Can a lawyer charge a sliding fee, scaled to the size of the claim, to collect a client's medical-payments benefits under the client's own auto insurance policy?

Plain-English summary

A lawyer charged $150 to collect up to $2,000 of a client's medical-payments benefits under the med-pay provisions of the client's liability policy, and $250 to collect med-pay of $2,000 or more. The inquiry asked whether charging this sliding fee, keyed to the amount collected, was ethical.

The opinion concluded it was not. It relied on RPC 35, which held that a lawyer may not charge a contingent fee to collect med-pay because most med-pay claims involve no risk that the insurer will refuse payment and no dispute about the amount due, so such fees are unreasonable under Rule 2.6(a) for lack of the risk element that justifies an elevated contingent fee. Applying that reasoning, the opinion held that unless there is a significant risk a med-pay claim will not be paid, it is unreasonable to charge a fee for collecting med-pay that is unrelated to the lawyer's cost of providing the service. Because the sliding fee was based on the amount of the claim rather than the cost of the work, it was unreasonable in violation of Rule 2.6(a).

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 Treat this page as historical context, not current guidance.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 lawyer charge a sliding fee to collect a client's med-pay benefits?

A: No. The opinion concluded that a med-pay collection fee scaled to the amount of the claim, rather than the cost of the work, is unreasonable under Rule 2.6(a).

Q: Why can't the fee scale with the size of the claim?

A: Because the risk that justifies a contingent or elevated fee is usually absent. The opinion reasoned, following RPC 35, that most med-pay claims carry no real risk of nonpayment, so a fee untied to the lawyer's cost is unreasonable.

Q: Could a higher fee ever be reasonable?

A: Only with real risk. The opinion framed the limit as turning on whether there is a significant risk the med-pay claim will not be paid; absent that, the fee must relate to the lawyer's cost of providing the service.

Background and rules framework

The opinion applied North Carolina's then-current Rule 2.6(a), the reasonable-fee provision corresponding to Model Rule 1.5(a), and built on its earlier opinion RPC 35, which barred contingent fees for collecting med-pay. It treated the absence of payment risk in typical med-pay claims as the reason a fee scaled to the claim, rather than to the work, is unreasonable.

Citations and references

Rules of Professional Conduct:

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

Other opinions cited:

• North Carolina RPC 35 (no contingent fee to collect med-pay)

See also

• NC Ethics Op. RPC 190: billing a client for reused work product
• NC Ethics Op. RPC 187: proprietary interest in a client's support payments
• NC Ethics Op. RPC 205: referral fees

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-174/

Original opinion text

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

Inquiry:

Lawyer B charges $150.00 to collect up to $2000.00 due to a client under the medical payments provisions (or "med-pay" provisions) of the client's liability insurance policy. He charges $250.00 to collect a client's med-pay if the med-pay is $2000.00 or more. Is it ethical for Lawyer B to charge a sliding fee for the collection of med-pay?

Opinion:

No. RPC 35 ruled that a lawyer may not charge a contingent fee to collect med-pay because with most med-pay claims there is no risk that the insurance company will refuse payment and there is no dispute as to the amount due to the claimant. Therefore, such contingent fees are unreasonable, in violation of Rule 2.6(a), because "[t]he element of risk which is necessary to justify the typically elevated contingent fee is not present." Unless there exists a significant risk that a med-pay claim will not be paid, it is unreasonable for a lawyer to charge a fee for collecting med-pay which is not related to the cost to the lawyer of providing the service. A sliding fee for collecting med-pay claims is based upon the amount of the claim and not upon the cost to Lawyer B to provide the service. Such a fee structure is unreasonable in violation of Rule 2.6(a).