Opinions of the General Counsel

JurisdictionAlabama,United States
CitationVol. 79 No. 1 Pg. 0074
Pages0074
Publication year2018
OPINIONS OF THE GENERAL COUNSEL

Vol. 79 No. 1 Pg. 74

The Alabama Lawyer

January, 2018

J. Douglas McElvy
douglas.mcelvy@alabar.org

Lien Reduction and Double-Dipping

QUESTION:

The question before the Disciplinary Commission is whether a lawyer representing a client on a contingency fee basis may enter an agreement for, charge or collect an attorney's fee based on the gross recovery or settlement of a matter, and in the same matter, charge an additional contingent fee for the negotiation of a reduction of third-party liens or claims, for example medical bills, statutory liens and subrogated claims, where the liens or claims are related to, and to be satisfied from, the gross settlement proceeds from that matter?

ANSWER:

Absent extraordinary circumstances, a lawyer may not enter into an agreement for, charge or collect an attorney's fee based on the gross recovery or settlement of a matter, and in the same matter, charge an additional contingent fee for the negotiation of a reduction of third-party liens or claims, where the liens or claims are related to, and to be satisfied from, the gross settlement proceeds from that matter.

DISCUSSION:

Rule 1.5(a), Ala. R. Prof. C., requires "[a] lawyer shall not enter into an agreement for, or charge, or collect a clearly excessive fee," and identifies nine factors to be considered when determining whether a fee is clearly excessive:

Rule 1.5.

Fees.

(a) A lawyer shall not enter into an agreement for, or charge, or collect a clearly excessive fee. In determining whether a fee is excessive the factors to be considered are 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 lawyer;
(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 by 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;
(8) whether the fee is fixed or contingent; and
(9) whether there is a written fee agreement signed by the client.
***

These factors, with the exception of paragraph (9) which provides for consideration of a written fee agreement...

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