State Bar of Wisconsin

A History of the Organized Bar in Wisconsin

• Chapter 18: Annual and Midwinter Meetings

Chapter Nineteen
Fee Schedule

For a hundred years after statehood Wisconsin lawyers were inadequately compensated. In the earliest days most law work was charged for at flat rates  deeds, wills, contracts, notes, and the like. Court work was largely on a daily rate, and most of the lawyers who became well off did so through side ventures. Much of the fault lay in a haphazard system of charges for service. The earliest record of anything resembling a fee schedule pre-dates the formation of a local bar association. It is a flyer entitled "Fee Bill of the Bar of Milwaukee County, adopted March 12, 1844." It notes "all prices in all cases stated as the minimum" and continues by listing the several charges. It is signed by a dozen lawyers. The informality of these ways came to an end in Milwaukee, when on March 25, 1858 the local bar association adopted its first fee schedule. The Dane County Bar Association soon followed suit, and by the end of the century many local bar groups had some sort of fee bill.

The Milwaukee bar's schedule, as revised to date, was published in the state association's proceedings in June, 1921. In July of 1928, the new Bar Bulletin included a summary of the fee schedules from 19 local bar associations, compiled by the Supreme Court Clerk. The compilation gave the range of fees in each category, and led to the promulgation of the first recommended statewide fee schedule, which was formally adopted in June of 1929. This schedule contained a special provision on contingent fees.

Immediately post-WW II, the economic pressures on the lawyers led to a revision of the fee schedule, which was published as a supplement to the August 1947 Bar Bulletin. A further revision was adopted by the Council in November 1950 and published in the Bulletin. A still further (and upward) revision was adopted in September 1957. Local associations were urged to adopt the schedule, and by April 1958 over half of the local associations reported adopting new schedules since January 1957. Slowly and haltingly, the bar was putting its economic house in order.

By 1959, a far-reaching revolution in law office management was under way. The advent of the electric typewriter, the copying machine, and accurate time records were pointing lawyers to new ways. The American Bar Association's committee on Economics of Law Practice hammered hard at the economic plight of the profession and what could be done about it. The post-war lawyers were keenly aware of the poor economics of the profession. The stage was set for an event that had far reaching impact on the lawyers' pocketbooks.

The fee schedule was extensively revised in September 1959. Under the leadership of President Terwilliger, who had an unusual perceptiveness and insight on lawyer economics, the Executive Committee voted to publish and distribute to all 6,000 members a "Minnesota Type" fee schedule book. Minnesota had recently issued its schedule in a convenient loose-leaf desk top binder that had met great success. $12,000 was appropriated to pay for the fee book. Binders were procured, the schedule printed, and it was shipped to all lawyers and judges by Feb. 1, 1960.

The new schedule of minimum fees hit the Bar like a welcome rain on parched fields. Partly because of the attractive binder and the ease with which the schedule could be used, within six months the recommended fees became accepted statewide as the reasonable and customary minimum charges for lawyers' services. The fee book urged the members to recognize that an average charge of $18 per billable hour was necessary if the lawyer wished to net, before taxes, but after payment of overhead costs, about $14,500 per year.

The impact of this new schedule was estimated to have raised the lawyers' incomes by 25 percent to 50 percent within three years. Coupled with new law office management techniques, the lawyers were well on their way out of the financial morass that they had suffered through for 100 years. Several updates and additions were issued in the following ten years by the special committee on Economics of the Bar (27 members), but the brown-covered Schedule of Minimum Fees was a standard fixture in most law offices for 12 years.

While the fee schedule was never designed to be other than a guide to fair charges, and only minimum charges at that, an opinion by the Ethics Committee to the effect that continued, flagrant, and publicized fee cutting was in effect a form of advertising and as such a violation of the Canons of Professional Conduct, undoubtedly led many to fear sanctions if they cut fees. The State Bar did formally change the name of the schedule from one of minimum fees to a "customary fee guide" in June 1972, but this came too late to save the schedule.

Although republished and clearly designated as a fee guide, and not mandatory or compulsory, this did not satisfy the federal officials that the anti-trust implications of fixed fees had been eliminated. The anti-trust division of the U.S. Department of Justice "opened a file" on the State Bar late in 1972, and notified the Executive Director that suit would be commenced to force discontinuance of the fee schedule. The Executive Committee thereafter ordered that an appropriate statement be inserted in March, 1973 WisBar making clear to the members that in February the Board of Governors had abrogated and rescinded the former minimum or mandatory fee schedule in Wisconsin. This was done and upon being informed that there no longer was such schedule in Wisconsin, the anti-trust division "closed its file" and the matter was dropped. Within the year, acting under similar pressure, almost every state bar had repealed its fee schedule.

This repeal had an unanticipated favorable result. The Executive Director reported a year later that "when he traveled about the state immediately after the Bar's repeal of the schedule was announced he almost needed hip boots to avoid the 'crocodile tears' of woe that the lawyers were shedding over the demise of the schedule, but that twelve months later the same lawyers were sheepishly admitting that the repeal was probably the best thing that had ever happened to the bar." What happened was that there had been massive shift to keeping time records and charging based on time. This shift was largely due to the revision of the schedule. This not only produced greater income but fairer fees to the clients.

Nevertheless, the Fee Schedule Binders remained in most lawyers' libraries, and inevitably were referred to. In fact, in late December 1973 President Cross, no doubt motivated by the anti-trustee's looking over our shoulder, felt compelled to speak to the Board of Governors, thusly:

"The President discussed the misunderstanding still existent in some quarters concerning the former minimum fee schedule of the State Bar of Wisconsin. He emphasized that it was essential that the members appreciate that the fee schedule has been abrogated and eliminated; that under the current interpretation of the anti-trust statutes it is impossible and illegal for any bar association to have any type of fee schedule; and requested that the Governors convey this message to the lawyers and local bar officers in their several districts."

Despite the fact that on Dec. 29, 1967, Sen. William Proxmire advised the Executive Director that, "I have been advised by the Attorney General of the U.S. that there is no possible anti-trust action that can be taken against the State Bar Association," administrations and views changed. This culminated in Goldfarb, et. al. v. Virginia State Bar, et.al. (1975) in which the Virginia bar was held by the U.S. Supreme Court to have violated anti-trust statutes with its fee schedule, and was assessed large penalties. That case clinched the doom of all fee schedules, mandatory or advisory.

Following the abolition of the fee schedule, the Wisconsin Supreme Court gave the bar something even better. In a case involving fees for criminal defense, the court recognized in its opinion that a fee of $45 an hour was entirely proper as being the prevailing average rate. Coupled with the bar's shift to time records and hourly charges, this pronouncement of the court was a welcome reinforcement to the fees being charged.

In retrospect, the adoption of fee schedules by the bar association were, in light of the times and conditions, both essential and useful. The sad state of the bar economics in the early 1950s, fraught with non-businesslike practices and lack of record keeping, made the publication of the fee schedule book in 1960 timely and helpful. That book also contained many practice and office management tips, and these were supplemented by articles in the Bar Bulletin. By the time the anti-trust attack was mounted, the fee schedule had accomplished its purpose, and undoubtedly had outlived its usefulness. The economics of the bar had turned around and the State Bar was instrumental in bringing it about. The large numbers of new lawyers were being absorbed without difficulty. Law office management was the "in" thing, and the advances in office equipment greatly increased productivity. The computer age was dawning and the lawyers were ready for it.

• Chapter 20: Relations with the Courts

A History of the Organized Bar in Wisconsin