The ethics of the legal profession requires lawyers to inform their clients “at the outset of the representation” just how they intend to bill for fees and costs and, just as importantly, the basis or how those fees and other charges are going to be determined. See American Bar Assoc. (ABA) Model Rules of Professional Conduct (RPC) 1.5(b). Also see ABA Formal Ethics Op. 93-370at p. 3 (“At the outset of the representation the lawyer should make a disclosure of the basis for the fee and any other charges to the client.”).
Except for contingency fee agreements, most states do not require an attorney to put a fee agreement be in writing and have it signed by the client. However, most reputable firms will set out in writing the terms of how they will bill the client and in many instances, will have the clients sign the agreement. If not, a lawyer may send clients an “engagement letter” in which he set out how he intended to bill for his fees and costs.
Two important points about attorney fee agreements or any initial communications to clients on how the attorney intends to bill for fees. One is that attorney fee agreements or communications on fees are strictly construed against the attorney. Severson & Werson v. Bolinger, 235 Cal. App. 3d 1569 (1991). What this means is that if there are any ambiguities in the agreement or communication (i.e., the agreement or communication was not as clear as it needed to be on a point) and you did not fully understand some things, this will be construed against the lawyer.
Two is that an attorney cannot change the terms of the original fee agreement on how he was going to bill for fees and services without your permission. He cannot, for example, increase his billing rates during the course of the representation unless he gets your advance approval. See Severson & Werson v. Bolinger, supra.
Finally, just because a client signs a fee agreement or agrees to certain billing terms does not mean that the agreement will hold up in court. This is because courts will always review the agreement to determine if the terms and conditions are “reasonable.” See ABA Annotated Model RPC (2007), Comments to RPC 1.5 at p. 74, Review for Reasonableness, Review Always Available (“no matter what the client has agreed to”). In re Sinnott, 845 A.2d 373 (VT 2004) (It is unethical for lawyers to charge unreasonable fees “even if they are able to find clients who will pay whatever a lawyer’s contract demands.”).
While the law will step in to protect clients from unreasonable terms in fee agreements, this does not mean that clients should not be careful about what they are signing or agreeing to. This is because the the law also will uphold reasonable terms in a fee agreement.
Because of the importance of the client being aware of what he is agreeing to in signing a retainer agreement, I will be devoting future blog posts to this subject.