With 2009 upon us and the cost of operating a firm rising steadily, many lawyers may wonder how to increase billing rates for existing clients. What must a firm do before it increases the billing rate for clients who already have signed a retainer agreement? Can the firm increase its hourly rate without notifying the client? If the firm must give notice of rising rates, can notice be verbal or must it be written? If the client consents to the proposed rate increase can that client still challenge the modification later?
In Archer v. Griffith, 390 S.W.2d 735 (Tex. 1965), the Texas Supreme Court considered whether an agreement between an attorney and a client could be modified during the existence of an attorney-client relationship, and whether the modification was so unreasonable that it was unenforceable. The court pointed out that although an attorney is not prohibited from contracting with his client for additional compensation after an attorney-client relationship has formed, a court will scrutinize a modification because of the unique relationship between the attorney and client. The court further stated that there is a presumption of unfairness that attaches to a modification of a retainer agreement. And, the burden of showing fairness and reasonableness of the modification rests on the attorney.
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