Can a firm with an hourly-rate fee contract raise its rates during the engagement without getting the client's consent to the increase?

Plain-English summary

A firm with an existing contract setting fees at its usual hourly rates asked whether it could unilaterally impose 5% to 10% rate increases without securing further client consent, including where a rate schedule was attached to the engagement agreement or where the contract gave the firm the right to increase fees annually.

The opinion declined to resolve the contract question, explaining that the inquiry sought a legal construction of an incompletely described fee contract, which is a question of law on which no opinion is expressed. It did address the ethical considerations. Quoting the comment to Rule 2.6, the opinion stated that an attorney may seek to renegotiate a fee agreement in light of changed circumstances or for other good cause, but may not abandon or threaten to abandon the client to cut the lawyer's losses or to coerce an additional higher fee. The opinion added that an attorney may not charge a clearly excessive fee under any circumstances, including on renegotiation, citing Rule 2.6(a). The second and third questions were answered by reference to Opinion #1.

Currency note

This opinion was issued in 1994, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.

Common questions

Q: Can a firm raise its hourly rates mid-engagement without new client consent?

A: The opinion declined to decide. It treated the enforceability of a unilateral increase under the fee contract as a question of law on which it expressed no opinion.

Q: When may a lawyer renegotiate a fee?

A: The opinion, quoting the comment to Rule 2.6, said a lawyer may seek to renegotiate a fee for changed circumstances or other good cause, but may not abandon or threaten to abandon the client to coerce a higher fee.

Q: Is there an outer limit on any renegotiated fee?

A: Yes. The opinion held that a lawyer may never charge a clearly excessive fee under any circumstances, including on renegotiation, under Rule 2.6(a).

Background and rules framework

The opinion interpreted North Carolina Rule 2.6, the fee provision corresponding to Model Rule 1.5, and its comment. It separated the contract-construction question (declined as a matter of law) from the ethical limits on fee renegotiation: good-cause renegotiation is permitted, coercion through threatened abandonment is not, and a clearly excessive fee is barred under Rule 2.6(a).

Citations and references

Rules of Professional Conduct:

• MR 1.5 (fees; reasonableness)
• North Carolina Rule 2.6, Rule 2.6(a)

See also

• NC Ethics Op. RPC 174: fees for the collection of med-pay
• NC Ethics Op. RPC 190: billing for reused work product
• NC Ethics Op. RPC 187: proprietary interest in a domestic client's support payments

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-166/

Original opinion text

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

Inquiry #1:

Where Firm A has an existing contract with a client specifying that fees will be based on usual hourly rates, is it ethical for Firm A to unilaterally impose increases to its hourly rates (ranging from 5% to 10%) without securing further consent from its client regarding these increases?

Opinion #1:

The inquiry appears to ask for a legal construction of a fee contract with a client and only provides an incomplete description of the contract. To the extent that a legal construction of a fee contract is sought, this is a question of law upon which no opinion is expressed.

There are ethical considerations raised by the inquiry. As noted in the comment to Rule 2.6 of the Rules of Professional Conduct, "[a]n attorney may seek to renegotiate his fee agreement in light of changed circumstances or for other good cause, but he may not abandon or threaten to abandon his client to cut his losses or to coerce an additional higher fee." Moreover, an attorney may not charge a clearly excessive fee under any circumstances, including renegotiation of his fee. Rule 2.6(a).

Inquiry #2:

If a schedule for hourly rates for each attorney has been attached to the original engagement agreement (which includes an agreement as to fees), would it then be ethical for Firm A to impose a unilateral increase to the hourly rates of those attorneys listed on the schedule without securing further consent from the client?

Opinion #2:

See Opinion #1 above.

Inquiry #3:

Is the answer to either (1) or (2) affected by a provision in the fee contract that specifically gives Firm A the right to increase fees annually?

Opinion #3:

See Opinion #1 above.