When a lawyer handles several lawsuits for one client under a single retainer, can the lawyer agree that recoveries from the winning cases will cover the litigation costs of the losing cases?

Plain-English summary

The inquiry involved a lawyer retained to bring multiple lawsuits for a single plaintiff, such as a group of collection matters under one retainer agreement. The lawyer asked whether the recoveries obtained on the successful claims could be used to offset the litigation costs of the claims that failed.

The committee analyzed the question under DR 5-103(B), which permits a lawyer to advance or guarantee the expenses of litigation provided the client remains ultimately liable for those expenses. The committee concluded that the proposed arrangement does not violate that rule as long as there are sufficient recoveries on the successful claims to cover the expenses of the unsuccessful ones, because the client would then bear the ultimate responsibility for the costs.

The committee added an express condition: the understanding with the client must provide that if the total costs and expenses of litigation exceed the amounts recovered, the client is responsible to pay the difference. Put simply, the lawyer may net the costs against the recoveries, but cannot relieve the client of ultimate liability for any net shortfall.

Currency note

This opinion was issued in 2001, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. 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 Treat this page as historical context, not current guidance.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 pay the costs of the losing lawsuits out of what the winning ones recover?

A: The opinion concluded yes, provided the total recovered is greater than the total cost of litigation, so the client still ultimately bears the expenses as DR 5-103(B) requires.

Q: What happens if the costs exceed the recoveries?

A: The retainer must require the client to pay the difference. The opinion held the client must remain ultimately liable for all litigation expenses; the offset arrangement cannot shift that liability to the lawyer.

Q: Did the opinion treat this as a contingent fee question?

A: No. The committee analyzed it solely as an advance of litigation expenses under DR 5-103(B), focusing on the client's ultimate liability for costs rather than on the lawyer's fee.

Background and rules framework

The opinion interpreted DR 5-103(B) of New York's former Code of Professional Responsibility, which allowed a lawyer to advance or guarantee litigation expenses "provided the client remains ultimately liable for such expenses." The Model Rule analogue is Rule 1.8(e), which governs a lawyer's advancement of court costs and litigation expenses. New York replaced the Code with the Rules of Professional Conduct in 2009; the DR number cited here is historical.

Citations and references

Rules of Professional Conduct:

• MR 1.8(e) (advancing litigation expenses)
• NY DR 5-103(B)

See also

• NY State Bar Op. 754: Passing litigation-loan interest on to clients
• NY State Bar Op. 1044: Advancing a client's transportation costs as a litigation expense
• NY State Bar Op. 1181: Charging interest on contingency-case disbursements

Source

• Landing page: https://nysba.org/opinion-744/