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RULE 19-301.5. FEES (1.5)

West's Annotated Code of MarylandMaryland Rules

West's Annotated Code of Maryland
Maryland Rules
Title 19. Attorneys
Chapter 300. Maryland Attorneys' Rules of Professional Conduct
Client-Attorney Relationship
MD Rules Attorneys, Rule 19-301.5
RULE 19-301.5. FEES (1.5)
(a) An attorney shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include 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 of the attorney;
(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 attorney or attorneys performing the services; and
(8) whether the fee is fixed or contingent.
(b) 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 attorney 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.
(c) 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 section (d) of this Rule or other law. A contingent fee agreement shall be in a 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 attorney 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 responsible whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the attorney shall provide the client with a written statement stating the outcome of the matter, and, if there is a recovery, showing the remittance to the client and the method of its determination.
(d) An attorney shall not enter into an arrangement for, charge, or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or custody of a child or upon the amount of alimony or support or property settlement, or upon the amount of an award pursuant to Md. Code, Family Law Article, §§ 8-201 through 8-213; or
(2) a contingent fee for representing a defendant in a criminal case.
(e) A division of a fee between attorneys who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each attorney or each attorney assumes joint responsibility for the representation;
(2) the client agrees to the joint representation and the agreement is confirmed in writing; and
(3) the total fee is reasonable.
COMMENT
Reasonableness of Fee and Expenses--[1] Section (a) of this Rule requires that attorneys charge fees that are reasonable under the circumstances. The factors specified in subsection (a)(1) through (8) of this Rule are not exclusive. Nor will each factor be relevant in each instance. Section (a) of this Rule also requires that expenses for which the client will be charged must be reasonable. An attorney may seek reimbursement for the cost of services performed in-house, such as copying, or for other expenses incurred in-house, such as telephone charges, either by charging a reasonable amount to which the client has agreed in advance or by charging an amount that reasonably reflects the cost incurred by the attorney.
Basis or Rate of Fee--[2] When the attorney has regularly represented a client, they ordinarily will have evolved an understanding concerning the basis or rate of the fee and the expenses for which the client will be responsible. In a new client-attorney relationship, however, an understanding as to fees and expenses must be promptly established. Generally, it is desirable to furnish the client with at least a simple memorandum or copy of the attorney's customary fee arrangements that states the general nature of the legal services to be provided, the basis, rate, or total amount of the fee and whether and to what extent the client will be responsible for any costs, expenses or disbursements in the course of representation. A written statement concerning the terms of the engagement reduces the possibility of misunderstanding.
[3] Contingent fees, like any other fees, are subject to the reasonableness standard of section (a) of this Rule. In determining whether a particular contingent fee is reasonable, or whether it is reasonable to charge any form of contingent fee, an attorney must consider the factors that are relevant under the circumstances. Applicable law may impose limitations on contingent fees, such as a ceiling on the percentage allowable, or may require an attorney to offer clients an alternative basis for the fee. Applicable law may also apply to situations other than a contingent fee, for example, government regulations regarding fees in certain tax matters.
Terms of Payment--[4] An attorney may require advance payment of a fee, but is obliged to return any unearned portion. See Rule 19-301.15 (c) (1.15); Comment [3] to Rule 19-301.15 (1.15); Rule 19-301.16 (d) (1.16). An attorney may accept property in payment for services, such as an ownership interest in an enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 19-301.8 (i) (1.8). However, a fee paid in property instead of money may be subject to the requirements of Rule 19-301.8 (a) (1.8) because such fees often have the essential qualities of a business transaction with the client.
[5] An agreement may not be made whose terms might induce the attorney improperly to curtail services for the client or perform them in a way contrary to the client's interest. For example, an attorney should not enter into an agreement whereby services are to be provided only up to a stated amount when it is foreseeable that more extensive services probably will be required, unless the situation is adequately explained to the client. Otherwise, the client might have to bargain for further assistance in the midst of a proceeding or transaction. However, it is proper to define the extent of services in light of the client's ability to pay. An attorney should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures.
Prohibited Contingent Fees--[6] Section (d) of this Rule prohibits an attorney from charging a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement to be obtained. This provision does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under support, alimony or other financial orders because such contracts do not implicate the same policy concerns.
Division of Fee--[7] A division of fee is a single billing to a client covering the fee of two or more attorneys who are not in the same firm. A division of fee facilitates association of more than one attorney in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring attorney and a trial specialist. Section (e) of this Rule permits the attorneys to divide a fee on either the basis of the proportion of services they render or by agreement between the participating attorneys if all assume responsibility for the representation as a whole and the client agrees to the joint representation, which is confirmed in writing. Contingent fee agreements must be in a writing signed by the client and must otherwise comply with section (c) of this Rule. Joint responsibility for the representation entails financial and ethical responsibility for the representation as if the attorneys were associated in a partnership. An attorney should only refer a matter to an attorney whom the referring attorney reasonably believes is competent to handle the matter. See Rule 19-301.1 (1.1).
[8] Section (e) of this Rule does not prohibit or regulate division of fees to be received in the future for work done when attorneys were previously associated in a law firm.
Disputes over Fees--[9] If a procedure has been established for resolution of fee disputes, such as an arbitration or mediation procedure established by the bar, the attorney must comply with the procedure when it is mandatory, and even when it is voluntary, the attorney should conscientiously consider submitting to it. Law may prescribe a procedure for determining an attorney's fee, for example, in representation of an executor or administrator, a class or a person entitled to a reasonable fee as part of the measure of damages. The attorney entitled to such a fee and an attorney representing another party concerned with the fee should comply with the prescribed procedure.
Cross reference: See Post v. Bregman, 349 Md. 142 (1998) and Son v. Margolius, 349 Md. 441 (1998).
Model Rules Comparison: Rule 19-301.5 (1.5) is substantially similar to the language of the Ethics 2000 Amendments to the ABA Model Rules of Professional Conduct except that it retains existing Maryland language in Rule 19-301.5 (d)(1) (1.5) and adds wording changes to Rule 19-301.5 (e)(2) (1.5) and Comment [7].

Credits

[Adopted June 6, 2016, eff. July 1, 2016.]
MD R Attorneys, Rule 19-301.5, MD R ATTORNEYS Rule 19-301.5
Current with amendments received through February 1, 2019.
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