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Ethics Opinion

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RI-286

December 17, 1996

SYLLABUS

    A lawyer may not charge a contingent fee in a criminal case. A fee based on results obtained is a contingent fee. An advertising announcing "all fees based on results" in a criminal matter is improper.

    References: MRPC 1.2(a), 1.4(b), 1.5(d), 1.7(b), 7.1; Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 US 626 (1985); In re Stivers, 516 NE2d 1066 (Ind 1987).

TEXT

A lawyer is considering changing the billing scheme for some criminal cases to base the fees on results obtained and to advertise those fees. For example, if a client was charged with Operating Under the Influence of Liquor [OUIL], 1st offense, and acquitted, the fee would be $1,500. If the client was convicted of impaired driving (a lesser included offense) the fee would be $750. If the client was convicted as charged, the fee would be $500. The corresponding advertisement would state "all fees based upon results." The lawyer asks if this fee structure violates MRPC 1.5(d) and whether the advertisement violates MRPC 7.1.

MRPC 1.5(d) states:

    "(d) A lawyer shall not enter into an arrangement for, charge, or collect a contingent fee in a domestic relations or in a criminal matter."

A fee based upon results obtained is a contingent fee. Contingent fees are governed by MRPC 1.5(c) and (d), and MCR 8.121. While the comment to MRPC 1.5 does not address the blanket prohibition on contingent fees for criminal matters, it is explained in the Annotated Model Rules of Professional Conduct, Third Edition, American Bar Association, 1996, p 66, which states:

    "In the context of criminal matters, a contingency fee based on exoneration creates a potential conflict of interest as the lawyer has an incentive not to plea bargain and may otherwise act contrary to his or her client's best interest."

The ABA/BNA Lawyer's Manual on Professional Conduct states at 41:917, "It is indisputably unethical for a lawyer to represent a criminal defense client on a contingent fee bases."

Authors Hazard & Hodes discuss the rule in more detail.

    "Numerous cases recite that contingent fee arrangements in criminal cases are 'against public policy' but few if any explain what that public policy might be. Certainly, some such fee arrangements could lead to unacceptable conflicts of interest. A fee pegged to total exoneration, for example, creates risk that a lawyer might improperly counsel against a proffered plea bargain or might ignore opportunities to argue for mitigation or conviction of a lesser offense." The Law of Lawyering, 1996 Supplement, Prentice-Hall, ยง1:5:501.

Each of these sources cite In re Stivers, 516 NE2d 1066 (Ind 1987), where a lawyer was reprimanded for using a contingent fee arrangement for a client seeking reduction or suspension of a sentence imposed in a criminal case, where the lawyer would recover $1500 if the client was released but only $500 if the client was not released.

This type of contingent fee arrangement can also be analyzed under MRPC 1.7(b) which states in part:

    "(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests unless:

      "(1) the lawyer reasonably believes the representation will not be adversely affected; and

      "(2) the client consents after consultation . . . ."

The proposed fee scheme is exactly the kind of contingent fee arrangement analyzed above. Not only does it violate 1.5(d), it gives the lawyer an impermissible financial interest in the outcome of the litigation. If the lawyer will receive less compensation if the client pleads guilty, the lawyer may counsel the client to continue to trial on the chance of acquittal rather than accept a plea bargain. It is difficult to imagine how a lawyer could reasonably believe the representation would not be adversely affected in these circumstances.

In addition, MRPC 1.2(a) requires a lawyer to "abide by the client's decision, after consultation with the lawyer, with respect to a plea to be entered, whether to waive jury trial and whether the client will testify." Again, if the lawyer will receive greater compensation for an acquittal after trial, the lawyer's own financial interests may be in conflict with the client's decision to accept a proffered plea to a lesser offense.

MRPC 1.4(b) requires a lawyer to "explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation." The lawyer's ability to explain the advantages and disadvantages of an offer to plead to a lesser offense may conflict with the lawyer's own interests in obtaining the maximum compensation.

As to the proposed advertisement, MRPC 7.1 states:

    "A lawyer may, on the lawyer's own behalf, on behalf of a partner or associate, or on behalf of any other lawyer affiliated with the lawyer or the lawyer's law firm, use or participate in the use of any form of public communication that is not false, fraudulent, misleading, or deceptive. A communication shall not:

      "(a) contain a material misrepresentation of fact or law, or omit a fact necessary to make the statement considered as a whole not materially misleading;

      "(b) be likely to create an unjustified expectation about results the lawyer can achieve, or state or imply that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or

      "(c) compare the lawyers' services with other lawyers' services, unless the comparison can be factually substantiated."

An ad offering refunds to drunk drivers if convicted was part of the advertising scheme struck down by the United States Supreme Court in Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio, 471 US 626, 85 LEd 2d 652, 105 S Ct 2265 (1985). The Ohio Disciplinary Counsel had argued that the ad was false, fraudulent, misleading, and deceptive as it promised a contingent fee in a criminal matter which is also prohibited in Ohio. Another ad used by Mr. Zauderer claimed that in personal injury cases "[i]f there is no recovery, no legal fees are owed . . ." which did not explain that the client may be liable for costs in a contingent fee case and was also deemed deceptive. Therefore, an advertisement which merely states "all fees based on results" is improper.

 
     

 

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