Can a contingent fee contract set the fee on discharge by reference to the last settlement offer if the client hires new contingent-fee counsel?

Plain-English summary

The committee reviewed proposed language in paragraph III(C)(4) of a contingent-fee contract. The clause provided that "if you do not retain other counsel on a contingent fee basis," coupled with a sentence stating that if the client did retain other contingent-fee counsel for at least an equal contingent fee, the original firm "may, at our sole option, collect a fee of 1/3 of the last bona fide offer of a settlement made by the opposing party or the amount you ultimately recover, if the matter proceeds to adjudication, whichever is less." The committee was of the opinion that this language would violate the requirements of RPC 1.5(c).

The committee also was of the opinion that nothing in the RPCs precludes a clause providing that, upon discharge, a lawyer may claim a fee at a reasonable hourly rate.

Currency note

This opinion was issued in 1996, before the Washington State Bar Association's adoption of the 2006 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 Treat this page as historical context, not current guidance.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. Washington's RPC 1.5 corresponds to ABA Model Rule 1.5 (fees), and the contingent-fee requirements appear in RPC 1.5(c).

Common questions

Q: Can a contingent-fee contract set the discharge fee from the last settlement offer?

A: The committee was of the opinion that the proposed clause measuring the fee by one-third of the last bona fide settlement offer, keyed to whether the client retained other contingent-fee counsel, would violate RPC 1.5(c).

Q: What fee can a discharged lawyer claim instead?

A: The committee said nothing in the RPCs precludes a clause providing that, on discharge, the lawyer may claim a fee at a reasonable hourly rate.

Background and rules framework

The opinion applied RPC 1.5(c) (the requirements for contingent-fee agreements, corresponding to ABA Model Rule 1.5). The committee reviewed specific proposed contract language and found that conditioning the discharged firm's recovery on the client's choice of replacement counsel, and measuring it by the last settlement offer, did not satisfy RPC 1.5(c), while a reasonable-hourly-rate clause on discharge did not run afoul of the Rules.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.5 (fees); Washington RPC 1.5(c)

See also

• WA Ethics Op. 1658: Pricing and Selling a Law Practice
• WA Ethics Op. 1638: Collecting a Client Agency's Own Claims

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=753

Original opinion text

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

Advisory Opinion: 1679
Year Issued: 1996
RPC(s): RPC 1.5(c)
Subject: Contingent fee agreement providing fee if lawyer discharged based on last bona fide settlement offer

The Committee reviewed the proposed language in paragraph III(C)(4) of a contingent fee contract and was of the opinion that the phrase "if you do not retain other counsel on a contingent fee basis" coupled with the sentence "if you retain other counsel on a contingent fee basis in an amount at least equal to the contingent fee in this agreement, we may, at our sole option, collect a fee of 1/3 of the last bona fide offer of a settlement made by the opposing party or the amount you ultimately recover, if the matter proceeds to adjudication, whichever is less" would violate the requirements of RPC 1.5(c). The Committee was also of the opinion that nothing in the RPCs precludes a clause in a fee contract that upon discharge a lawyer may claim a fee at a reasonable hourly rate.