Rules of Professional Conduct Related Ethical Opinions

1.5  Fees

13-02: Client Files; Withholding Documents

In the extreme circumstances in which a lawyer is reasonably concerned that by providing a tangible copy of certain documents to an incarcerated client, the safety of the client or a third person may be jeopardized, the lawyer may ethically retain the documents and refuse to allow the incarcerated client to possess the documents during the representation. The lawyer must still fully inform the client as to the contents of the documents, discuss information contained in the documents with the client, and explain the lawyer’s rationale for wanting to retain possession of the documents. If the client cannot be persuaded to allow the lawyer to retain physical possession of the documents, the lawyer may ethically retain possession of the documents to protect the client’s safety or the safety of a third person, over the client’s objection.

10-03: Fees; Fee Agreement; Non-Refundable Fees; Flat Fees

Provided that the overall fee is reasonable, it is ethically permissible to charge a minimum fee that may be designated “earned upon receipt” or “non-refundable” with the language required by ER 1.5(d), for a specified number of hours or through completion of the matter, whichever occurs first, and also to include a provision that, under certain reasonably defined changed circumstances, the lawyer reserves the right to charge the client on an hourly basis for the remainder of the matter.

10-04: Fees; Division Of Fees Between Lawyers Not In The Same Firm; Out-Of-State Lawyers

An Arizona lawyer may divide a fee with a lawyer admitted in another United States jurisdiction if the client consents to the arrangement in writing, each lawyer receiving any portion of the fee assumes joint responsibility for the representation, and the total fee is reasonable.  In addition to complying with these general rules regarding fee division, the out-of-state lawyer must be in good standing, admitted in a United States jurisdiction, and providing services to the Arizona client in association with a lawyer who is admitted to practice in Arizona and who actively participates in the matter.  The client must consent in writing to the fee division, acknowledge the out-of-state lawyer is not admitted in Arizona, and consent to the out-of-state lawyer’s representation.  The out-of-state lawyer must either ensure that he or she is admitted pro hac vice in order to provide legal services that require pro hac vice admission or be eligible to provide temporary legal services in Arizona pursuant to ER 5.5.

10-02: Communication with Clients; Departing Lawyer; Law Firm's Obligations

When a lawyer’s employment with a firm is terminated, both the firm and the departing lawyer have ethical obligations to notify affected clients, avoid prejudice to those clients, and share information as necessary to facilitate continued representation and avoid conflicts.  These ethical obligations can best be satisfied through cooperation and planning for any departure.

09-02: Termination of Representation; Withdrawal; Fees; Confidentiality

Lawyer-client relationships sometimes end earlier than the lawyer and client anticipated at the start of the representation. A lawyer’s withdrawal from representation is not always agreed upon by the client and may also be under touchy circumstances, such as dishonesty of the client or non-payment of fees owed to the lawyer. Further, a client may fire a lawyer at any time, for good or bad reasons. A lawyer faced with such situations must uphold the lawyer’s ethical responsibilities to the client despite that the representation is at, near, or has reached an end. Client confidentiality must be protected unless the ethical rules specifically allow disclosure, and any disclosures must be made as narrowly as possible. If, in a court setting, the tribunal does not allow the withdrawal, the lawyer can seek relief from a higher court, but must protect the client’s interests and competently represent the client until and unless an order for withdrawal is granted. A withdrawing lawyer must advise the client and new counsel of pending court dates, status of the case, and anything else necessary and appropriate for the smooth transfer of the representation. Any fees charged to the client for withdrawal-related work must be reasonable. Of course, the client is entitled to the client file regardless of the circumstances for the withdrawal.

08-01: Fees; Trust Accounts; Credit Cards

After the Committee on the Rules of Professional Conduct issued this opinion, the Supreme Court of Arizona amended ER 1.15 and Rule 43 to allow lawyers, under certain circumstances, to take credit cards for advance fees and costs. Click here for the link to the Supreme Court of Arizona's website.

