Lawyers should avoid changing fee arrangements on clients.
I am a lawyer who is representing a client and it is clear to me that my fee arrangement is inadequate. Can I change the fee agreement during the middle of the representation?
There are really two components to this question. The first component is the ethical component set forth in Rule 1.5 of the Rules of Professional Conduct. The second component is basic contract law. Generally, an agreement is binding and cannot be changed unless there is some additional consideration. A bad agreement normally can’t be changed if it was agreed to without any fraud or misrepresentation, particularly when the party is a sophisticated person, such as a lawyer. But the essence of this column is not contractual law, but legal ethics.
In reference to legal ethics, rules involving fee arrangements are set forth in Rule 1.5 of the Rules of Professional Conduct. This rule has a requirement under 1.5(b) that the fee arrangement be in writing, either as a contract or just a letter. The client does not have to sign it, but the client has to agree to it and the agreement can be signaled by the commencement of the representation that the client is accepting the benefit of the representation.
There is nothing in Rule 1.5 about changing the fee agreement. The only prohibition is that the fee agreement or amended fee agreement cannot be excessive.
Comment 1 to Rule 1.5 talks about when a change of fee might be necessary:
"When developments occur during the representation that render an earlier estimate substantially inaccurate, a revised estimate should be provided to the client. A written statement concerning the fee reduces the possibility of a misunderstanding. Furnishing the client with a simple memorandum or a copy of the lawyer’s customary fee schedule is sufficient if the basis or rate of the fee is set forth."
Therefore, the rule does envision that a fee might be changed during the course of representation.
Comment 3 prohibits the old bait and switch. The comment states:
"For example, a lawyer should not enter into an agreement whereby services are to be provided up to a stated amount when it is foreseeable that more extensive services probably will be required, unless the situation is adequately explained to the client. Otherwise, the client might have to bargain for further assistance in the midst of a proceeding or transaction."
Therefore, although at times a fee can be changed, it is strongly discouraged in Pennsylvania, as noted by the comments. The American Bar Association’s standing committee on ethics and professional responsibility issued a major formal opinion on August 4, 2011, titled "Formal Opinion 11-458." This opinion dealt with changing fees during the representation. The opinion starts by noting any change in the fee agreement during the representation will be treated with great suspicion. The committee noted and cited the Reinstatement of Lawyers, No. 18(A)(1), which notes there should not be any changes unless the lawyer can show the changed contract and the circumstances were fair and reasonable to the client.
The opinion notes in Model Rule of Professional Conduct 1.5(b) any changes in the basis or rate for the way the fee has to be communicated to the client. Pennsylvania’s rule does not have that particular language. But it should be noted that, under Rule 1.4(b), a client must be fully aware of any changes in the fee arrangement. The opinion noted any arrangements or modifications must be reasonable under the circumstances and communicated to the client and the modification must be accepted by the client. Changes in the fee agreement are not something that can be unilaterally imposed on the client.
The committee noted that if a lawyer changed or increased his or her hourly rate and the client paid the higher rate, that by itself may not indicate an acceptance. The lawyer has to adequately explain the increase to the client. The committee warned that absent unanticipated changes in circumstances, an attempt by a lawyer to change a fee will most likely be unreasonable and unenforceable.
The committee warned if lawyers are seeking additional security for the fee, then Rule 1.8, concerning the restrictions on doing business with a client, must be complied with. That rule requires fair and reasonable transaction with the client. The committee suggested strongly that the client be advised of the right to consult with independent counsel.
Therefore, changing a fee in midcourse is not something a lawyer should do lightly and, if so, the client must consent after full disclosure and opportunity to carefully review the arrangement. The better practice is not to charge the fee, both from an ethical and contractual perspective.
But there can be circumstances that justify a fee change. For instance, the representation may go several years and the lawyer, over the course of that time, may have raised his or her hourly rates. If the case were to go longer than originally anticipated and the lawyer were raising the hourly rate, it would appear to be something that might be enforceable if properly explained to the client. If it were a criminal case and what had been thought to be a one-week trial is now going to be a 10-week trial, that would most likely be a good basis to increase the fee arrangement, assuming there were a reasonable basis for the lawyer to believe a one-week trial was originally realistic.
