Can a lawyer's fee agreement provide for the lawyer's hourly rate to be paid for time later spent testifying as a fact witness about the representation?

Plain-English summary

An estate-planning lawyer wanted to add a retainer-agreement provision stating the lawyer would be paid an hourly rate for time spent responding to discovery or testifying as a fact witness if such testimony is required after the legal work concludes. The lawyer asked whether a fee agreement may include such a provision.

The Committee concluded a lawyer may charge an hourly rate for potential future time spent testifying as a fact witness relating to the representation, subject to the rate being reasonable, and so may include such a provision in the client engagement agreement. The Committee expressly declined to opine on whether such an agreement binds a future personal representative, anyone else managing the client's affairs, or heirs and beneficiaries, treating that as substantive contract law, and declined to opine on any particular contract language as opposed to the general concept.

The Committee reasoned that whether the provision may appear in a fee agreement depends on whether it is permissible to charge the hourly rate for those services; if charging it is permissible, saying so in the agreement is permissible. It looked to South Carolina Ethics Advisory Opinion 97-42, where the wife's former attorneys, subpoenaed to testify about her independent counsel, billed the husband for their time, and the Committee found it ethically permissible for the husband's lawyer to pay a fee exceeding the statutory witness fee, provided the payment was solely for the lawyer's time and not for the content of the testimony; 97-42 did not address compelling payment from the lawyer's own client.

Turning to that question, the Committee relied on Comment 1 to Rule 1.5, which allows a lawyer to seek reimbursement for in-house services either by charging a reasonable amount the client agreed to in advance or by charging an amount that reasonably reflects the cost incurred. Charging a reasonable amount for the lawyer's time performing non-legal services that may be compelled by and ancillary to the legal representation is not inherently unreasonable. So as long as the hourly rate complies with the Rule 1.5(a) reasonableness requirement, the charge is not categorically unethical, provided the client agrees to it when the lawyer's services are first engaged. The Committee expressed no opinion on whether the lawyer could compel payment from an opposing party or counsel.

In practice

Under this opinion, a lawyer may include in the engagement agreement a provision charging the lawyer's reasonable hourly rate for future time spent on discovery responses or fact-witness testimony relating to the representation, provided the client agrees at the outset and the rate satisfies Rule 1.5(a). The opinion does not resolve whether such a provision binds a future personal representative, heirs, or beneficiaries, or whether the lawyer could compel payment from an opposing party or counsel, leaving those to substantive law.

Common questions

Q: Can a lawyer charge for time spent testifying as a fact witness about a former client's matter?

A: Yes. The opinion concludes a lawyer may charge a reasonable hourly rate for future time spent testifying as a fact witness relating to the representation.

Q: Can that charge be written into the fee agreement?

A: Yes. The opinion concludes that because charging a reasonable rate for such time is permissible, including a provision saying so in the engagement agreement is also permissible.

Q: Is there a limit on the rate?

A: Yes. The opinion conditions the charge on the rate being reasonable under Rule 1.5(a) and on the client agreeing to it when the lawyer's services are first engaged.

Q: Does the agreement bind the client's heirs or a future personal representative?

A: The opinion does not say. It expressly declines to opine on whether such a provision binds a future personal representative, others managing the client's affairs, or heirs and beneficiaries, treating that as substantive contract law.

Background and rules framework

The opinion interprets Rule 1.5 (fees), particularly the 1.5(a) reasonableness requirement and Comment 1's allowance for charging a reasonable amount for in-house services the client agreed to in advance. South Carolina's Rule 1.5 corresponds to ABA Model Rule 1.5. The Committee relied on its prior Opinion 97-42 on paying a lawyer-witness for time spent testifying.

Citations and references

Rules of Professional Conduct:

• MR 1.5 / SC RPC 1.5(a) (fees; reasonableness; Comment 1 on in-house cost reimbursement)

Other opinions cited:

• S.C. Bar EAC Op. 97-42: paying a lawyer-witness a fee for time testifying, not for the content of the testimony.

See also

• ABA Formal Op. 96-402: Payments to Occurrence Witnesses
• ABA Formal Op. 93-379: Billing for Fees and Expenses

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-23-01/
• Original PDF: https://www.scbar.org/media/f4pdd31e/23-01.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

ETHICS ADVISORY OPINION

23-01

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER'S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

SC Rules of Professional Conduct: 1.5(a)

Facts: Lawyer prepares estate planning documents for clients, such as wills, trusts, powers of attorney, and beneficiary designations. Lawyer would like to include in the firm's retainer agreement a provision providing that the lawyer is to be paid his or her hourly rate for time spent responding to discovery or testifying as a fact witness in the event such testimony is required after the lawyer's legal work is concluded.

Question Presented: May an attorney include in a fee agreement a provision for payment of the lawyer's hourly rate for the lawyer's fact-witness testimony?

Summary: An attorney is permitted to charge his or her hourly rate for potential future time spent testifying as a fact witness relating to the representation, subject to the requirement that the rate must be reasonable. Therefore, an attorney is permitted to include such a provision in the client engagement agreement.

This committee does not opine on whether such a fee agreement binds a future personal representative or anyone else managing the client's financial affairs, or heirs or beneficiaries, as this is a matter of substantive contract law. The committee also does not opine on any particular language to include in the fee agreement, as opposed to the general concept outlined above.

Discussion: The question whether an attorney may include in a fee agreement a provision for payment of the lawyer's hourly rate for the lawyer's fact-witness testimony depends on whether it is permissible to charge the hourly rate for those services. In other words, if it is permissible to charge it, it is permissible to say so in a fee agreement.

South Carolina Ethics Advisory Opinion 97-42 answered a related question. In that inquiry, after a divorce hearing, the husband subpoenaed three of the wife's previous attorneys to prove that the wife had the benefit of independent legal counsel before entering into various property settlement agreements during the course of the marriage. After the hearing, each of the wife's three former attorneys submitted bills to the husband for their time in appearing at the hearing. The reasonableness of the rates was not disputed, and this committee opined that it was ethically permissible for husband's lawyer to pay these witnesses a fee in excess of the fee specified by the South Carolina Rules of Civil Procedure, provided the payment was solely for the lawyer's time and not for the content of the testimony. 97-42 did not address whether the lawyer-witness could have compelled the payment from his own client.

Comment 1 to Rule 1.5 states that a lawyer may seek reimbursement for the cost of services performed in house "either by charging a reasonable amount to which the client has agreed in advance or by charging an amount that reasonably reflects the cost incurred by the lawyer." Charging a reasonable amount for the lawyer's time performing non-legal services that may be compelled by and ancillary to the legal representation is not inherently unreasonable. Therefore, as long as the lawyer's hourly rate complies with the reasonableness requirement of Rule 1.5(a), this kind of charge is not categorically unethical, provided the client agrees to it when the lawyer's services are first engaged.

We express no opinion whether an attorney could compel payment from an opposing party or counsel.