A lawyer may accept credit-card payments only for earned fees, earned-upon-receipt retainers, or reimbursement for advanced costs. Such credit-card payments may not be deposited into the lawyer’s trust account. , A lawyer may not accept payment in advance by credit card for unearned fees or costs not yet advanced. , A lawyer may receive a single, non-cash payment from a client consisting of funds belonging partly to the client and partly to the lawyer. , Such a payment must occur by check, money order, or electronic-fund transfer, and must be deposited into the lawyer’s trust account. , After the transaction has cleared the issuing bank, the lawyer’s portion must be removed promptly from the trust account.

06-04: Disclosure; Third Parties; Prepaid Legal Services; Conflict

In the context of a prepaid legal services program, attorneys may not release confidential or privileged information to a third-party auditor without the client's informed consent.  Because billing information often contains confidential information, contractual provisions requiring an attorney to allow, without exception, third parties to review the client file and billing records violate ER 1.6(a).

An attorney may agree to represent a client under a prepaid legal services agreement that limits the presumptive compensation allowable for "basic" legal services if the attorney complies with ER 1.8(f)(2), including determining that the limit on payment does not interfere "with the lawyer's independence of professional judgment or with the client-lawyer relationship."  When agreeing to accept third-party payments, the attorney must be careful to abide by the client's "decisions concerning the objectives of representation and ... whether to settle a matter."  ER 1.2(a).  An attorney's agreement to limit compensation from a third party does not limit the attorney's duty provide a diligent and thorough representation of the client.

Provisions in a prepaid legal services contract between a client and the issuing trust do not excuse a lawyer's compliance with applicable ethical rules. An attorney may not enter into a contract that requires the attorney to violate his or her ethical duties.

05-06: Limited Scope Representation; Candor to Tribunal; Fees

An attorney representing a client may enter into an agreement limiting the scope of services to a specific and discrete task. An attorney is required to have sufficient knowledge and skill to provide reliable counsel to the limited scope client as to the advisability of the action requested by the client. The attorney providing limited scope representation is not required to disclose to the court or other tribunal that the attorney is providing assistance to a client proceeding in propria persona.

05-02: Advertising - Referral Gifts/Fees; Inactive Lawyer

An attorney who is on inactive status and not practicing law must comply with the Rules of Professional Conduct. An inactive attorney may pay a referral fee to a third party so long as the fee is not related to legal services and does not constitute sharing of legal fees. An inactive attorney may not, however, pay the referral fee to a practicing attorney.

04-02: Lawyer Referral Fees; Division of Fees with Lawyers; Gifts

Arizona, unlike some other states, does not allow a lawyer to be paid a fee merely for recommending another lawyer or referring a case. Instead, Arizona allows "referral fees" only in the sense that lawyers who are not in the same firm may divide a fee as provided in ER.1.5(e). That rule allows lawyers to divide a single billing to a client if three conditions are met: (1) each lawyer receiving any portion of the fee assumes joint responsibility for the representation: (2) the client agrees, in a signed writing, to the participation of all the lawyers involved: and (3) the total fee is reasonable. "Joint responsibility" requires, at the least, that the referring attorney accept vicarious liability for any malpractice that occurs in the representation. Although the client must consent to the respective roles of the lawyers in the ongoing representation, ER 1.5(e) does not require that the client consent to the particular division of the total fee among the lawyers.

The referral fee that does not satisfy ER 1.5(e) violates ER 7.2(b), which generally prohibits lawyers from paying others for channeling professional work. ER 7.2(b) is not violated, however, by a lawyer giving or receiving a "de minimis" gift that is not a "quid pro quo" for another lawyers referring a particular client.

03-07: Trust Account/ADR Practice Only

A lawyer who engages solely in alternative dispute resolution does not represent clients and, therefore, is not required to maintain a trust account in accordance with ER 1.15 and Rule 43, Rules of the Supreme Court of Arizona (Ariz. R.S.Ct.).

