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1.5 Fees

(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. A fee or charge for expenses is unreasonable when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee or expense is in excess of a reasonable fee or expense. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the responsibility assumed, the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;

(8) whether the fee is fixed or contingent;

(9) whether the client has given informed consent as to the fee arrangement; and

(10) whether the fee agreement is in writing.

(b) The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.

(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. A general form of Contingent Fee Agreement is attached to the comments to this rule.

(d) A lawyer shall not enter into an arrangement for, charge, or collect:

(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or

(2) a contingent fee for representing a defendant in a criminal case; or

(3) any fee to administer an estate in probate, the amount of which is based on a percentage of the value of the estate.

(e) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer’s law firm or office unless:

(1) after full disclosure, the client consents to the employment of the other lawyer and to the terms for the division of the fees, confirmed in writing; and

(2) the total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered to the client.

(f) A lawyer may accept payment by credit card for legal services.

(g) A lawyer practicing in this State shall submit, upon the request of the client, the resolution of any fee dispute in accordance with Rule 9.

COMMENT

Reasonableness of Fees and Expenses

[1] Paragraph (a) requires that lawyers charge fees that are reasonable under the circumstances. The factors specified in (1) through (10) are not exclusive. Nor will each factor be relevant in each instance. Paragraph (a) also requires that expenses for which the client will be charged must be reasonable. A lawyer may seek reimbursement for the cost of services performed in-house, such as copying, or for other expenses incurred in-house, such as telephone charges, either by charging a reasonable amount to which the client has agreed in advance or by charging an amount that reasonably reflects the cost incurred by the lawyer.

Basis or Rate of Fee

[2] When the lawyer has regularly represented a client, she or he ordinarily will have evolved an understanding concerning the basis or rate of the fee and the expenses for which the client will be responsible. In a new client-lawyer relationship, however, an understanding as to fees and expenses must be promptly established. Generally, it is desirable to furnish the client with at least a simple memorandum or copy of the lawyer’s customary fee arrangements that states the general nature of the legal services to be provided, the basis, rate or total amount of the fee and whether and to what extent the client will be responsible for any costs, expenses or disbursements in the course of the representation. A written statement concerning the terms of the engagement reduces the possibility of misunderstanding.

[3] Contingent fees, like any other fees, are subject to the reasonableness standard of paragraph (a) of this Rule. In determining whether a particular contingent fee is reasonable, or whether it is reasonable to charge any form of contingent fee, a lawyer must consider the factors that are relevant under the circumstances. Applicable law may impose limitations on contingent fees, such as a ceiling on the percentage allowable, or may require a lawyer to offer clients an alternative basis for the fee. Applicable law also may apply to situations other than a contingent fee, for example, government regulations regarding fees in certain tax matters.

Terms of Payment

[4] A lawyer may require advance payment of a fee, but is obliged to return any unearned portion. See Rule 1.16(d). A lawyer may accept property in payment for services, such as an ownership interest in an enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 1.8 (i). However, a fee paid in property instead of money may be subject to the requirements of Rule 1.8(a) because such fees often have the essential qualities of a business transaction with the client.

[5] An agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in a way contrary to the client’s interest. For example, a lawyer should not enter into an agreement whereby services are to be provided only up to a stated amount when it is foreseeable that more extensive services probably will be required, unless the situation is adequately explained to the client. Otherwise, the client might have to bargain for further assistance in the midst of a proceeding or transaction.

However, it is proper to define the extent of services in light of the client’s ability to pay. A lawyer should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures.

Prohibited Contingent Fees

[6] Paragraph (d) prohibits a lawyer from charging a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement to be obtained. This provision does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under support, alimony or other financial orders because such contracts do not implicate the same policy concerns. Paragraph (d) further prohibits a lawyer from charging a fee to administer a probate estate when payment is based upon a percentage of the value of the estate.

Division of Fee

[7] A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist. Paragraph (e) permits the lawyers to divide a fee subject to certain conditions. The client must consent to the employment of the other lawyer and to the terms for the division of the fees, after full disclosure, which disclosure must be confirmed in writing. In addition, the total fee must be reasonable. Contingent fee agreements must be in a writing signed by the client and must otherwise comply with paragraph (c) of this Rule. A lawyer should only refer a matter to a lawyer whom the referring lawyer reasonably believes is competent to handle the matter. See Rule 1.1.

[8] Paragraph (e) does not prohibit or regulate division of fees to be received in the future for work done when lawyers were previously associated in a law firm, nor does paragraph (e) prohibit payment to a former partner or associate pursuant to a separation or retirement agreement. Paragraph (e) further does not address the issue of the fee division when a lawyer is terminated before the matter is completed, and new counsel is engaged.

Disputes over Fees

[9] A mandatory fee arbitration procedure has been established for resolution of fee disputes. Lawyers must conscientiously comply with the procedure set forth in Maine Bar Rule 9. This Rule prescribes a procedure for determining a lawyer’s fee, for example, in representation of an executor or administrator, a class or a person entitled to a reasonable fee as part of the measure of damages. The lawyer entitled to such a fee and a lawyer representing another party concerned with the fee shall comply with the prescribed procedure.

