Rule 1.5. Fees

Alabama Rules of Professional Conduct

Client-Lawyer Relationship

Rule 1.5.

Fees.

(a)

A lawyer shall not enter into an agreement for, or charge, or collect a clearly

excessive fee. In determining whether a fee is excessive the factors to be considered are

the following:

(1)

The time and labor required, the novelty and difficulty of the

questions involved, and the skill requisite to perform 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;

(8)

Whether the fee is fixed or contingent; and

(9)

Whether there is a written fee agreement signed by the client.

(b)

When the lawyer has not regularly represented the client, the basis or rate

of the fee shall be communicated to the client, preferably in writing, before or within a

reasonable time after commencing the representation.

(c)

A fee may be contingent on the outcome of the matter for which the service

is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or

)

When the lawyer has not regularly represented the client, the basis or rate

of the fee shall be communicated to the client, preferably in writing, before or within a

reasonable time after commencing the representation.

(c)

A fee may be contingent on the outcome of the matter for which the service

is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or

other law. A contingent fee agreement shall be in writing and shall state the method by

which the fee is to be determined, including the percentage or percentages that shall

accrue to the lawyer in the event of settlement, trial or appeal, litigation and other

expenses to be deducted from the recovery, and whether such expenses are to be

deducted before or after the contingent fee is calculated. Upon conclusion of a

contingent fee matter, the lawyer shall provide the client with a written statement

stating the outcome of the matter and, if there is a recovery, showing the remittance to

the client and the method of its determination.

(d)

A lawyer shall not enter into an arrangement for, charge, or collect:

(1)

Any fee in a domestic relations matter, the payment or amount

of which is contingent upon the securing of a divorce or upon the amount of

alimony or support, or property settlement in lieu thereof; or

(2)

A contingent fee for representing a defendant in a criminal

case.

(e)

A division of fee between lawyers who are not in the same firm, including a

division of fees with a referring lawyer, may be made only if:

(1)

Either (a) the division is in proportion to the services

performed by each lawyer, or (b) by written agreement with the client, each

lawyer assumes joint responsibility for the representation, or (c) in a

contingency fee case, the division is between the referring or forwarding

lawyer and the receiving lawyer;

(2)

The client is advised of and does not object to the participation

of all the lawyers involved;

ion is in proportion to the services

performed by each lawyer, or (b) by written agreement with the client, each

lawyer assumes joint responsibility for the representation, or (c) in a

contingency fee case, the division is between the referring or forwarding

lawyer and the receiving lawyer;

(2)

The client is advised of and does not object to the participation

of all the lawyers involved;

(3)

The client is advised that a division of fee will occur; and

(4)

The total fee is not clearly excessive.

(f)

Without prior notification to and prior approval of the appointing court, no

lawyer appointed to represent an indigent criminal defendant shall accept any fee in the

matter from the defendant or anyone on the defendant's behalf. A lawyer appointed to

represent an indigent criminal defendant may separately hold property or funds received

from the defendant or on the defendant's behalf which are intended as a fee for the

representation, as provided for by Rule 1.15, only if the lawyer promptly notifies the

appointing court and promptly seeks its approval for accepting the property or funds as a

fee.

Comment

Basis or Rate of Fee

When the lawyer has regularly represented a client, they ordinarily will have

evolved an understanding concerning the basis or rate of the fee. In a new clientlawyer

relationship, however, an understanding as to the fee should be promptly established.

It is not necessary to recite all the factors that underlie the basis of the fee, but only

those that are directly involved in its computation. It is sufficient, for example, to state

that the basic rate is an hourly charge or a fixed amount or an estimated amount, or

to identify the factors that may be taken into account in finally fixing the fee. 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 misunderstanding

rate is an hourly charge or a fixed amount or an estimated amount, or

to identify the factors that may be taken into account in finally fixing the fee. 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 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.

