When a court awards attorney fees that exceed what the lawyer is owed under the fee agreement with the client, who gets the difference, the lawyer or the client?
Apply this to your situation
This page answers the general question as of 2005. Ezel answers yours: whether it's allowed on your facts, under the current Oregon Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer represents a plaintiff in litigation that includes attorney fee claims. When judgment is entered, the court's attorney fee award exceeds the amount the lawyer is due under the lawyer's contract with the plaintiff. The opinion asks who is entitled to the difference between the fee award and the agreed-on compensation.
The opinion answers: the plaintiff. It applies Oregon RPC 1.5(a), which bars a lawyer from charging or collecting an illegal or clearly excessive fee. A fee is illegal or clearly excessive if it exceeds the amount previously agreed on. Absent a valid amendment to the fee agreement, the lawyer may not receive more than the agreed-on fee, even if a larger fee might also be reasonable under the circumstances. A footnote notes the result would differ if the fee agreement expressly entitled the lawyer to the greater of the contract fee or the court-awarded amount.
The opinion then addresses Oregon RPC 5.4, which (subject to exceptions not applicable here) prohibits a lawyer from sharing legal fees with a nonlawyer. The opinion concludes that paying the excess amount to the plaintiff would not violate that rule, because RPC 5.4 aims at fee splitting in exchange for services related to legal work, and the prevailing party, not the lawyer, is entitled to a court's fee award.
In practice
The opinion holds that, under Oregon RPC 1.5(a) as it stood at the time of the opinion, a lawyer cannot keep a court-awarded fee that exceeds the contractually agreed fee; the surplus belongs to the client unless the fee agreement expressly provides for the lawyer to take the greater amount. The analysis turns on the agreed fee as the ceiling on what the lawyer may collect. Paying the surplus to the client does not implicate RPC 5.4's bar on sharing fees with a nonlawyer. Verify the current text of Oregon RPC 1.5 and RPC 5.4 before relying on any specific point.
Common questions
Q: The court awarded more in attorney fees than my contract entitles me to. Can I keep the extra?
A: No, unless your fee agreement expressly says you get the greater of the contract fee or the court award. Otherwise the opinion concludes keeping the excess would be a clearly excessive fee under RPC 1.5(a), and the surplus goes to the client.
Q: If I pay the extra to my client, am I improperly sharing fees with a nonlawyer?
A: No. The opinion concludes paying the excess to the client does not violate RPC 5.4, which targets sharing legal fees with nonlawyers for services related to legal work.
Q: Can I draft around this in my fee agreement?
A: The opinion notes the result would differ if the fee agreement expressly provided that the lawyer is entitled to the greater of the contract fee or the court-awarded amount.
Background and rules framework
The opinion interprets Oregon RPC 1.5(a) (illegal or clearly excessive fees) and RPC 5.4 (sharing fees with nonlawyers), corresponding to Model Rules 1.5 and 5.4. Under the opinion's reading, the agreed fee fixes the maximum the lawyer may collect, and a court fee award belongs to the prevailing party rather than the lawyer.
Citations and references
Rules of Professional Conduct:
- Oregon RPC 1.5(a) / Model Rule 1.5 (fees)
- Oregon RPC 5.4 / Model Rule 5.4 (professional independence; sharing fees with nonlawyers)
Cases:
- In re Kerrigan, 271 Or 1, 530 P2d 26 (1975)
- In re Sassor, 299 Or 720, 705 P2d 736 (1985)
- In re Griffith, 304 Or 575, 748 P2d 86 (1987)
- Venegas v. Mitchell, 495 US 82, 110 S Ct 1679, 109 L Ed 2d 74 (1990) (prevailing party, not lawyer, is entitled to a fee award)
Other opinions cited:
- OSB Formal Ethics Op. No. 2005-15 (excessive fees)
- Washington Advisory Op. No. 1570 (1994)
See also
- OSB Ethics Op. 2005-15: Contingent Fees Paid in Installments
- OSB Ethics Op. 2005-54: Contingent-to-Hourly Fee on a Rejected Settlement
Source
- Landing page: https://www.osbar.org/ethics/toc.html
- Original PDF: https://www.osbar.org/_docs/ethics/2005-69.pdf
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