MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 2002-11
Whether an attorney may change an hourly fee agreement to a contingency fee agreement in litigation arising out of an estate.
You have requested our advice with respect to whether you may convert an hourly fee agreement into a contingency fee agreement. The facts as we understand them are that you were referred a "difficult" case involving an estate matter. You have filed a series of petitions and motions and participated in a number of hearings before the Orphan's Court and you have also participated in a number of lengthy settlement conferences. To date your hourly contract billing reflects approximately $15,000 in time. Your client's personal attorney has suggested that a new attorney-client contract be established "based on a percentage of what [you] are able to salvage by way of exceptions and appeals to the Court of Special Appeals and negotiations."
First, to the extent required law the Orphan's Court may have to approve any fee, regardless of any agreement reached between the parties.
Second, the fee must be reasonable based upon the factors contained in Rule 1.5(a). Assuming that the fee reached will be reasonable, the principles of Maryland contract law will determine your right to accept an offer from the client to amend the agreement from a fixed hourly fee to a contingent fee. Any amendment to the existing retainer agreement must be made in accordance with the law, and in our opinion the amendment must conform to the requirements of Rule 1.5(c) as follows:
A fee may be contingent on the outcome of the matter
for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. The terms of a contingent fee agreement shall be communicated to the client in writing. The communications shall state the method by which the fee is to be determined, including the percentage or the percentages that shall accrue to the lawyer in the event of settlement, trial or appeal litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated….
We conclude, therefore, that you must communicate with your client in writing setting out the terms of the contingent fee agreement and amending your current retainer agreement. We also suggest that you have your client sign both documents.