"Earned upon receipt" fee arrangement not per se ethical. Reasonableness of such agreement determined under ER 1.5 guidelines.
A common practice of attorneys in criminal defense is to enter into fee arrangements which provide for a fee "earned upon receipt.” These agreements result in a non-refundable fee, not specifically dependent upon the amount of work performed for the client.
Are fee arrangements providing for fee “earned upon receipt” unethical so as to require disciplinary action by the Arizona Bar Association?
CODE PROVISIONS INVOLVED
ER 1.5 Fees
(a) A lawyer’s fee shall be reasonable. 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 lawer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or 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; and
(8) whether the fee is fixed or contingent.
(d) A lawyer shall not enter into an arrangement for, charge or collect:
(2) a contingent fee for representing a defendant in a criminal case.
Formerly AR 2-106 which stated that:
(A) A lawyer should net enter into an agreement for, charge, or collect an illegal or clearly excessive fee.
(B) A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee.
Factors to be considered. . . in determining reasonableness. . . include . . .: (same as in ER 1.5).
(C) “a contingent fee in a criminal case” is prohibited.
The Comnittee is of the opinion that there is no per se rule holding “earned upm receipt” fee contracts unethical. In fact, ER 1.5(a)(8) specifically recognizes fixed fee contracts. Therefere, each fee contract must be held to be reasonable or unreasonable in light of the guidelines set forth in ER 1.5 and the specific facts of each case.
Formal opinions of the Committee on the Rules of Professional Conduct are advisory in nature only and are not binding in any disciplinary or other legal proceeding. This opinion is based on the Ethical Rules in effect on the date the opinion was published. If the rules change, a different conclusion may be appropriate.
© State Bar of Arizona 1986
View this opinion, archived in PDF format.