Can an Illinois lawyer charge a contingent fee to find and recover a client's unclaimed property?

Plain-English summary

An attorney asks whether he may charge a contingent fee to represent a client in discovering and obtaining unclaimed property. The opinion treats this as two questions: whether a contingent fee is proper for such work, and whether the amount later collected is reasonable.

The opinion surveys Illinois Supreme Court disciplinary cases. In Teichner, Gerard, and Doyle, the Court held that taking a matter on a contingent basis is judged by what the lawyer knew when the engagement began: if the lawyer reasonably believed recovery was uncertain or contested, a contingent fee was appropriate even though recovery later proved quick and easy. But in each case the Court separately tested the reasonableness of the amount actually collected against the time, effort, difficulty, and risk involved, using the Rule 1.5(a) factors. The Court found the fees in Teichner ($7,000 on a routine insurance payout) and Gerard ($160,000 for essentially administrative work locating CDs) excessive and warranting discipline, while in Doyle a $34,000 fee was reasonable because it covered substantial additional services. The opinion notes that Gerard and Doyle questioned contingent fees outside adversarial, litigated matters resolved by settlement or judgment, where the lawyer "champions" the client's claim.

Applying this to the inquiry, the opinion concludes there is no per se prohibition and no blanket approval; propriety depends on the lawyer's knowledge at the outset of the existence, amount, and difficulty of locating the property and the risk of non-recovery. A contingency on a simple internet search or claim-form submission would be improper, while significant effort or sophisticated research with no certainty the property exists would likely justify it. Even when justified, the fee remains subject to the reasonableness standard and possible court reduction. The committee disagrees with reading Gerard and Doyle to confine contingent fees to litigated matters, noting (consistent with its prior Opinion 91-13) that contingent fees are permissible in non-litigation contexts though more closely scrutinized for reasonableness, and that allowing lawyers to do this work on contingency benefits clients who could otherwise only turn to asset-finding firms not bound by ethical fee limits.

In practice

The opinion holds that an Illinois lawyer may take a contingent fee to find and recover unclaimed property where, judged by what the lawyer knew at the outset, the existence, amount, or difficulty of recovery and the risk of non-recovery made a contingency appropriate, but that a contingency on trivial work (a simple search or claim form) is improper. It holds that even a properly contingent fee must satisfy the Rule 1.5(a) reasonableness factors and that a court may reduce an excessive amount, and it concludes contingent fees are not limited to litigated or adversarial matters, though non-litigation contingencies face closer reasonableness scrutiny.

Common questions

Q: Is a contingent fee for recovering unclaimed property allowed in Illinois?

A: There is no per se bar. The opinion holds whether it is proper depends on what the lawyer knew at the outset about the property's existence, amount, difficulty of recovery, and the risk of non-recovery.

Q: When would such a contingent fee be improper?

A: When the task was known to be trivial. The opinion states that taking a contingency on a simple internet search or the submission of a claim form would be improper.

Q: Does a valid contingent-fee agreement guarantee the lawyer can keep the full fee?

A: No. The opinion holds the amount remains subject to the Rule 1.5(a) reasonableness test and to court review, and may be reduced if the services actually performed make the fee excessive.

Q: Can contingent fees be used outside litigation?

A: Yes. The opinion concludes contingent fees are permissible in non-litigation contexts, consistent with ISBA Opinion 91-13, but their reasonableness is more closely scrutinized because such matters typically involve less uncertainty.

Background and rules framework

The opinion interprets Illinois Rule 1.5(a) (reasonableness of fees; Model Rule 1.5), which lists whether a fee is fixed or contingent among the reasonableness factors, and its Comment 3 confirming contingent fees are subject to the reasonableness standard. It applies Illinois Supreme Court disciplinary precedent (Teichner, Gerard, Doyle) and the committee's prior Opinion 91-13 on contingent fees in non-litigation matters.

Citations and references

Rules of Professional Conduct:

• Illinois RPC 1.5(a) (reasonableness of fees) / MR 1.5

Cases:

• In re Teichner, 104 Ill. 2d 150, 470 N.E.2d 972 (1984), reasonableness of contingent fee judged at outset and on amount collected
• In re Gerard, 132 Ill. 2d 507, 548 N.E.2d 1051 (1989), excessive contingent fee for administrative work
• In re Doyle, 144 Ill. 2d 451, 581 N.E.2d 669 (1991), contingent fee reasonable where covering substantial services
• Robert S. Pinzur, Ltd. v. The Hartford, 158 Ill. App. 3d 871, 511 N.E.2d 1281 (2d Dist. 1987), meaning of "recovered"

Other opinions cited:

• ISBA Opinion 91-13, contingent fees in non-litigation matters

See also

• ISBA Ethics Op. 12-02: Percentage-of-Estate Fee for Estate Planning
• NY State Bar Op. 390: Contingent Fee Tied to an Administrative Rate Application
• NY State Bar Op. 572: Medicolegal Consulting Service on a Contingent Fee

Source

• Landing page: https://www.isba.org/ethics/opinions/1220