ABA Issues Formal Opinion Regarding Responsibilities of Successor Counsel when Originally Retained Counsel is Discharged in a Contingent Fee Situation

Steve Herman - August 5, 2019

When a client engages successor counsel in a contingent fee matter to replace his or her original attorney, successor counsel must inform the client in writing that the predecessor counsel may have a claim against the contingent fee.

(The Committee notes that the Opinion only applies where the client terminates a lawyer without cause and hires a new lawyer to replace him. When a client terminates a lawyer with cause, or when the original lawyer withdraws, the first attorney may forfeit some or all of her fee.)

The attorneys are not bound by the fee-division requirements of Rule 1.5(e), which are designed to address situations where two lawyers from different firms handle a case concurrently.  Of course, fee-sharing in proportion to the work performed by lawyers concurrently representing a client is similar to the quantum meruit analysis that is frequently used post hoc to divide contingent fees between successive firms.  But “joint responsibility” under Model Rule 1.5(e) for some other agreed-to division is not realistic and would ultimately burden the client’s ability to discharge the first lawyer and find replacement counsel. [Under Louisiana’s unique Rule 1.5(e), it would be similarly non-sensical for the client to “agree in writing to representation by all of the lawyers involved” on a going-forward basis, as it is contemplated that the originally retained law firm will no longer be involved.]

Upon a recovery, successor counsel must obtain the client’s agreement before dividing any fee with predecessor counsel.  Rule 1.5(a) requires that any fee be reasonable, including the total fees of predecessor and successor counsel, and client consent is required for all disbursements. A client always has the right to challenge the total fee charged or the separate fee claimed by the predecessor counsel. The successor counsel may not disburse fees claimed by that counsel absent the client’s consent.  As a practical matter, of course, the division of fees to predecessor and successor counsel will often not affect the client’s recovery. In these instances, successor counsel may obtain the client’s consent to any fee split that does not alter the client’s recovery. The client can, after consultation and adequate disclosure, decide that the matter should be worked out between counsel without further need for consent or consultation with the client.

Both predecessor and successor counsel remain bound by their confidentiality obligations to the client, as well as any further confidentiality obligations that might be undertaken by the client in settlement of the underlying matter.

In handling funds that are in dispute, the successor lawyer must, of course, follow the safekeeping requirements of Rule 1.15.

ABA Formal Opinion No. 487 (June 18, 2019).