Therefore, all lawyers should be very careful when establishing their initial fees. Obviously, it has to be in writing, pursuant to Rule of Professional Conduct 1.5(b). But it should also be realistic in terms of the scope and length of the representation. Rule 1.2, involving scope of representation, probably should be considered when setting the fee.
If the fee arrangement is a flat rate, then that rate should be tied to a certain time period. In other words, if a lawyer is charging X number of dollars for a week-long jury trial, the fee agreement should state if it goes into the second week then it will cost another X number of dollars, etc.
But the days of unilaterally changing the fee agreement and telling a client to take or leave it are long gone and such conduct would be considered unethical. The bottom line is changing a fee in misrepresentation should be avoided as much as possible.
It is a lawyer’s responsibility to help teach younger attorneys.
I am a lawyer who has been practicing for 25 years and in the last year or two I have seen a number of young lawyers practicing on their own without any older lawyer guiding them. Many of them don’t always know what they should do and need some mentoring. Can I do that without hurting the client I am representing?
The comment is a good one, particularly because Pennsylvania long ago abolished preceptorships, which ended around 1971 or 1972. Although some older lawyers have talked about the preceptorship as a term of indentured slavery where they received little if no pay and had to work essentially for free for six months, that practice did help lawyers learn from more experienced lawyers and get a sense of how law is practiced and how things are done.
In this modern era with the economy being so bad and suggestions that one out of every two law students are not getting jobs with a firm, obviously there are going to be a lot of young lawyers who are going to venture out on their own, even if they are working off their dining room tables or using their bedrooms as their offices. No one can fault young lawyers starting their own practices. Certainly, the independence needed to make the attempt to begin one’s own practice is also a good suggestion that the lawyer will have the sense of independence and courage he or she will need when representing clients, particularly during trials. But, like everything else, no matter how bright a new lawyer is, he or she still needs some help. Many of them don’t have anyone to turn to for advice. The legal profession has had a long tradition of helping younger members of the bar. This tradition is done with the recognition that the younger lawyers will someday be the senior lawyers and it is the only way a profession can continue to teach the next generation of lawyers how to act as an attorney and how to practice.
This mentoring process is important, not only for teaching a young lawyer how to handle a certain case or file a certain document. The mentoring goes far beyond that, because it helps to instill a sense of professionalism in a young lawyer and a sense of the rich traditions of the bench and bar. Although law is a business and every young lawyer needs to make a living, it is also a great tradition and practice that will enrich a young lawyer and ultimately help him or her to be more successful if he or she is taught these traditions.
As a result, there is certainly nothing wrong with a more experienced lawyer taking a younger practitioner under his or her wing or just pointing out their mistakes during the course of representation, as long as it is done in a courteous and fair fashion. Taking a young lawyer out to lunch after he or she butchered a deposition and telling him or her how to do one is perfectly permissible.
There is no harm to one’s client if the lawyer is an opponent. A lawyer, in mentoring a young lawyer, is not going to tell him or her trade secrets in terms of how to win a particular case. But he or she will show a young lawyer how to start to utilize professional skills in an appropriate and proper fashion and in the context of the legal profession.
Every lawyer has to remember that these young lawyers will someday be the leaders of the profession and will someday be judicial officers at all levels. To instill in these young lawyers now a respect for the profession and show them how to handle themselves as lawyers will only go a long way to perpetuating the great traditions that the legal profession has always fostered.
Therefore, it behooves every lawyer when dealing with a young and inexperienced lawyer to assist him or her in terms of professional obligations and show him or her how to do things. Presumably, that young lawyer will then reciprocate and do the same thing for the next generation. If it makes the person a better lawyer, that is what every lawyer wants. No one wants an opponent who doesn’t know what he or she is doing. The practice of law is based on reason and logic, not on winning because the other side is incompetent. The traditions and practice of law have a great and wonderful history that enrich every practitioner who understands and practices that way. It is each and every lawyer’s obligation to understand that great and long history and tradition and aid others to fully participate in it. •
Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have aquestion, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pa. 19381.