How ABA Model Rule 1.5 on “Fees” Impacts How Lawyers Can Bill for Their Fees and Costs

[Editor’s note: this is  another in a series of blog posts discussing how specific ABA Model Rules of Prof. Conduct (RPC) that all lawyers must follow impacts how lawyers can and cannot bill clients.]

If you read my first blog piece in this series, you will recall that I noted ABA Ethics Committee Formal Opn. 93-379 (1993) on Billing for Professional Fees, Costs,  Disbursements, and Other Expenses stated that several RPC affect how lawyers ethically can bill for their services. The Opinion specifically mentions RPC 1.1, 1.4, 1.5, 3.2, and 7.1 but notes that other Rules may also be implicated. So far, I have covered each of these RPC (and others) but for RPC 1.5 Fees.

As the name of the rule indicates, RPC 1.5 is all about fees.  RPC 1.5 is broken down in three parts. RPC 1.5(a) provides that a lawyer’s fees and expenses must not be “unreasonable,” RPC 1.5(b) is about a lawyer’s duty to communicate to the client the “scope of the representation and the basis or rate of the fee and expenses,” and RPC 1.5(c) addresses “contingent fee” situations.

I have already covered the duty of communication about fees in my post on RPC 1.4 on “communications.” And as contingent fees are not applicable in fee billing situations, I will devote this post to discussing just RPC 1.5(a).

The term used in RPC 1.5(a) that a lawyer’s fee and expenses not be “unreasonable” has been generally flipped in fee billing cases by courts which always discuss a lawyer’s fee and expenses in terms of whether or not they were “reasonable” rather than unreasonable.

Part RPC 1.5(a) lists 8 factors “to be considered in determining the reasonableness of a fee.” They are:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perorom the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances

(6) the nature and length of the professional relationship with the client’

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.

A plain reading of these 8 factors indicate that they are applicable in those situations involving “fixed” or “contingent” fees rather than fees generated by hourly billing. Nevertheless, I note that some courts try to pound square pegs into round holes and mistakenly try to apply the 8 factors in RPC 1.5(a) to hourly billing situations as if they were the only factors to be used to judge the reasonableness of a fee bill. See, e.g., Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d 982 (Ind. Ct. App. 2014) trans. denied (May 15, 2015).

My impression in reading these types of cases is either that the judges (or their law clerks) have not bothered to read the abundance of case law on the subject or the attorneys representing the parties opposing the reasonableness of the billed for fees and costs failed to put the RPC 1.5 factors into proper perspective. For in Comment [1]  it is clearly stated that the “factors in (1) through (8) are not exclusive.” Moreover, the case law that has developed over the application of RPC 1.5 to hourly fee billing situations rarely if ever mentions the 8 factors in RPC 1.5(a).

So if  the  8 factors set out in RPC 1.5(a) cannot be used to judge the reasonableness of  billed for fees and expenses in an hourly billing situation, what factors are to be used? Well, if you have read my other blog pieces you will realize that there are quite a number of different factors courts have used in different situations to determine the reasonableness of a billed for fee or expense.

However, I believe that all different factors on determining reasonableness can be put into three categories. I will cover these three categories in my next post.

 

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