Terms of Payment

A lawyer may require advance payment of a fee, but is obliged to return any

unearned portion. See Rule 1.16(d). A lawyer may accept property in payment for

services, such as an ownership interest in an enterprise, providing this does not

involve acquisition of a proprietary interest in the cause of action or subject matter of

the litigation contrary to Rule 1.8(j). However, a fee paid in property instead of money

may be subject to special scrutiny because it involves questions concerning both the

value of the services and the lawyer's special knowledge of the value of the property.

An agreement may not be made whose terms might induce the lawyer

improperly to curtail services for the client or perform them in a way contrary to the

client's interest. For example, a lawyer should not enter into an agreement whereby

services are to be provided only 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. However, it is proper to define

the extent of services in light of the client's ability to pay. A lawyer should not exploit a

fee arrangement based primarily on hourly charges by using wasteful procedures

y 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. However, it is proper to define

the extent of services in light of the client's ability to pay. A lawyer should not exploit a

fee arrangement based primarily on hourly charges by using wasteful procedures.

When there is doubt whether a contingent fee is consistent with the client's best

interest, the lawyer should offer the client alternative bases for the fee and explain

their implications. Applicable law may impose limitations on contingent fees, such as

a ceiling on the percentage.

Division of Fee

A division of fee is a single billing to a client covering the fee of two or more

lawyers who are not in the same firm. A division of fee facilitates association of more

than one lawyer in a matter in which neither alone could serve the client as well, and

most often is used when the fee is contingent and the division is between a referring

lawyer and a trial specialist. Paragraphs (e)(1)(a) and (b) permit the lawyers in any

type of matter to divide a fee on either the basis of the proportion of services they

render or by agreement between the participating lawyers if all assume responsibility

for the representation as a whole and the client is advised and does not object.

Paragraph (e)(1)(c) permits the lawyers in a contingency fee matter to divide the fee

without restriction other than disclosure to the client. Paragraphs (e)(2) and (3) do not

require disclosure to the client of the share that each lawyer is to receive. However,

Rule 1.5(b) does require the extent of the division to be disclosed upon request. Joint

responsibility for the representation entails the obligations stated in Rule 5.1 for

purposes of the matter involved. Paragraph (e)(4) requires that the total fee of both

lawyers not be clearly excessive

) and (3) do not

require disclosure to the client of the share that each lawyer is to receive. However,

Rule 1.5(b) does require the extent of the division to be disclosed upon request. Joint

responsibility for the representation entails the obligations stated in Rule 5.1 for

purposes of the matter involved. Paragraph (e)(4) requires that the total fee of both

lawyers not be clearly excessive. That the total percentage applicable to a contingency

fee arrangement is increased when a matter is referred does not indicate that the fee

is excessive. Nor is excessiveness shown merely because the receiving lawyer would

have accepted the matter for a lesser total fee had that lawyer been the only lawyer

receiving a fee.

Disputes over Fees

If a procedure has been established for resolution of fee disputes, such as an

arbitration or mediation procedure established by the bar, the lawyer should

conscientiously consider submitting to it. Law may prescribe a procedure for

determining a lawyer's fee, for example, in representation of an executor or

administrator, a class or a person entitled to a reasonable fee as part of the measure

of damages. The lawyer entitled to such a fee and a lawyer representing another party

concerned with the fee should comply with the prescribed procedure.

Fees for Indigent Representation

Lawyers appointed by a court to represent indigent criminal defendants are

typically paid by the government, under various state or federal programs providing

for the representation of indigent criminal defendants. When a criminal defendant,

upon the basis of indigency, receives representation by a lawyer through a court

appointment, the lawyer may not accept any fee from the defendant or from anyone

acting on behalf of the defendant, unless the lawyer obtains the prior approval of the

court. This prohibition prevents the defendant from abusing the system of court

appointments

igent criminal defendants. When a criminal defendant,

upon the basis of indigency, receives representation by a lawyer through a court

appointment, the lawyer may not accept any fee from the defendant or from anyone

acting on behalf of the defendant, unless the lawyer obtains the prior approval of the

