In a lot of different kinds of legal cases, a contingency fee arrangement can work for both the lawyer and the client. Contingency gives the lawyer incentive to get the best result possible and allows a client with means to have access to good legal help.
But there are ethical rules related to contingency fee agreements—rules that could get you into trouble, if they aren’t followed. Our Chicago attorney defense lawyer at Ellis Legal reviews these rules below.
Everything Must be in Writing (Not Just the Percentage)
Your contingency fee agreement must be in writing. You probably already knew that.
However, the writing needs to say more than just what the contingency percentage is. It also must break down differing percentages based on trial or appeals (if applicable). While you may know that your fee is based on the total recovery, the client may not—your agreement needs to say whether your percentage is based on the total recovery or the recovery after expenses are deducted.
Later Modifications
Sometimes facts and cases are fluid—the contingency fee you agreed on at the start of the case, may now seem like too little, if the case ends up being more involved, or more work, than first anticipated.
But before you modify that agreement, think again. Many courts interpret modifications to contingency fee agreements to be based on undue influence, the lawyer having too much influence over the client once representation has begun and after the initial agreement has been signed.
Post-Judgment Domestic Enforcement
You may already know that a contingent fee dispute in a domestic or family law matter is not allowed. But what about post-judgment enforcement? Can an attorney take a contingency fee on, for example, property division that a spouse never made or alimony that is back owed and never paid?
The answer is yes, ethically and according to bar rules—the state bar has said that such an agreement does not violate the prohibition on contingency fees in domestic disputes so long as the contingency fees are based on post-judgment enforcement.
But be wary: just because the state bar has said that doing this is ethical, doesn’t mean it’s enforceable, if challenged in court, and some courts have found that such an arrangement is not enforceable by the lawyer seeking to collect the agreed upon contingency.
Unrelated to Litigation
The state bar, through the ARDC, has said that you can have a contingency fee arrangement for things that aren’t related to litigation. So, for example, you could be paid a contingency if a business deal goes through, securities get registered, or a contract gets signed.
However, always make sure some other laws (outside of the Illinois Rules of Conduct) aren’t being violated by a contingency agreement.
Always be aware that in every instance where a contingency fee is allowed, the fee must be “reasonable,” a standard that varies from case to case.
If you have a problem or issue with the ARDC, protect your law license. Let us help you. Speak with a Chicago attorney discipline lawyer at Ellis Legal at (312) 967-7629 today.