Vol. 76, No. 11, November 2003

State Bar asks supreme court to delay action on written fee agreement requirement

On Oct. 22, the Wisconsin Supreme Court heard petition 03-04, filed by the Wisconsin Courts Fee Arbitration Study Committee. The petition, which seeks to amend Supreme Court Rule 20:1.5, would require written fee agreements for fees over $1,000 when a lawyer has "not regularly represented" the client and require attorneys to take one CLE credit every two years on the financial relationship between lawyers and clients. The committee was created by the court in 2001 to study mandatory and voluntary fee arbitration of lawyer-client fee disputes.

On Sept. 20, the State Bar Board of Governors voted 31-1 (with 3 abstentions) to oppose the petition and request the court to defer action until the Wisconsin Ethics 2000 Committee submits its full report next year. State Bar President George Burnett and President-elect Michelle Behnke appeared on behalf of the bar. The justices agreed to defer further action on this subject until the ongoing Wisconsin Ethics 2000 Committee completes it's work next fall.

The State Bar opposes the rule for several reasons:

It is open to debate whether the rule is needed. Despite the petition, the committee's report acknowledges that empirical data from the Office of Lawyer Regulation (OLR) shows that allegations of unreasonable fees comprise less than four percent of all ethical allegations, and a similarly small percent of misconduct findings. Among the committee's conclusions is the determination that "fee disputes occur in only a small percentage of interactions between lawyers and clients."

The State Bar questions whether the administrative burden that this rule imposes on the legal profession is justified, especially on the small firms and solo practitioners. The rule requires that every fee arrangement over $1,000 in estimated amount be committed to writing when the lawyer does not regularly represent the client. The rule further requires that the attorney provide the client with regular, periodic accounting of fees and revise the fee estimate each time it becomes "substantially inaccurate."

Current Rule 20:1.5(b) already requires significant communication to the client about fees, "when a 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."

The proposed rule presumes that fees can be reasonably estimated in all matters and makes it an ethical violation for a lawyer to decline to estimate fees, even if the lawyer cannot accurately do so. Given the fact that the lawyer has little control over actions taken by his or her adversary, especially in a family law practice, fees cannot always be accurately estimated. The same is true for unique or complex business and litigation matters.

The proposed rule is too indefinite to adequately guide the legal profession in its ethical responsibilities, and in fact may precipitate more, not fewer, ethical complaints. For example, according to the rule, a fee estimate must be provided to every client who the lawyer has not "regularly represented" without definition of that key term. The rule also requires that a written estimate be provided when it is "reasonably foreseeable" that a fee of $1,000 or more will result. The estimate must be provided within a "reasonable time" after representation begins. If the fee estimate becomes "substantially inaccurate," another key term undefined, the lawyer must "timely" provide a revised estimate.

The rule also requires an "estimate" of fees at the beginning of a matter, when counsel has heard but one side of the story and often considerable investigation must be done in order to bring counsel abreast of the full scope of the matter. This is especially important because the term "estimate" as used in the rule presumably means a reasonable approximation of the fees to be charged. In the mind of many consumers, however, an estimate is a promise not to exceed a given amount. Thus, the rule may promote more, not fewer, misunderstandings between lawyers and clients. The important point is that the rule as drafted is too inexact, providing more aspirational goals than practical guidelines as to a lawyer's responsibility.

The State Bar is not opposed to re-examining Rule 20:1.5, especially in light of the counter-proposal advanced by the Ethics 2000 Study Committee. The board was presented a "draft" of the Ethics 2000 proposal at its Sept. 20 meeting. Discussion among board members suggested that the Ethics 2000 proposal is worthy of review, but given the fact that the proposal was provided to the Board of Governors in draft form and without formal approval by the Ethics 2000 Committee, the board deferred taking up the issue. Due deliberation and evaluation of the Ethics 2000 proposal or any other amendment to Supreme Court Rule 20:1.5 is warranted but at a deliberate pace.

Petition 03-04 was published in the September Wisconsin Lawyer.

Wisconsin Lawyer