court. This prohibition prevents the defendant from abusing the system of court

appointments. Furthermore, a lawyer who accepts a court appointment does so with

the expectation that any fee in excess of the amount approved through the

appointment system will be subject to further scrutiny by the court. When a criminal

defendant is indigent at the time of appointment but is later able, through family, friends

or other sources, to pay a fee to the lawyer, the lawyer may deposit the proffered fee,

which may be kept separately in trust according to the Rules regulating the holding of

property for clients or third persons. When the appointing court approves the

acceptance of a fee from the defendant or on his behalf, then the Rules generally

applicable to the disbursement of such property or funds apply. Otherwise the fee shall

be disbursed first as the appointing court directs.

Comparison with Former Alabama Code of Professional Responsibility

Rule 1.5(a) has no counterpart in the Disciplinary Rules. In 1974, Alabama did

not adopt Model DR 2-106(A) which provided that a lawyer “shall not enter into an

agreement for, charge, or collect an illegal or clearly excessive fee” and Model DR 2-

106(B), which provided that a fee is “clearly excessive when, after a review of the

facts, a lawyer of ordinary prudence would be left with a definite and firm conviction

that the fee is in excess of a reasonable fee.” Instead, these considerations were

included in the prior EC 2-18. The factors to be considered in determining whether a

fee is excessive in Rule 1.5(a) are substantially identical to those listed in EC 2-18,

with two modifications

e when, after a review of the

facts, a lawyer of ordinary prudence would be left with a definite and firm conviction

that the fee is in excess of a reasonable fee.” Instead, these considerations were

included in the prior EC 2-18. The factors to be considered in determining whether a

fee is excessive in Rule 1.5(a) are substantially identical to those listed in EC 2-18,

with two modifications. The factor of “the responsibility, financial or otherwise,

assumed by the lawyer,” as previously contained in EC 2-18, is omitted. And, a new

factor is added at Rule 1.5(a)(9): “Whether there is a written fee agreement signed by

the client.” EC 2-17 states that a lawyer “should not charge more than a reasonable

fee ....”

There was no counterpart to paragraph (b) in the Disciplinary Rules. EC 2-19

stated that it is “usually beneficial to reduce to writing the understanding of the parties

regarding the fee, particularly when it is contingent.”

There was also no counterpart to paragraph (c) in the Disciplinary Rules. EC 2-

20 provided that “[c]ontingent fee arrangements in civil cases have long been

commonly accepted in the United States,” but that “a lawyer generally should decline

to accept employment on a contingent fee basis by one who is able to pay a

reasonable fixed fee ....”

With regard to paragraph (d), DR 2-107(A) prohibited “a contingent fee for

representing a defendant in a criminal case.” EC 2-20 provided that “contingent fee

arrangements in domestic relation cases are rarely justified.”

With regard to paragraph (e), DR 2-107(A) permitted division of fees only if: “(1)

The client consents to employment of the other lawyer after a full disclosure that a

division of fees will be made.” Alabama had rejected the other subdivisions of the

Model DR which also required that “(2) The division is in proportion to the services

performed and responsibility assumed by each” and “(3) The total fee does not exceed

clearly reasonable compensation ....” Further, in a provision unique to Alabama, a

mployment of the other lawyer after a full disclosure that a

division of fees will be made.” Alabama had rejected the other subdivisions of the

Model DR which also required that “(2) The division is in proportion to the services

performed and responsibility assumed by each” and “(3) The total fee does not exceed

clearly reasonable compensation ....” Further, in a provision unique to Alabama, as

found in DR 2-103, it was said: “Nothing contained herein shall prohibit the division of

fees with a forwarding lawyer.” A similar provision was added to the Model Rule at

Rule 1.5(e) by the phrase “including a division of fees with a referring lawyer.”

There is no counterpart to paragraph (f) in the Disciplinary Rules. EC 2-29

stated that “[i]t is not unethical for an appointed attorney to receive a fee voluntarily

paid by the defendant, or persons interested in him; but any appointed attorney

receiving such payment shall forthwith advise the appointing court of such fact.”