03-06: Hybrid Fee Agreement, Fee Structure

Hybrid fee arrangements that combine aspects of contingent and hourly fee arrangements are permissible if the resulting fee is reasonable and all requirements of ER 1.5 are met. Such fee structure is likely to produce an "excessive fee" and be unreasonable, however, where it provides that the lawyer is entitled to the greater of a standard contingency percentage or the lawyer's standard time charges.

01-11: Billing; Unauthorized Practice of Law; Nonlawyers; Employees of Lawyer

A law firm may only contract with an agency that would assist firm clients in preparing forms for medical benefits if: a) the clients are informed about the costs of such support services; and b) the lawyers adequately supervise the work of the Agency (and review the forms) to assure that the Agency's conduct is compatible with the lawyers' ethical obligations.[ERs 1.4, 1.5, 1.6, 5.3, 5.5]

00-07: Collection of Legal Fees; Fee Agreements; Interest; Billing; Confidentiality

Lawyers may charge interest on past due legal fees provided that the rate is reasonable and the client has given informed consent. Lawyers also may use collection agencies, as described in Ariz. Op. 94-11, to collect fees and interest charges, if the client has given informed consent and may charge the client for the collection fee. [ER 1.5]

00-08: Letterhead; Of Counsel Designation; Out-of-State Lawyers; Division of Fees with NonLawyers

A law firm may list on its letterhead attorneys who are not admitted to the State Bar of Arizona as being "Of Counsel" to the firm. The law firm must state on the letterhead the "Of Counsel" attorneys are not members of the State Bar of Arizona, identify that they are "only admitted" in certain states and that their practice in Arizona is limited to federal law matters. They also may indicate the out-of-state attorneys are available only for consultation in federal Social Security matters. The law firm may engage in a fee sharing arrangement by both paying and receiving fees from the "Of Counsel" attorneys. [ERs 1.5(e), 5.5, 7.1, 7.5]

99-06: Internet; Referral Fees; Division of Fees with Nonlawyers; Lawyer Referral Services; Advertising and Solicitation

Arizona lawyers ethically may not participate in an Internet service that sends legal questions from individuals to attorneys based upon the subject matter of the question. Lawyers also could not pay a fee for such referrals or give the service a portion of the legal fees earned from the referral. [ER 1.5, 5.4, 5.5, 7.1(j), 7.1(r)(3), 7.4]

99-04: Fees; Division of Fees with Lawyers

Ethical Rule 1.5(e) provides the exclusive framework for dividing fees among lawyers in different firms. Thus, a contract between a firm and its departing lawyers that purports to govern post-departure disposition of fees must comply with ER 1.5(e) or it is ethically unenforceable. Such contracts also cannot restrict a lawyer’s right to practice in violation of ER 5.6 (a). [ER 1.5(e), 5.6(a)]

99-05: Fees; Retainer Agreements; Contingent Fees; Domestic Relations

An attorney representing a domestic relations client under a County Bar reduced fee agreement ethically may not ask the client to modify the agreement to permit a higher hourly rate if a certain value of assets is awarded to the client. [ER 1.5(d)]

99-02: Fees; Retainer Fees; Fee Agreements; Retainer Agreements

A non-refundable fee is ethical if reasonable under E.R. 1.5. A client must be fully informed about and expressly agree to such a fee, preferably in writing. Non-refundable fees are earned upon receipt and do not go into a lawyer's trust account. [ER 1.4 (b), 1.5, 1.15, 1.16 (d)]

96-04: Conflicts of Interest; Multiple Representation; Automobile Accident; Fee Sharing Among Lawyers

This opinion discusses the conflict of interest issues and fee issues when a law firm initially represents both a driver and passenger in a personal injury case against another driver and eventually the firm refers out the passenger for separate representation.  There is a non-waivable conflict if the firm continues to represent the driver, yet has an interest in recovering a portion of the fees retrieved by the passenger.  [ERs 1.5, 1.7, 1.8, 1.9, 1.16]

