Do government regulations that cap attorneys' fees, like the Veterans Administration's limits on VA-guaranteed mortgage closings, conflict with the rule that lawyers may not let others fix their fees?

Plain-English summary

The Committee had stated in its Opinions 7 and 13 that it was improper for attorneys to permit others to fix their fees. The inquiry asked whether the Veterans Administration regulation limiting fees for the closing of VA-guaranteed mortgage loans conflicted with those opinions.

The Committee explained that Canon 12 set out guides for determining a fee, and that Canon 35 provided that a lawyer's professional services should not be controlled or exploited by any lay agency. It observed that both federal and state governments had in many instances preempted lawyers' right to fix their own fees, establishing fee schedules or maximum amounts. As the inquirer noted, the VA regulations controlled the maximum fees for VA-guaranteed mortgage loans.

The Committee held that controlling attorneys' fees in this manner had never been deemed improper, pointing out that attorneys' fees in workers' compensation cases had long been fixed by statute in New Jersey and elsewhere without any doubt that the Legislature could do so. The VA regulations fell into the same category. The Committee concluded that its prior opinions were not intended to apply where attorneys' fees are fixed or limited by federal or state law, or by regulations promulgated under statutory authority.

Currency note

This opinion was issued in March 1964, before New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), and well before the 1984 Rules of Professional Conduct and all later revisions. It applied Canons 12 and 35 of the former Canons of Professional Ethics; fees are now governed by RPC 1.5. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, regulation, or fee limit mentioned here.

Common questions

Q: Did the VA fee limits conflict with the rule against others fixing a lawyer's fees?

A: No. The Committee held that its prior opinions did not apply where fees are fixed or limited by federal or state law, or by regulations issued under statutory authority.

Q: Why were government fee schedules treated differently from a lay agency setting fees?

A: The Committee reasoned that governments had long preempted the right to fix fees in statutory matters, citing workers' compensation fees fixed by statute, and that such control had never been deemed improper.

Background and rules framework

The opinion applied Canons 12 (fee guides) and 35 (no control of professional services by a lay agency) of the former Canons of Professional Ethics, distinguishing government fee regulation under statutory authority from improper control by a private party. Fee questions are now governed by RPC 1.5.

Citations and references

Rules of Professional Conduct (as in effect at the time):

• Canon of Professional Ethics 12 (fixing the amount of the fee)
• Canon of Professional Ethics 35 (control of professional services by a lay agency)

Statutes:

• N.J.S.A. 34:15-64 (workers' compensation attorney fees fixed by statute)
• Code of Federal Regulations par. 36.4312 (Veterans Administration fee limits on guaranteed mortgage loans)

Cases:

• Comparri v. James Readding, Inc., 121 N.J.L. 591 (Sup. Ct. 1939)
• Alexander v. Cunningham Roofing Co., 125 N.J.L. 277 (E. & A. 1940)
• Haberberger v. Myer, 4 N.J. 116 (1950), Legislature may prescribe and limit attorneys' fees in statutory matters

Other opinions cited:

• N.J. ACPE Opinions 7, 86 N.J.L.J. 405 (1963), and 13, 87 N.J.L.J. 1 (1964): improper for attorneys to let others fix their fees

See also

• NJ ACPE Op. 119: Borrower's Payment of Fees Charged by the Lender
• NJ ACPE Op. 178: Finder's Fees and Disclosure to the Client
• NJ ACPE Op. 121: Matrimonial Fees and Reimbursing the Client

Source

• Landing page: https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp34-1.html

Original opinion text

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

87 N.J.L.J. 190
March 26, 1964

OPINION 34

Fixing Fees

In our Opinions 7, 86 N.J.L.J. 405 (1963); and 13, 87 N.J.L.J. 1 (1964), we stated that it was improper for attorneys to permit others to fix their fees. Inquiry is made as to whether the regulation of the Veterans Administration limiting fees in connection with the closing of mortgage loans guaranteed by that agency is in conflict with our opinions.

Canons of Professional Ethics, Canon 12 sets forth guides which a lawyer should apply in determining the amount of the fee to be charged in any matter. Canon 35 provides in part that the professional services of a lawyer should not be controlled or exploited by any lay agency, personal or corporate.

Both the federal and state governments have in numerous instances pre-empted the rights of lawyers to fix their own fees and have established either a schedule of fees which the lawyers must accept or a maximum amount to be charged. As the inquirer properly states, the regulations of the Veterans Administration control the maximum fees to be charged for mortgage loans guaranteed by that governmental agency (see Code of Federal Regulations, par. 36.4312, p. 802).

The controlling of attorneys' fees in this manner has never been deemed improper. For years, in this State and others, attorneys' fees in workmen's compensation cases have been fixed by statute (see N.J.S.A. 34:15-64 and its predecessors since 1913). Neither our former Supreme Court nor Court of Errors and Appeals, nor our present Supreme Court, has expressed any doubt that the Legislature could prescribe and limit attorneys' fees in such cases. See Comparri v. James Readding, Inc., 121 N.J.L. 591 (Sup. Ct. 1939); Alexander v. Cunningham Roofing Co., Inc., 125 N.J.L. 277 (E. & A. 1940); Haberberger v. Myer, 4 N.J. 116 (1950). Similar provisions are found in the compensation laws of other states. The regulations of the Veterans Administration fall into the same category.

The right of state and federal agencies to control fees in these purely statutory matters seems never to have been questioned.

The prior opinions of this Committee were not intended to apply to situations where the attorneys' fees are fixed or limited by federal or state law or regulations promulgated pursuant to statutory authority.