent or a tribunal.

In practice

Under this opinion, a lawyer who takes over a contingent-fee case from a prior lawyer must tell the client, in the signed fee agreement, that part of any contingent fee may be owed to the prior lawyer and that switching lawyers will not increase the client's total fee. The opinion holds that this is not a Rule 1.5(e) division, that the client owes no more than one full contingent fee, and that the successor may not pay out the prior lawyer's claimed share without the client's consent. It holds that funds subject to a fee dispute must be kept in a client trust account under Rule 1.15 until the dispute is resolved, and that a successor who negotiates the prior lawyer's fee on the client's behalf must obtain the client's informed consent to that conflict under Rule 1.7.

Common questions

Q: I'm taking over a contingent-fee case from another firm. Do I have to follow the fee-splitting rule?

A: Per the opinion, no. Rule 1.5(e) covers lawyers working on a case at the same time, not a successor replacing a prior lawyer, so its procedures do not apply to the substitution.

Q: Will my client end up paying two contingent fees?

A: The opinion says no. A client cannot be exposed to more than one contingent fee when switching attorneys; the total fee, split between prior and successor counsel, must still be reasonable.

Q: What do I have to tell the client in writing?

A: The opinion says the signed contingent-fee agreement must disclose that a portion of any fee may be paid to the prior lawyer and that the total fee will not increase because of the change; an agreement silent on the prior lawyer's potential claim is inconsistent with Rule 1.5(b) and (c).

Q: Can I just pay the prior lawyer out of the recovery?

A: The opinion says not without the client's consent, and any disputed portion must be held in a client trust account under Rule 1.15 until the dispute is resolved by consent or a tribunal.

Background and rules framework

The opinion interprets Model Rule 1.5 (fees), including 1.5(a) (reasonableness), 1.5(b) and (c) (communication and the signed contingent-fee writing), and 1.5(e) (fee division, held inapplicable), with Comment [7]. It applies Model Rule 1.7 (conflicts where the successor negotiates the fee), Model Rule 1.15 (safekeeping funds and holding disputed amounts in trust), and Model Rule 1.16 (the client's right to discharge counsel).

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.5(a), (b), (c), (e) (fees; fee division), Comment [7]
• ABA Model Rule 1.7 (conflicts), 1.15 (safekeeping funds), 1.16 (discharge of counsel)

Other opinions cited:

• ABA Formal Op. 94-389 (1994): fee arrangements discussed before agreement

See also

• ABA Formal Op. 489: Notice When Lawyers Change Firms
• ABA Formal Op. 505: Fees Paid in Advance
• ABA Formal Op. 501: Solicitation Under Rule 7.3
• RI Ethics Advisory Panel Op. 2001-03: Escrowing Disputed Fees Owed to Predecessor Counsel

Source

• Landing page: ABA Formal Ethics Opinions index
• Original PDF: aba-formal-opinion-487.pdf