Ezel / Ethics Opinions / OSB
OSB August 2005

Can a lawyer accept a flat fee per case from an insurer to defend its insureds, and what duties does the lawyer still owe the insureds?

Short answer: Yes: a flat fee per case is not clearly excessive so long as the agreement as a whole is reasonable, but the flat fee does not reduce the lawyer's duties of competence, diligence, and independent judgment to each insured client, and the lawyer cannot accept a rate so low that it would help the insurer shirk its duty to provide a competent defense.

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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.

Currency note: this opinion is from 2005
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 Not binding precedent.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 on this page as a PDF) is the authoritative source for any reliance.
View original ethics opinion (PDF)

Plain-English summary

An insurer wants to contract with a lawyer to provide legal services to its insureds at a flat rate per case, regardless of the work required. On some cases the lawyer will earn more than an hourly rate would yield, and on others less. The opinion asks whether the lawyer may enter into and collect under that agreement, and what limits the arrangement places on the lawyer's relationship with the insureds, who are also the lawyer's clients.

On the first question the opinion answers yes. Oregon RPC 1.5(a) bars an illegal or clearly excessive fee, but there is no reason to believe the proposed flat-fee agreement would produce a clearly excessive fee. The question is not whether the lawyer earns more than a permissible hourly rate on any one case, but whether the agreement as a whole provides excessive compensation.

On the second question the opinion explains that being paid a flat fee does not limit the lawyer's obligations to each client under Oregon RPC 1.1 (competence), 1.2 (scope), 1.3 (diligence), 1.8(f) (compensation from a third party), and 5.4(c) (no interference with professional judgment by the payor). The lawyer owes flat-fee clients the same duties owed any other client and cannot assist the insurer in violating the insurer's own duty to provide insureds a competent defense. The opinion gives an example: if the flat rate quoted were so low as to compel the conclusion that the insurer was seeking to shirk its duties to insureds and enlist the lawyer in doing so, the lawyer could not ethically accept the representation.

In practice

The opinion holds that, under the Oregon rules as they stood at the time of the opinion, flat-fee-per-case insurance defense is permitted, the excessiveness test looks at the agreement as a whole rather than any single case, and the fee structure does not dilute the lawyer's duties of competence, diligence, and independence to each insured. The analysis turns on whether the overall compensation is clearly excessive and on whether the rate is so low that accepting it would assist the insurer in shirking its defense obligations. Verify the current text of Oregon RPC 1.5, 1.1, 1.3, 1.8(f), and 5.4(c) before relying on any specific point.

Common questions

Q: Can I take a flat fee per case from an insurer to defend its insureds?

A: Yes. The opinion concludes such an agreement is permissible and the fee is not clearly excessive unless the agreement as a whole provides excessive compensation.

Q: Is the fee excessive if I make more than my hourly rate on a given case?

A: Not by itself. The opinion concludes the test is whether the agreement as a whole is excessive, not whether the lawyer earns more than an hourly rate on any one case.

Q: Does the flat fee lower what I owe the insured?

A: No. The opinion concludes the lawyer owes flat-fee clients the same competence, diligence, and independent judgment owed any client, and the payor may not direct the lawyer's professional judgment under RPC 5.4(c).

Q: What if the insurer's flat rate is extremely low?

A: The opinion concludes that if the rate is so low as to compel the conclusion that the insurer is seeking to shirk its duty to provide a competent defense and to enlist the lawyer's help, the lawyer cannot ethically accept the representation.

Background and rules framework

The opinion interprets Oregon RPC 1.5(a) (clearly excessive fees), corresponding to Model Rule 1.5; Oregon RPC 1.1 (competence), 1.2 (scope), and 1.3 (diligence), corresponding to Model Rules 1.1 to 1.3; Oregon RPC 1.8(f) (accepting compensation from a third party), corresponding to Model Rule 1.8; and Oregon RPC 5.4(c) (no interference with professional judgment by the person who pays), corresponding to Model Rule 5.4.

Citations and references

Rules of Professional Conduct:

  • Oregon RPC 1.5(a) / Model Rule 1.5 (clearly excessive fees)
  • Oregon RPC 1.1 / Model Rule 1.1 (competence)
  • Oregon RPC 1.2 / Model Rule 1.2 (scope of representation)
  • Oregon RPC 1.3 / Model Rule 1.3 (diligence)
  • Oregon RPC 1.8(f) / Model Rule 1.8 (compensation from a third party)
  • Oregon RPC 5.4(c) / Model Rule 5.4 (professional independence of the lawyer)

Other opinions cited:

  • OSB Formal Ethics Op. No. 2005-97 (fee agreements and excessiveness)
  • OSB Formal Ethics Op. No. 2005-119 (duties owed to nonclients)
  • OSB Formal Ethics Op. No. 2005-170 (insurance defense)

See also

Source

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