Can a lawyer insist on a contingent fee in a personal-injury case when the client could afford to pay an hourly rate?

Plain-English summary

The Committee was asked whether it is unethical for an attorney to insist on a contingent fee in a personal-injury matter where the client can well afford to pay an hourly rate. It first observed that an attorney cannot be compelled to accept particular employment except by court appointment (EC 2-26), though a lawyer should not lightly decline employment, and that a lawyer is never justified in charging an illegal or clearly excessive fee (DR 2-106(A)), which the Code defines by enumerated reasonableness factors.

Between those limits, the opinion noted, fixing a fee for an individual client is a sensitive area, given the potential conflict between lawyer and client and the need to maintain a proper professional appearance. The lawyer's first responsibility in setting a fee is the utmost candor: under EC 2-19 a lawyer should explain fully the reasons for the proposed fee arrangement to clients who may have little experience with legal fees, and under EC 2-20, although a lawyer generally should decline a contingent fee from a client able to pay a reasonable fixed fee, it is not necessarily improper, where justified by the circumstances, to enter into a contingent-fee contract in a civil case with a fully informed client who desires that arrangement.

The opinion concluded that for the client to be fully advised, the lawyer must explain fully, fairly, and with the utmost candor the possible fee arrangements, including the advantages and disadvantages of each, so the client can make a knowledgeable choice uninfluenced by the lawyer's personal preference. The lawyer also has a duty to advise candidly whether other lawyers in the community would proceed on a particular arrangement even if the lawyer himself is unwilling to. In sum, an attorney is never justified in charging a clearly excessive fee, should strive to charge a reasonable fee (EC 2-17), and must explain all the possible fee arrangements even though the attorney is only willing to undertake the matter on the arrangement he proposes.

Currency note

This opinion was issued in 1974, before the Alaska Bar Association's adoption of the Alaska Rules of Professional Conduct (it applies the former Code of Professional Responsibility) and before the 2009 revisions to those rules. The rules on fees and client communication have since been recodified. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific point mentioned here.

Common questions

Q: Can a lawyer propose a contingent fee to a client who could pay hourly?

A: The opinion concluded that, although a lawyer generally should decline a contingent fee from a client able to pay a reasonable fixed fee, proposing one is not necessarily improper where justified by the circumstances and the client is fully informed.

Q: What must the lawyer explain about fees?

A: The opinion concluded the lawyer must explain fully, fairly, and candidly all the possible fee arrangements and their advantages and disadvantages, so the client can choose knowledgeably and uninfluenced by the lawyer's preference.

Q: Is there a limit on the fee a lawyer can charge?

A: Yes. The opinion concluded a lawyer is never justified in charging an illegal or clearly excessive fee (DR 2-106(A)) and should strive to charge a reasonable fee.

Background and rules framework

The opinion applied the former Code's fee rules: the bar on illegal or clearly excessive fees (DR 2-106(A)), the reasonableness consideration (EC 2-17), the duty to explain a proposed fee (EC 2-19), and the guidance on contingent fees for clients able to pay fixed fees (EC 2-20), together with EC 2-26 on declining employment, subjects now treated by Model Rule 1.5 (fees) and Model Rule 1.4 (communication).

Citations and references

Rules of Professional Conduct (former Code; cf. Model Rules):

• DR 2-106(A) (no illegal or clearly excessive fee) (cf. Model Rule 1.5)
• EC 2-17, EC 2-19, EC 2-20 (reasonable fee; explaining the fee; contingent fees) (cf. Model Rules 1.5, 1.4)
• EC 2-26 (declining employment)

See also

• Alaska Ethics Op. 76-5: Explaining Fee Arrangements to Clients
• Alaska Ethics Op. 92-4: Contingent Fee for a Subrogation Case
• Alaska Ethics Op. 79-1: Charging Interest on Unpaid Bills

Source

• Landing page: https://alaskabar.org/ethics-discipline/ethics-opinions/adopted-ethics-opinions-chronological/
• Original PDF: https://alaskabar.org/wp-content/uploads/74-3.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Ethics Opinion No. 74-3
Propriety of a Contingent Fee Contact when Client Can Afford to Pay for Services At an Hourly Rate. The Committee has been asked the following question: "Is it unethical for an attorney to insist upon a contingent fee basis or retention in a personal injury situation where the client can well afford to pay for services at an hourly rate?" First, it should be observed that an attorney cannot be compelled to accept any particular employment against his wishes, except by court appointment. EC 2-26. The Code of Professional Responsibility, however, properly counsels that a lawyer should not lightly decline proffered employment. Second, it should also be observed that a lawyer is under no circumstances justified in charging a fee except as sanctioned by the Code of Professional Responsibility. The Code provides that: "A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee." DR 2-106(A). The Code goes on to define what constitutes a clearly excessive fee, and enumerates the factors to be considered in determining the reasonableness of a fee. Once these two extremes are passed, however, the lawyer is in a sensitive area of determining fees for individual clients. The sensitivity arises from not only the potential conflict of interest between the lawyer and his client in the fixing of the fee, but also from the necessity and desirability of maintaining a proper professional appearance for the lay public. The first responsibility of a lawyer in fixing a fee arrangement with his client is the utmost in candor. "A lawyer should be mindful that many persons who desire to employ him may have had little or no experience with fee charges of lawyers, and for this reason he should explain fully to such persons the reasons for the particular fee arrangement he proposes." EC 2-19. The Code goes on to observe: "Although a lawyer generally should decline to accept employment on a contingent fee basis by one who is able to pay a reasonable fixed fee, it is not necessarily improper for a lawyer, where justified by the particular circumstances of a case, to enter into a contingent fee contract in a civil case with any client 1

who, after being fully informed of all relevant factors, desires that arrangement." EC 2-20. In the Committee's opinion, for the client to be fully advised of all relevant factors with respect to a fee arrangement, it is necessary for the lawyer to explain fully, fairly and with the utmost candor to his client the possible fee arrangements in a particular case. This explanation should include both the advantages and disadvantages of each particular possible fee arrangement, and should be done in such a manner to insure the particular client can make a knowledgeable choice between the alternatives, uninfluenced by the lawyer's personal preference. The lawyer also has a duty to advise with candor as to whether or not other lawyers in the community would proceed on the basis of a particular fee arrangement, even though he, himself, is unwilling to undertake the matter on that basis. Thus, it is the Committee's opinion that under no circumstances is an attorney justified in charging a clearly excessive fee, as proscribed by DR 2106(A), and should always strive to charge a reasonable fee as set forth by EC 2-17. In the matter of establishing a fee arrangement, the lawyer has an ethical obligation to explain fully to the client, in such a fashion to assure that the client is able to make a knowledgeable judgment, all the possible fee arrangements in the matter, even though the attorney himself is only willing to undertake the matter under a particular fee arrangement which he proposes. Adopted by the Board of Governors on October 11, 1974. G:\Ds\COMM\Ethics\Ethics Opinions for CDROM\1974\73-3.doc

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