A lawyer’s contract with a client does not have to be in writing in most cases, but when a lawyer agrees to represent a new client or represent a current client on a new matter, the lawyer should prepare and execute a written contract. These agreements are known by several names, including engagement agreements, fee agreements, engagement letters, retainer agreements or simply fee contracts. Whatever the name of these agreements, reducing the agreement to writing can define the attorney-client relationship, define the duties and obligations of both the lawyer and the client, reduce the risk of misunderstanding and reduce the risk of grievances and disciplinary action.

AGREEMENTS REQUIRED TO BE IN WRITING

Contingent fee agreements must be in writing. ORPC 1.5(c) states, in part:

A contingent fee agreement shall be in writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or 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. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party (emphasis added).

A contingent fee agreement must be in writing and must contain all the elements mentioned above to be in compliance with the Oklahoma Rules of Professional Conduct.

Rule 1.5(b) requires:

The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client (emphasis added).

All written fee agreements, contingent or not, should contain the information required by 1.5(c) and more, and all fee agreements should be in writing.

A WRITTEN FEE AGREEMENT SHOULD CLEARLY IDENTIFY THE CLIENT

Defining the scope of the representation is essential. Essential to defining the scope of the representation is the identification of who is and who is not the client. A few common situations may give rise to uncertainty as to the identity of the client. For example, when a lawyer represents a business organization but not constituents, employees or officers of that organization. The identity issue may arise when a lawyer represents a partnership but not individual partners. Similarly, this issue may also arise when the lawyer represents constituents, partners or officers of organizations but not the organization itself.[1]

At times, someone other than the client may pay the fee for the representation. A third-party payor may think they are entitled to direct the representation or obtain confidential information about the representation. ORPC 1.8(f) prohibits a lawyer from accepting compensation for representing the client unless the client gives informed consent, there is no interference with the attorney-client relationship or the professional judgment of the lawyer and confidential information is kept confidential. When there is a third-party payor involved, a written fee agreement is a handy place to document informed consent. A statement signed by the third-party payor acknowledging that they have no ability to direct the representation or get confidential information without the consent of the client can also be included or contained in a separate document. An agreement about who (the client or the third party) is entitled to any refund of any unused part of the fee is also advisable.

Clarity in an agreement about who is and who is not the client may prevent issues about confidential information, disqualification and later claims by constituents, officers, employees or a third-party payor, who believed they were represented by the lawyer. Providing that clarity in written form may later save a lawyer from disqualification motions, malpractice actions or disciplinary proceedings.

A WRITTEN FEE AGREEMENT SHOULD CLEARLY DEFINE THE SCOPE OF THE REPRESENTATION

The lawyer’s fee agreement should clearly set forth the scope of the representation. In many instances, the scope of the representation will be clear. In litigation, for example, a lawyer may be engaged to prosecute or defend a particular action settlement, judgment, dismissal or sentencing. In other representations – such as business formation, purchasing a business or real estate transactions – the scope of the representation may not be as clear. A lawyer who is engaged to represent a client in the acquisition of a business may need to list particular services that are included within the representation, such as preparing contracts, dealing with regulatory agencies, zoning issues and real estate closing.

It is as important to define what the lawyer will not do in the course of the representation as it is to define what the lawyer will do. For instance, the lawyer engaged to represent a client in the acquisition of the business may want to specifically exclude conducting due diligence on the viability of the acquired business to avoid misunderstanding should the business not perform to the client’s expectations.

REPRESENTING MULTIPLE CLIENTS

When representing multiple clients in one matter, the lawyer must address issues that may arise in joint representation. Those issues include potential adversity between the clients, informed consent to the representation and the potential of a nonconsentable conflict as defined by ORPC 1.7(b) and Comment [17]. The agreement should address the issue of confidential information and how it will be shared. The clients should also be made aware of the consequences of adversity between the clients and the possibility of withdrawal from the representation of one or more of the clients.

MORE ABOUT THE FEE

The requirements of ORPC 1.5(c) do not contain everything that should be disclosed about a fee in the written agreement. The agreement should define the requirement of any advanced fee (retainer) and how that advanced fee is to be replenished. The due date of payments and whether late fees will be required and how those fees will be calculated should also be included.

The written agreement may also remind the client of the uncertain cost of the representation when billed by the hour. If the fee is a flat or a fixed fee, it is imperative that the lawyer specifically describe the service to be provided. Any flat fee should be accompanied by a statement of when and how portions of the fee will be earned. These “benchmarks” will help prevent misunderstandings about whether the lawyer is entitled to some part of the fee if the entire representation cannot be completed through no fault of the lawyer.

The agreement should also define acceptable manners of payment. If credit card transactions are an acceptable form of payment, the agreement should provide for the responsibility for any fees associated with the transaction. Without giving any opinion on whether credit card surcharges are lawful in Oklahoma, I will direct lawyers to 2019 OK AG 12. If a surcharge is imposed, sufficient notice must be given in the agreement, and the surcharge should be reasonably related to the fee imposed. A lawyer’s fees must be reasonable.[2] If the lawyer takes possession of or a security interest in property of the client, the transaction must comply with ORPC 1.8(a).[3]

NONMONETARY OBLIGATIONS OF THE CLIENT

Written fee agreements should also contain other obligations of the client. Those obligations should include keeping the lawyer informed of contact information. The client also has an obligation to provide honest and accurate information to the lawyer, and that should be included in the agreement.

TERMINATION OF THE REPRESENTATION

The addition of a termination provision in your agreement will prevent misunderstandings. Language that defines the end of the representation as the submission of a final bill or another benchmark may be added. This will not only define the end of the representation but also define whether the client is a current or former client for conflict purposes.

CONCLUSION

The provisions listed in this article are not intended to be exhaustive. Not all of these provisions will be desirable in every practice, and I certainly have not included every conceivable provision. I have known many lawyers who do not use written contracts and some who have used them in pro bono representations (for the nonmonetary provisions). I believe it is best for every lawyer to use a written contract for the security and certainty it provides.

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ABOUT THE AUTHOR

Richard Stevens has served as OBA ethics counsel since September 2019. Previously, he was a solo practitioner following his retirement from the District 21 District Attorney’s Office after 33 years as a prosecutor. Mr. Stevens is a member of the OBA Criminal Law Section and the Rules of Professional Conduct Committee. He served as the 2018 OBA vice president, on the Board of Governors from 2013 to 2015 and as a member of the Professional Responsibility Commission.

 

 

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ENDNOTES

[1] See ORPC 1.13.

[2] See ORPC 1.5(a).

[3] See ORPC 1.8 Comment [1].