Can a lawyer charge a contingent fee for non-litigation work like a securities registration, combine it with hourly fees, and advertise it?

Plain-English summary

A corporate and securities lawyer was asked by a client to register a securities offering for a fee set as a percentage of the securities, contingent on successful registration. The inquiry asked whether the Rules prohibit such a contingent fee, whether they prohibit combining hourly and contingent fees, and whether they prohibit advertising the arrangement.

The committee noted the Rules' Preamble defines a contingent fee agreement as one where compensation is contingent in whole or part on successful completion of the matter, so the proposed fee qualifies. Rule 1.5(c) permits contingent fees and requires the agreement to be in writing, state the method of determining the fee and the handling of expenses, and provide a written statement of disbursements at the conclusion. The Rules prohibit contingent fees in domestic-relations and criminal-defense matters under Rule 1.5(d), and where prohibited by other law under Rule 1.5(c), and Rule 1.5(a) requires fees to be reasonable. The committee also directed the attorney to Rule 1.8, because he would receive actual securities (a proprietary interest), while noting that the comments to ABA Model Rule 1.8 confirm contingent fees may be used in non-litigation contexts, though such matters may invite closer scrutiny of reasonableness because they involve less uncertainty than litigation.

The committee concluded it would not be improper to undertake the representation under the contingent arrangement, provided it violates no other law such as federal and Illinois securities regulations, and that a combination of hourly and contingent fees is likewise permissible. Because the arrangement is proper, the attorney may advertise it if the advertising and communication Rules are followed: Rule 7.1 bars false or misleading communications (for example, implying the attorney could assure successful registration), and Rule 7.2 governs advertising of services.

Currency note

This opinion was issued in 1991, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (Rules 1.5, 1.8, 7.1, and 7.2), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer charge a contingent fee for non-litigation work like a securities registration?

A: The opinion concluded it is not improper if the arrangement meets Rule 1.5(c)'s writing and disclosure requirements and violates no other law, such as securities regulations.

Q: Can a lawyer combine hourly and contingent fees?

A: Yes. The opinion concluded there is no prohibition against a combination of hourly and contingent fees.

Q: Are contingent fees barred in any matters?

A: The opinion noted Rule 1.5(d) bars contingent fees in domestic-relations and criminal-defense matters, and Rule 1.5(c) bars them where prohibited by other law.

Q: Can the lawyer advertise a contingent-fee arrangement?

A: The opinion concluded the lawyer may, within Rules 7.1 and 7.2, but may not, for example, imply that he could assure the successful registration of a securities offering.

Background and rules framework

The opinion applied Rule 1.5(a), (c), and (d) (reasonable fees, contingent-fee requirements, and prohibited matters), Rule 1.8 (a lawyer's proprietary interest, here actual securities), and Rules 7.1 and 7.2 (advertising and communications) to a contingent fee for non-litigation securities work (Model Rules 1.5, 1.8, 7.1, 7.2).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5 (fees; contingent fees) / Illinois Rule 1.5(a), (c), (d)
• Model Rule 1.8 (specific conflicts; proprietary interest) / Illinois Rule 1.8
• Model Rules 7.1 and 7.2 (communications and advertising) / Illinois Rules 7.1, 7.2

Cases:

• Todd v. City of Visalia, 254 Cal. App. 2d 679, 62 Cal. Rptr. 485 (1967).
• Brillhart v. Hudson, 169 Colo. 329, 455 P.2d 878 (1969).

See also

• ISBA Ethics Op. 12-02: Fee for Estate Planning as a Percentage of the Estate
• ISBA Ethics Op. 91-06: Billing a Client for Secretarial Overtime
• ISBA Ethics Op. 90-37: Solicitation via Written Communication

Source

• Landing page: https://www.isba.org/ethics/opinions/9113