Invariably, when a legal matter has continued for some time, there is an increase hourly billing rates over what was disclosed in the original Fee agreement. Sometimes, though, there are more substantive changes or modifications to the original Fee Agreement.

In this segment from my book, The Art Of Hiring The Right Lawyer & Negotiating A Fee Agreement That Will Save On Legal Costs, I discuss what lawyers must do to be able to increase their hourly billing rates or make any substantive change to the original Fee Agreement.

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Subsequent Modifications to the Fee Agreement

While discussing modifications to a proposed fee agreement, it is important to also discuss those modifications that are made to a fee agreement during the course of a representation.

Some modifications to an attorney fee agreement may be needed during the course of the representation because the objective (that is, the scope) of the representation has changed. Or perhaps costs have become a major concern and a less costly approach is needed. Or the modification could be for some other minor reasons related to something specifically stated in the agreement, such as the names of the attorneys involved in the matter. But whatever the reason for the modification, if it relates to an issue discussed in this book, a reference back to that issue as discussed should be made prior to agreeing to the modification.

Although some modifications to a fee agreement may be necessary, I have observed that most modifications made during the course of the representation occur for the attorney’s own benefit and usually because the attorney is trying to increase his compensation. For example, the attorney may want to convert an hourly fee agreement into a contingency fee agreement because the lawyer thinks he will be able to earn a larger fee that way. Or the change may involve increasing the percentage amount of a contingency fee. But for whatever reason, if an attorney is in any way seeking to modify the fee agreement for his benefit, the attorney needs to get the client’s permission to the modification.[1] That is, it cannot be a unilateral change. And to get the client’s permission to make a modification of a fee agreement enforceable to increase compensation, the lawyer must follow a strict process set out in RPC 1.8, which governs “business transactions” with a client.[2]  

One of the things that RPC 1.8 requires a lawyer to do is to advise the client in writing “of the desirability of seeking . . . the advice of independent legal counsel.”[3] Also, the lawyer must get the client’s “informed consent” to the proposed business transaction (that is, to the modification of the fee agreement to the lawyer’s benefit).[4] Getting “informed consent” from a client is an involved process that I will discuss in detail in Chapter 10. For now, I will simply say that getting a client’s informed consent is a big deal that attorneys do not at all like to go through.

Of course, it might be said that regular hourly fee increases that typically occur on an annual basis during the course of a representation are modifications to the original fee agreement to an attorney’s benefit. But, such increases are exempt from the application of RPC 1.8 so long as any increase is “reasonable,” and the client was notified prior to the increase taking effect.[5]

To address the issue of notification of fee rate increases, there is usually a sentence buried in the original attorney fee agreement notifying the client to the effect that “we may raise our hourly billing rates from time to time.” And some lawyers believe this language, along with the client’s signature at the bottom of the fee agreement, means that the client has given the lawyer blanket approval to increase hourly billing rates whenever the lawyer wants to do so without first notifying the client of the increase.

However, just informing the client that the lawyer may increase his hourly billing rates at some time in the future is not at all the same thing as notifying the client prior to actually raising the hourly billing rates or changing them from what was originally agreed on in the attorney fee agreement.

In my experience, though, despite whatever language there is or is not in a fee agreement about increasing hourly rates during the course of the representation, most lawyers do give clients notice and get their permission prior to implementing any rate increases. So, most of the time, this is not going to be an issue. But just to ensure that this does not become an issue, in Chapter 6 I included some recommended language to address this when discussing hourly billing rates.

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[1] See ABA Annotated Model Rules of Professional Conduct (7th ed. 2011), Comments to RPC 1.5 at p. 80, Modification of Agreements (“Modification of a fee agreement to a lawyer’s benefit during a representation is generally impermissible as well as unenforceable.”).

[2] See ABA Annotated Model Rules of Professional Conduct (9th ed. 2019), Comments to RPC 1.8 at p. 170, Changing Fee Agreements (“Although Rule 1.8(a) does not apply to ordinary client–lawyer fee agreements, it has been applied to efforts to modify an agreement during the course of the representation.”) citing, inter alia, In re Curry, 16 So. 3d 1139 (La. 2009)(inserting more favorable terms into original agreement violated rule) and Restatement Third of the Law Governing Lawyers, §18(1)(a) (2000) (client may avoid modification unless lawyer shows modification fair and reasonable to client).

[3] See RPC 1.8(a)(2).

[4] See RPC 1.8(a)(3).

[5] See ABA Standing Committee on Ethics and Professional Responsibility Opinion 11-458 (2011) Changing Fee Arrangements during Representation at p. 3 (“[T]he client’s acceptance of a modified fee arrangement may be inferred from the circumstances. For example, many lawyers who bill for their services on an hourly basis routinely increase their “normal” or “regular” hourly billing rates incrementally from time to time.” citing Severson & Werson v. Bolinger, 235 Cal. App. 3d 1569, 1570 (1991) (law firm cannot raise its “regular hourly rates” without first notifying client)).