ABA Issues Opinion on Dividing Contingent Fees with Prior Counsel

By David Hricik

The American Bar Association’s committee on professional ethics issues ethics opinions interpreting the ABA Model Rules, which are similar to (almost) all state rules, as well as the PTO’s disciplinary rules.  Its opinions are not binding, but they hold sway.

The ABA released Formal Opinion 487 (June 18, 2019), addressing how successor counsel should divide fees with predecessor counsel (from a different firm) who have contingent fee agreement with successor counsel’s client in the case.  The opinion provides some helpful guidance on what can be — given the literal language of the fee splitting rules — some thorny issues. The summary of the opinion states:

In a contingent fee matter, when a counsel (successor counsel) from one firm replaces a counsel (predecessor counsel) from another firm as counsel for the client, Rules 1.5(b) and (c) require that the successor counsel notify the client, in writing, that a portion of any contingent fee earned may be paid to the predecessor counsel. The successor counsel may not be able to state at the beginning of the representation the specific amount or percentage of a recovery, if any, that may be owed to the predecessor counsel unless the amount or percentage has been agreed by the client and both predecessor and successor counsels. The successor counsel is not bound by the requirements of Rule 1.5(e), either at the time of engagement or upon a recovery, because Rule 1.5(e) addresses situations where two lawyers are working on a case together, not situations where one lawyer is replacing another. Upon a monetary recovery, the successor counsel may only disburse a portionof the overall attorney’s fee to the predecessor counsel with client consent or pursuant to an order of a tribunal of competent jurisdiction. If there is a dispute as to the amount due to the predecessor counsel under Rule 1.15(e) the disputed amount may have to remain in a client trust account until the matter is resolved. If successor counsel negotiates with predecessor counsel on the client’sbehalf, successor counsel must explain to the client the potential conflict of interest in the dual roles pursuant to Rule 1.7, where successor counsel has a personal interest in the amount predecessor counsel may receive or in the timing of the release of funds held pursuant to Rule 1.15(e)

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.

10 thoughts on “ABA Issues Opinion on Dividing Contingent Fees with Prior Counsel

    1. 2.1

      Thanks NPtC – I’ll give it a look.

    2. 2.2

      This snippet is found in a linked article:

      New websites must comply from 23 September 2019 on, old websites from September 23, 2020 on and mobile applications from June 23, 2021 on.

  1. 1

    Off topic. In view of the Brunetti case, can a lawyer turn down representation of a prospective trademark client if the lawyer is offended by the mark that the prospective client wants the lawyer to register with the USPTO?

    1. 1.1

      NPtC,

      I take it that you are not an attorney.

      An attorney remains in charge of actually accepting engagement with any prospective client.

      Here, since the scope of legal services may include offensive (but still legal) material, the attorney should spell out their parameters prior to (or concomitant with) the agreement to serve as counsel.

      Inside counsel may have a more difficult time, as the exercise of one’s own choice may involve leaving the inside position.

      1. 1.1.1

        At first blush, one would be inclined to think that an attorney is free to choose who their clients are. However, the recent spate of cases involving florists and cake shop owners denying service to same sex couples suggests that might not always be true. See for example the cases in Oregon and Colorado involving cakeshop owners and the case in Washington involving a florist.

        My refined question for David is whether he expects that to be true for lawyers with respect to marks that (a) run counter to the lawyer’s religious beliefs or (b) the lawyer finds morally repugnant. Take for example, the Brunetti mark, if a prospective client walked into your office could you turn them down for either reasons (a) or (b).

        1. 1.1.1.1

          NPtC,

          Yes, you (as an attorney) are not forced to accept ANY client.

          This is true at first blush and all subsequent blushes.

          Mind you, this is NOT the same as offering a service to the public and then denying someone that service (in the form of actual discrimination).

          1. 1.1.1.1.1

            Separate topic. Based on that premise, would you say that attorney websites do not need to comply with the Americans with Disabilities Act?

            1. 1.1.1.1.1.1

              NPtC,

              Can you be more specific? Is there a particular website/disability combination that you think should apply to websites in general (and then to attorney websites in particular)?

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