Ezel / Ethics Opinions / NYSBA
NYSBA 1997-12-30

Can a lawyer charge both an hourly fee and, on top of it, a percentage of any recovery (a hybrid or modified contingent fee)?

Short answer: The opinion concluded yes, in a case where a contingent fee is allowed, so long as the total fee is reasonable, which usually means a lower hourly rate, a lower contingency percentage, or both; criminal-defense contingent fees and fees above court schedules remain barred.
Currency note: this opinion is from 1997
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

NY State Bar Ethics Opinion 697: A hybrid hourly-plus-contingent fee

Short answer: The opinion concluded a lawyer may charge a modified contingent fee, an hourly fee plus a percentage of any recovery, in a case where a contingent fee is permitted, as long as the total fee is reasonable.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.

View original opinion

Plain-English summary

The committee considered whether a lawyer may charge both an hourly fee, regardless of outcome, and, if there is a recovery by settlement or verdict, a percentage of the net recovery, an arrangement sometimes called a "modified contingent fee" or "hybrid fee." It concluded the arrangement is permissible as a matter of ethics so long as the total fee is not excessive under DR 2-106(A).

The committee explained that whether a fee is fixed or contingent bears on whether it is excessive. A pure contingent fee is normally higher than an hourly fee for the same work because the lawyer bears the risk of no payment, and large fees can be unreasonable when unearned by either effort or a significant period of risk. Because a lawyer charging a modified contingent fee does not bear the full risk of no recovery (the lawyer still receives an hourly fee), the committee reasoned the lower risk should be balanced by a lower contingency bonus; the contingency percentage will usually be lower than in a pure contingency, and whether the hourly rate must also be reduced depends on whether the fee as a whole exceeds a reasonable fee.

The committee noted two hard limits: a lawyer may never charge a contingent fee to defend a criminal case (DR 2-106(C)(1)), and in personal-injury and wrongful-death matters any fee dependent on recovery must conform to the Appellate Division's maximum fee schedules, so a combined fee in such a case could not exceed those schedules (DR 2-106(A) also bars an illegal fee). The committee observed that reducing the hourly component can make counsel available for cases whose odds would not attract a pure contingency lawyer, serving EC 2-20's goal of affordable access, and that modified contingent fees had been upheld elsewhere (Boston & Maine Corp. v. Sheehan, Phinney, Bass & Green, P.A.; Nevada Formal Op. 4 (1987)).

Currency note

This opinion was issued in 1997, 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 combine an hourly fee with a contingency percentage?

A: The opinion concluded yes, in a case where a contingent fee is permitted, as long as the total fee is reasonable, which usually means a lower contingency percentage than a pure contingency, and possibly a reduced hourly rate.

Q: Does the contingency percentage have to be lower in a hybrid fee?

A: The opinion said it usually will be, because the lawyer bears less risk when also receiving an hourly fee; the reduced risk is balanced by a reduced bonus.

Q: Are there cases where a hybrid fee is not allowed?

A: The opinion said a contingent fee, hybrid or pure, may never be charged to defend a criminal case, and in personal-injury and wrongful-death matters the fee must stay within the Appellate Division's contingency fee schedules.

Background and rules framework

The opinion interpreted DR 2-106(A) (a lawyer shall not charge an excessive or illegal fee) and DR 2-106(C)(1) (no contingent fee in a criminal defense) of New York's former Code of Professional Responsibility, along with the Appellate Division's contingency fee schedules for personal-injury and wrongful-death matters. The Model Rule analogue is Rule 1.5 (fees, including reasonableness factors and limits on contingent fees). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR numbers cited here are historical.

Citations and references

Rules of Professional Conduct:

  • MR 1.5 (fees; reasonableness; limits on contingent fees)
  • NY DR 2-106(A); DR 2-106(C)(1); EC 2-20

Cases:

  • Boston & Maine Corp. v. Sheehan, Phinney, Bass & Green, P.A., 778 F.2d 890 (1st Cir. 1985), reasonableness of an hourly-plus-reduced-contingent fee

Other opinions cited:

  • Nevada Formal Op. 4 (1987): reduced hourly fee plus bonus

See also

Source