Ezel / Ethics Opinions / DBHAWAII
DBHAWAII January 28, 2004

Can a lawyer mark up the rate of a contract attorney billed to the client without telling the client?

Short answer: The opinion concluded that because a contract attorney is not an employee of the firm, the engaging lawyer must disclose, preferably in writing, that a contract attorney will work on the case as an independent contractor and the rate billed; absent disclosure and client consent, that rate must be the same as what the firm pays the contract attorney.

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This page answers the general question as of 2004. Ezel answers yours: whether it's allowed on your facts, under the current Hawaii Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2004
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
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Plain-English summary

The opinion addressed how a lawyer or firm may bill a client for the use of a contract attorney. Because a contract attorney is not an employee of the attorney or law firm, the engaging attorney or firm must disclose, preferably in writing, to an affected client both that a contract attorney will work on the client's case as an independent contractor and the rate at which the contract attorney will be billed to the client.

The opinion concluded that, absent disclosure and client consent, that rate shall be the same as the rate the attorney or firm pays to the contract attorney. It grounded the disclosure duty in HRPC 1.2 (consulting the client on the means of the representation), HRPC 1.4(b) (explaining a matter to permit informed decisions), HRPC 1.6(a) (not revealing information relating to the representation without client consent after consultation), and HRPC 1.5(b) (communicating the basis or rate of the fee, preferably in writing, where the lawyer has not regularly represented the client).

In practice

Under this opinion, a Hawaii lawyer who brings in a contract attorney must tell the affected client that the contract lawyer is an independent contractor and at what rate the work will be billed. The opinion holds that the billed rate may exceed what the firm pays the contract attorney only if the lawyer discloses the markup and the client consents; otherwise the client is billed at cost.

Common questions

Q: Must a Hawaii lawyer tell the client about using a contract attorney?

A: Yes. The opinion concluded that the engaging lawyer or firm must disclose, preferably in writing, that a contract attorney will work on the case as an independent contractor and the rate billed to the client.

Q: Can the firm bill the contract attorney's time at a markup?

A: Per the opinion, absent disclosure and client consent, the rate billed to the client must be the same as the rate the firm pays the contract attorney.

Q: Which rules support the disclosure duty?

A: The opinion cited HRPC 1.2, 1.4(b), 1.6(a), and 1.5(b).

Background and rules framework

The opinion interprets HRPC 1.2 and 1.4(b) (consulting and informing the client), HRPC 1.5(b) (communicating the basis or rate of the fee), and HRPC 1.6(a) (confidentiality), as applied to the engagement of a contract attorney who is not a firm employee. These correspond to Model Rules 1.2, 1.4, 1.5, and 1.6.

Citations and references

Rules of Professional Conduct (Hawaii; cf. Model Rules):

  • HRPC 1.2 (consulting the client on the means of representation) (cf. Model Rule 1.2)
  • HRPC 1.4(b) (explaining a matter for informed decisions) (cf. Model Rule 1.4)
  • HRPC 1.5(b) (communicating the basis or rate of the fee) (cf. Model Rule 1.5)
  • HRPC 1.6(a) (confidentiality of information) (cf. Model Rule 1.6)

See also

Source

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

Office of Disciplinary Counsel
Supreme Court, State of Hawaii
1132 Bishop Street, Suite 300
Honolulu, Hawai'i 96813
Telephone (808) 521-4591

FORMAL OPINION NO. 47
(Cost to Client for Use of a Contract Attorney)

Because a contract attorney is not an employee of the attorney or law firm, the engaging attorney or law firm must disclose, preferably in writing, to an affected client both that a contract attorney will work on the client's case as an independent contractor and the rate at which the contract attorney will be billed to the client. Such rate shall be the same as that paid by the attorney or law firm to the contract attorney, absent disclosure and client consent. See HRPC 1.2 (an attorney shall consult with the client as to the means by which the objectives of the representation are to be pursued); HRPC 1.4(b) (an attorney shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation); HRPC 1.6(a) (an attorney shall not reveal information relating to the representation unless the client consents after consultation); and HRPC 1.5(b) (when an attorney has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing). Adopted by Disciplinary Board at its December 18, 2003 meeting.

DATED: Honolulu, Hawai'i, January 28, 2004.

Charles T. Kleintop
Chairperson, Disciplinary Board

Carroll S. Taylor
Chairperson, Opinion Committee

Carole R. Richelieu
Chief Disciplinary Counsel

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