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ABA Explains Fee Division With Client’s Prior Counsel

June 18, 2019, 2:02 PM

A lawyer who takes over a contingent fee case has to let the client know in writing of the former lawyer’s potential right to a fee, the American Bar Association said in an opinion on fee division with prior counsel.

Clients should have a “clear understanding of the total legal fee, how it’s to be computed, when it is to be paid, and by whom,” the opinion by the ABA’s Standing Committee on Ethics and Professional Responsibility said.

Sections (a), (b), and (c) of ABA Model Rule 1.5 provide guidance for attorneys when they take over a case on a contingent fee basis for a client who’s fired the previous attorney without cause, the committee said.

Even if the new attorney doesn’t know how much money may be owed to the first attorney for the work already performed, the new attorney has to inform the client in writing that the prior attorney may be entitled to a portion of the fee, it said.

And neither attorney is “ordinarily” entitled to the full contingent fee, the committee said.

Rule 1.5(e), which addresses fee division between lawyers working on a case simultaneously, doesn’t apply to this scenario, it said. That’s because simultaneous representation requires all the lawyers to assume joint responsibility for a case, which isn’t a possibility for a situation where earlier counsel has been replaced, it said.

In addition to work on a client’s case, the new attorney can advise the client on the legitimacy of the first attorney’s fee claim, the committee said. The scope of this representation should be covered in a fee agreement, and compensation for the work has to be reasonable, it said.

Because the new attorney has a dual role as “counsel for the client and a party interested in a portion of the proceeds,” the attorney has to get the client’s informed consent for any conflicts of interest that exist, the committee said. And if there’s a dispute between the counsel, they’re bound by confidentiality obligations to the client.

Once a case is over, the attorney on the case can’t pay the first attorney without the client’s consent, the committee said. If the client disputes the payment to the first attorney, the attorney on the case must hold the funds in a client trust account until the matter has been settled.

The opinion is ABA Standing Comm. on Ethics & Prof’l Responsibility, Formal Op. 487 6/18/2019.

To contact the reporter on this story: Melissa Heelan Stanzione in Washington at mstanzione@bloomberglaw.com

To contact the editors responsible for this story: Jessie Kokrda Kamens at jkamens@bloomberglaw.com; Rebekah Mintzer at rmintzer@bloomberglaw.com