Inside Track: Ethical Dilemmas: When Can You Modify a Fee Agreement? When Can You Withdraw?:

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  • October
    16
    2013

    Ethical Dilemmas: When Can You Modify a Fee Agreement? When Can You Withdraw?

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    Oct. 16, 2013 – Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by State Bar’s Ethics Counsel org tpierce wisbar Timothy Pierce and Assistant Ethics Counsel org akaiser wisbar Aviva Kaiser, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.

    Question

    I have been retained to represent a client, the plaintiff in a breach of contract action, for a flat fee. After some initial discussions with the defendant’s lawyer, who wants to fully litigate this case to establish precedent, it became apparent that the action was going to require much more time than I had originally expected. Is it unethical for me to renegotiate the fee agreement? If the client refuses to agree to modify the fee, may I withdraw as counsel?

    Answer

    There is no prohibition under the Wisconsin Rules of Professional Conduct on a lawyer seeking modification of an existing fee agreement. Such a modification, however, is usually subject to special scrutiny because of the fiduciary nature of the client-lawyer relationship. The lawyer must show that the modification was reasonable under the circumstances at the time of the modification as required by SCR 20:1.5(a), that the modification was communicated to the client as required by SCR 20:1.5(b) and SCR 20:1.4(b), and that the modification was accepted by the client.

    The justification for modifying a fee agreement lies in the reasonableness standard under SCR 20:1.5(a). Consequently, a modification sought by a lawyer that changes the basic nature of a fee arrangement or significantly increases the lawyer’s compensation absent an unanticipated material change in circumstances ordinarily will be unreasonable and thus violate SCR 20:1.5(a). Further, a lawyer may not use the threat of withdrawal to coerce a client into accepting a proposed modification.

    Even when the client accepts, the modification may be suspect, and the modified contract may be found unenforceable. Generally, the lawyer must show that a reasonable client would have accepted the modification, typically because the modification benefitted the client in some substantial way.

    References: SCR 20:1.5(a) and (b); SCR 20:1.4(b); SCR 20:1.16(b); ABA Comm. on Ethics & Prof'l Responsibility Formal Op. 11-458 (Aug. 4, 2011) (Changing Fee Agreements During Representation); Restatement (Third) of The Law Governing Lawyers § 18 (2000).




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