What must a Wisconsin lawyer tell a client about fees and expenses, and when does that have to be in writing?

Plain-English summary

Opinion E-09-03 (originally issued 2009, revised April 17, 2020) walks through SCR 20:1.5 and a lawyer's duty to communicate with clients about fees and expenses. Under SCR 20:1.5(b)(1), a lawyer must convey three things before or within a reasonable time after starting work: the scope of the representation, the basis or rate of the fee, and the expenses for which the client will be responsible. The only exception is a regularly represented client billed on the same basis as before. The committee reads each element as requiring enough detail for the client to identify the matter and understand how the fee is calculated; brief descriptions usually suffice, but limited-scope engagements should spell out what the lawyer will not do, and SCR 20:1.2(c) generally requires the client's informed consent to a scope limitation to be in writing.

On the fee itself, the committee notes that the basis or rate may be hourly, flat, contingent, or a stated set of factors, and must satisfy the SCR 20:1.5(a) reasonableness factors. A lawyer who intends to charge interest on unpaid balances or to raise rates during the representation must disclose that up front; failing to do so risks violating SCR 20:1.5(b)(1) and (a). Expenses such as copying, filing fees, and court-reporter charges must be disclosed, may be charged only at a reasonable amount, and may not be marked up for profit (citing ABA Formal Op. 93-379).

The opinion then sets out when the communication must be in writing. For non-contingent matters, a writing is required whenever it is reasonably foreseeable that the total cost (fees plus costs) will exceed $1,000, including when a matter that started under that threshold later crosses it. Contingent-fee agreements must always be in a writing signed by the client, must state how the fee is calculated and how expenses are handled, and must be followed by a written outcome statement; SCR 20:1.5(d) bars contingent fees in certain family-law and criminal matters. A "writing" under SCR 20:1.0(q) can be a letter, memo, or email. Regardless of whether the initial fee communication had to be written, any change in the basis or rate of the fee must be communicated in writing, which the Wisconsin Committee Comment says can be done through a clear notation on a billing statement.

In practice

Under this opinion, conduct matching its fact pattern is treated as follows. As the rule stood at the time of the opinion (and as revised in 2020), a Wisconsin lawyer had to communicate the scope, fee basis, and expenses to the client, and had to do so in writing whenever the total cost was reasonably foreseeable to exceed $1,000. The committee concludes that contingent-fee agreements must always be in a writing signed by the client, that interest charges and anticipated rate increases must be disclosed at the outset, and that any later change in the basis or rate of the fee must be communicated in writing.

Common questions

Q: When must a Wisconsin fee arrangement be in writing?

A: When the total cost is reasonably foreseeable to exceed $1,000. The committee concludes that SCR 20:1.5(b)(1) requires a writing in that situation, including when a matter started below $1,000 but later crosses the threshold; contingent-fee agreements must always be in a signed writing.

Q: Can a lawyer charge interest on unpaid balances?

A: Yes, at a reasonable rate, if disclosed. The committee concludes that interest is not prohibited, but it must be part of the written fee communication or clearly communicated at the start; charging it without prior notice risks violating SCR 20:1.5(b)(1) and (a).

Q: Can a lawyer mark up copying or other in-house expenses?

A: No. The committee concludes, citing ABA Formal Op. 93-379, that a lawyer may recover a reasonable amount for in-house costs but may not mark them up as a source of profit.

Q: Does a rate increase have to be put in writing?

A: Yes. The committee concludes that any change in the basis or rate of the fee must be communicated in writing, with no exception, though the Wisconsin Committee Comment allows this through a clear notation on a billing statement.

Background and rules framework

The opinion interprets SCR 20:1.5 / Model Rule 1.5 (fees), including the reasonableness factors in 20:1.5(a), the communication and writing requirements in 20:1.5(b), the contingent-fee requirements in 20:1.5(c), the family-law and criminal limits in 20:1.5(d), and the fee-division rule in 20:1.5(e). It also applies SCR 20:1.2(c) / Model Rule 1.2 (limited-scope representation) and the definitions in SCR 20:1.0(q) ("writing"), 20:1.0(ag) ("advanced fee"), and 20:1.0(mm) ("retainer"). It supersedes and withdraws E-91-2.

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20:1.5(a)-(e) / Model Rule 1.5 (fees, reasonableness, contingent fees, fee division)
• Wis. SCR 20:1.2(c) / Model Rule 1.2 (limited-scope representation)
• Wis. SCR 20:1.0(q) ("writing"); 20:1.0(ag) ("advanced fee"); 20:1.0(mm) ("retainer")

Cases:

• In re Estate of Konopka, 175 Wis. 2d 100, 498 N.W.2d 853 (Ct. App. 1993), fee exceeding a statutory limit was unreasonable
• In re Glesner, 2000 WI 18, 233 Wis. 2d 35, 606 N.W.2d 173, inflated fee was unreasonable
• In re Kitchen, 2004 WI 83, 273 Wis. 2d 279, 682 N.W.2d 780, file-retrieval charge after a grievance was unreasonable

Other opinions cited:

• ABA Formal Op. 93-379 (1993): no profit markup on in-house expenses
• Wisconsin Ethics Op. E-90-4 (interest charges); E-91-2 (withdrawn by this opinion)

See also

• DC Ethics Op. 238: Written and Fixed Fee Agreements
• AL Ethics Op. 1994-02: Guidelines for Billing Fees and Disbursements

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-09-03.pdf