Legal Fee Agreements

There are many types of fee agreements Indiana lawyers can make with their clients. Hourly-rate agreements, contigency fee agreements, retainer agreements, and flat fee agreements are all commonly recognized fee arrangements. But all such agreements and the duties of lawyers in respect to these fee agreements are subject to the rules of ethics adopted by the Indiana Supreme Court and imposed on all lawyers holding a license to practice law in this state. These rules provide that a lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The rules also prohibit comingling funds belonging to the lawyer and funds which belong to the lawyer’s client. For this reason all attorneys in private practice maintain trust accounts in which they hold any money which belongs to their clients. Money received from clients as advance payment for fees must be deposited into trust and kept there until the lawyer has earned the money or has other directions from the client as to how the money is to be applied.

It is best for both lawyers and clients to spell out their fee agreements in writing. In the case of contingency fee agreements the contract must be in writing. In any case, the agreement should be clearly understandable by the client. But even without a written agreement lawyers have a variety of ethical duties in regard to their financial dealings with their cleints. For example, even if a lawyer charges a flat fee for future legal services, the lawyer must inform the client that some portion of the fee may be refundable if the lawyer is unable to complete the task he agreed to undertake. And a lawyer has an ethical duty to return any unearned fees to her client when the representation of the client is concluded.

It is important to understand that the ethical duties of an attorney are not necessarily the same as a lawyer’s legal duties. The rules of ethics in Indiana are quite specific that a violation does not give rise to legal claims on the part of a client or someone else against the lawyer. So, any dispute over fees may well require that the client and the lawyer rely on general rules of contract law apart from the rules of ethics. This fact is another reason why once lawyers and their clients arrive at an agreement regarding services and fees both parties should “get it in writing”.

If you have questions about this article, we will be happy to discuss them with you if you contact us, which you may do at 317-773-3030 or admin@nickloyhigdon.com.