REPORTER’S NOTES:

Model Rule 1.5 substantively is equivalent to M. Bar R. 3.3 and replaces M. Bar. R. 8. Because the Task Force thought Model Rule 1.5 clearly and comprehensively set forth the rules governing lawyer’s fee arrangements and included the rules governing contingent fees, it recommended its adoption, subject to the noted modifications.

The Task Force recommended Rule 1.5(a) track M. Bar R. 3.3(a)’s more expansive description of what constitutes an “unreasonable fee.” The language added to Model Rule 1.5(a)(4) reflects the recommended addition to the Maine Rules of Professional Conduct Rule 1.2(c)(1) and (c)(2), allowing, under certain circumstances, lawyers’ provision of limited representation to clients. The Task Force recommended two additional provisions to Rule 1.5: (i) the allowance of credit cards as a method of payment for legal services, and (ii) a recognition of mandatory fee arbitration, in accordance with the provisions set forth in Rule 9.

The Task Force further recommended, consistent with established law, lawyers not be paid a fee for administering a probate estate based on a percentage of the value of a probate estate.

In 2005, the Supreme Judicial Court asked the Advisory Committee on Professional Responsibility (the “Advisory Committee”) to consider whether Maine should adopt the Model Rule version of the fee division rule, that allows fee sharing “in proportion to the services performed by each lawyer” or if the referring lawyer “assumes joint responsibility for the representation.” In contrast, M. Bar R. 3.3(d) allows fee division between unaffiliated lawyers if the terms of the fee division are disclosed to the client, and if the total fee is reasonable. The Advisory Committee observed the fee division rule as set forth in M. Bar R. 3.3(d) has been serving its intended purpose of encouraging the early referral of cases to lawyers with greater experience and expertise to handle them. The Advisory Committee solicited comments from members of the Maine Bar, and held an open forum to discuss the fee division issues. Because the vast majority of comments were in favor of maintaining the existing Maine Bar Rule, the Advisory Committee recommended that the language of Model Rule 1.5(e) be replaced with the language of M. Bar R. 3.3(d). The Task Force thought misunderstandings could be avoided, however, if the disclosure to the client about the fee division was confirmed in writing.

Finally the Task Force stressed that Rule 1.5(d) does not address the issue of the fee division when a lawyer is terminated before the matter is completed, and new counsel is engaged. In such a case, the fees paid to the old lawyer and new lawyer must meet the standards set forth in Rules 1.5(a) and (b).

CONTINGENT FEE AGREEMENT

To Be Executed In Duplicate

Date __________, 20__

The client, _____________________________________________ (Name) (Street & Number) (City or Town)

retains the attorney ________________________________________ (Name) (Street & Number)

______________________________________________________ (City or Town)

to perform the legal services mentioned in par. (1) below. The attorney agrees to perform them faithfully and with due diligence.

(1) The claim, controversy, and other matters with reference to which the services are to be performed are:

(2) The contingency upon which compensation is to be paid is:

(3) The client is not to be liable to pay compensation otherwise than from amounts collected for the client by the attorney, except as follows:

(4) Reasonable compensation on the foregoing contingency is to be paid by the client to the attorney, but such compensation (including that of any associated counsel) to be paid by the client shall not exceed the following maximum percentages of the gross (net) (indicate which) amount collected. Here insert the maximum percentages to be charged in the event of collection. These may be on a flat basis or in a descending scale in relation to amount collected.)

(5) The client is to be liable to the attorney for the attorney's reasonable expenses and disbursements as hereinafter specified.

A. Litigation costs. Costs of the action, including:

  1. Filing fees paid to the clerk of courts;

  2. Fees for service of process and other documents;

  3. Attendance fees and travel costs paid to witnesses;

  4. Expert witness fees and expenses;

  5. Costs of medical reports;

  6. Costs of visual aids; and

  7. Costs of taking depositions.

B. Travel expenses. Expenses for travel by the attorney on behalf of the client.

C. Telephone. Disbursements for long-distance telephone calls made by the attorney on behalf of the client.

D. Postage. Postage paid by the attorney for mailings on behalf of the client; and

E. Copying. Costs of photocopying and facsimile telecopying done by the attorney on behalf of the client.

F. Other: (Specify). (The client agrees that fees paid pursuant to this agreement will be divided. Attorney________________ will receive ___________ (dollars or percent of the contingent fee) and Attorney ________________ will receive (dollars or percent of the contingent fee).)

(6) This agreement and its performance are subject to Rule 1.5 of the Maine Rules of Professional Conduct.

WE HAVE EACH READ THE ABOVE AGREEMENT BEFORE SIGNING IT.

Witnesses to signatures

To client: _________________

Signature of Client

To attorney:________________

Signature of Attorney

(If more space is needed, separate sheets may be attached and initialed.)