Can a lawyer take a contingency fee on the whole recovery and also a percentage of the subrogated insurer's share?

Plain-English summary

This opinion revisits the committee's earlier Opinions 91-25 and 91-38 on a lawyer representing both an injured party and a subrogated insurer against a tortfeasor. Opinion 91-38 had concluded that, so long as the entire fee was reasonable, a lawyer could collect a fee from both clients.

The committee reported that the South Carolina Supreme Court, in In re Jones (Op. No. 23851, refiled July 19, 1993), had since held that a lawyer may not receive both a contingency fee based on the entire recovery and a percentage fee of the subrogated amount. Per the court, the lawyer should subtract the subrogated amount from the entire amount recovered before taking a fee from the insured's recovery, and may then take a percentage fee from the amount allocated to the subrogee. The committee concluded that, to the extent Opinion 91-38's advice may be read as inconsistent with Jones, it should be disregarded and the Jones procedure followed.

Currency note

This opinion was issued in 1993, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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 charge a contingency fee on the whole recovery and also take a cut of the subrogated share?

A: The committee concluded no, following In re Jones: the lawyer may not collect both a contingency fee on the entire recovery and a percentage of the subrogated amount.

Q: How should the fee be calculated instead?

A: Per Jones, the lawyer subtracts the subrogated amount from the total recovery before taking a fee from the insured's recovery, and may then take a percentage from the amount allocated to the subrogee.

Q: What happens to the earlier Opinion 91-38?

A: To the extent 91-38 is inconsistent with Jones, the committee said it should be disregarded and the Jones procedures followed.

Background and rules framework

The opinion addressed the reasonableness and structure of fees (Rule 1.5) where a lawyer represents both an injured party and a subrogated insurer, conforming the committee's prior guidance to the South Carolina Supreme Court's decision in In re Jones. The South Carolina rule corresponds to like-numbered Model Rule 1.5.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 1.5 / Model Rule 1.5: fees (reasonableness; contingent fees).

Cases:

• In re Jones, Op. No. 23851 (S.C., refiled July 19, 1993), lawyer may not take a contingency fee on the whole recovery plus a percentage of the subrogated amount.

Other opinions cited:

• SC Bar Adv. Ops. 91-25, 91-38: representing both an injured party and a subrogated insurer (91-38 disregarded to the extent inconsistent with Jones).

See also

• SC Bar Ethics Op. 93-31: When a Client Says to Ignore a Subrogation Claim
• SC Bar Ethics Op. 94-21: Successor Lawyer and a Prior Fee

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-93-33/

Original opinion text

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

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.

Ethics Advisory Opinion 93-33

In Advisory Opinions 91-25 and 91-38, this Committee considered the ethical propriety of a lawyer representing the interests of both the injured party and the subrogated insurer in an action against an alleged tortfeasor. Specifically in Advisory Opinion 91-38, the Committee concluded that, as long as the entire fee was reasonable, a lawyer could collect a fee from both clients in such a situation. The South Carolina Supreme Court subsequently has indicated in In the Matter of Jones, Op. No. 23851, refiled July 19, 1993, that a lawyer may not receive both a contingency fee based on the entire recovery and a percentage fee of the subrogated amount. The lawyer should "subtract the subrogated amount from the entire amount recovered before taking his fee from the insured's recovery. The attorney then could take a percentage fee from the amount allocated to the subrogee." To the extent that the advice offered in Advisory Opinion 91-38 may be interpreted as inconsistent with the approach outlined by the Court in Jones, the Advisory Opinion should be disregarded and the procedures set forth in Jones should be followed.