When a client hires a new contingent fee lawyer, must that lawyer tell the client the prior lawyer may still claim a fee?

Plain-English summary

The opinion adopts the conclusion of ABA Formal Opinion 487 (Fee Division with Client's Former Counsel) that successor counsel in a contingent fee matter must inform the client in writing that predecessor counsel may have a quantum meruit claim. The factual setup: a client signs a written contingent fee agreement with Lawyer 1, terminates Lawyer 1 without cause, and hires Lawyer 2 under a new contingent fee agreement that is silent on whether Lawyer 2's percentage is in addition to or includes any compensation owed to Lawyer 1.

The opinion reasons that a client may know of the right to terminate Lawyer 1 but may not realize that termination does not necessarily extinguish the obligation to pay Lawyer 1 for the value of work performed, particularly if the termination was not for cause. A fee agreement that fails to mention this is, the opinion concludes, inconsistent with Rule 1.4(b) (explaining a matter so the client can make informed decisions) and Rule 1.5(c) (contingent fee agreement requirements). The opinion concludes that Rules 1.4(b) and 1.5(c) require successor counsel to provide written notice that compensation may be claimed by Lawyer 1 and to explain the effect of that claim on Lawyer 2's fee, including that the client may risk paying both a quantum meruit amount to Lawyer 1 and a contingent fee to Lawyer 2.

The opinion notes that successor counsel may, but is not required to, include within the scope of representation help with the predecessor's claim, and that a fee agreement ignoring the value of compensable predecessor services could in some circumstances make the successor's fee "clearly excessive" under Rule 1.5(a). Quoting ABA Formal Opinion 487, it states that "a client cannot be exposed to more than one contingent fee when switching attorneys" and that Rule 1.5(a) requires the total fees of predecessor and successor counsel to be reasonable. The opinion also notes it agrees with ABA 487 that the fee-sharing provisions of Rule 1.5(e) do not apply to successive representation, while observing that the remaining ABA 487 discussion of Model Rule 1.5(e) is generally inapplicable in Pennsylvania given differences between Pa.R.P.C. 1.5(e) and the Model Rule.

In practice

Under this opinion, a Pennsylvania lawyer taking over an existing contingent fee matter must, in writing, tell the client that the prior lawyer may have a claim for compensation for services rendered and explain how that claim affects the new lawyer's contingent fee. The opinion concludes this follows from Rules 1.4(b) and 1.5(c). It holds that the successor need not undertake to handle the predecessor's claim, but if not, would be well advised to spell out that limitation in the engagement's scope under Rule 1.2(c), and that the total of both lawyers' fees must remain reasonable under Rule 1.5(a).

Common questions

Q: My new client just fired their old contingent fee lawyer. Do I need to mention that lawyer's fee?

A: Yes, in writing. The opinion concludes Rules 1.4(b) and 1.5(c) require successor counsel to inform the client in writing that predecessor counsel may have a claim and to explain its effect on the successor's contingent fee.

Q: Could the client end up paying two contingent fees?

A: The opinion addresses that risk. Quoting ABA Formal Opinion 487, it concludes a client cannot be exposed to more than one contingent fee when switching attorneys, and Rule 1.5(a) requires the total of predecessor and successor fees to be reasonable.

Q: Do I have to handle the dispute with the prior lawyer for my client?

A: No. The opinion concludes successor counsel may, but is not required to, include counseling on the predecessor's claim within the representation; if excluding it, the lawyer would be well advised to state that limitation in the scope of representation under Rule 1.2(c).

Background and rules framework

The opinion interprets Pennsylvania Rules of Professional Conduct 1.4(b) (communication sufficient for informed decisions), 1.5(c) (contingent fee agreement requirements), 1.5(a) (reasonableness of fees), and 1.2(c) (limiting the scope of representation), and discusses 1.5(e) (fee division) as inapplicable to successive representation. These track the ABA Model Rules of the same numbers, though the opinion notes material differences between Pa.R.P.C. 1.5(e) and Model Rule 1.5(e). The opinion adopts the holding of ABA Formal Opinion 487.

Citations and references

Rules of Professional Conduct:

• Pa.R.P.C. 1.4(b); ABA Model Rule 1.4
• Pa.R.P.C. 1.5(c), 1.5(a), 1.5(e); ABA Model Rule 1.5
• Pa.R.P.C. 1.2(c); ABA Model Rule 1.2

Cases:

• Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Malone Middleman, PC, 179 A.3d 1093 (Pa. 2018)

Other opinions cited:

• ABA Formal Op. 487: Fee Division with Client's Former Counsel (adopted by this opinion)

See also

• ABA Formal Op. 487: Fee Division With Client's Former Counsel
• PA Bar Ethics Op. 2020-500: Successor Counsel and a Predecessor's Charging Lien
• ABA Formal Op. 475: Safeguarding Fees Subject to Division

Source

• Landing page: PBA Ethics Opinions (Public)
• Original PDF: F2020-200.pdf