95-05: Gift; Personal Injury Representation

An attorney in a personal injury case, who has received his full fee, may accept the client's portion of the personal injury settlement, as a gift from the client, if:  (1) the attorney complies with the requirements set forth in ER 1.8 regarding business transactions with clients; (2) the attorney does not attempt to prepare a legal instrument to perfect the gift; and (3) the client is competent to make an informed decision.  These requirements do not apply to token gifts from clients.  [ERs 1.5, 1.8, 1.14)

94-14: Donating Fee to Charity; Advertising Donation

An attorney may offer to donate 10% of a legal fee to the charity of a client's choosing as long as: 1) the total fee charged is reasonable; 2) the attorney's independent professional judgment is not affected; 3) charities are not paid for referrals; and 4) the advertisement of the offer complies with ER 7.1.

94-15: Contingent Fees; Patent Assignments

An attorney may take a contingent fee in the form of a partial patent registration assignment for prosecution of a patent application at the U.S. Patent and Trademark Offices as long as the attorney complies with the requirements of ER 1.8 with respect to entering into a business transaction with a client.

94-10: Legal Fees; Percentage Surcharge

Lawyer may charge percentage surcharge in lieu of billing actual expenses and costs if agreed to in writing, approximates actual costs, and overall fees are reasonable.

94-09: Reporting Misconduct; Excessive Fees

Discussion of attorney's obligation and duties of confidentiality when he believes another attorney has charged an excessive fee.

94-02: Retainer Agreement; Representation; Fees and Files

Attorney's proposed contingent-fee agreement violates Rules as to: 1) limiting client's right to discharge attorney; 2) attorney's right to withdraw unilaterally; 3) attorney's overbroad authority; 4) method of calculating fee; and 5) attorney's withholding client files after termination of representation.

93-04: Contingent Fees; Domestic Relations Cases

Lawyer may charge a contingent fee to collect the arrearages of child support and spousal maintenance. Revision of Opinion 91-20.

93-05: Employment of Non-Lawyers; Trial Consultants

Lawyer may employ a non-testifying trial consultant, and pay him a prearranged bonus fee of if the case settles or is won at trial, subject to certain guidelines.

92-08: Sale or Lease of a Law Practice; Goodwill of a Law Practice (Invalidated by Op. 06-01)

Sole practitioner proposes to turn over his law practice to a law firm while he goes on a one-year leave of absence. Discussion of whether a law practice has a salable goodwill. (Invalidated by Op. 06-01)

91-20: Fees

Attorney may charge a contingent fee to collect arrearages of child support and spousal maintenance.

89-02: Fees

An attorney may represent an indigent client on a contingency fee basis in a post-decree action to recover property not divided during the marriage dissolution proceeding only where the action involves property claim separate from alimony and child support issues; this type of fee arrangement should be considered a last resort to allow representation to a party otherwise unable to afford competent legal counsel.

87-06: Contingent Fee; Domestic Relations

Inquiring attorney proposing to use contingent fee arrangement in marital dissolution matter.

87-16: Fees

Law firm including the amount of money recovered for costs, attorney fees, interest, and all other sums recovered for purposes of computing contingent fee.

86-12: Fees; Scope of Representation; Meritorious Claims

Pursuant to A.R.S. § 25-315, a lawyer may obtain a lien on a community funds as security for fees and costs, unless and until an Arizona Appellate Court rules otherwise.

86-09: Fees

Absent a written fee agreement or the client's consent after notice, interest may not be charged on delinquent invoices.

86-06: Fees

"Earned upon receipt" fee arrangement not per se ethical. Reasonableness of such agreement determined under ER 1.5 guidelines.

86-03: Fees

Division of fees with attorney who is "of counsel" is permissible if based upon percentage of work done.