Rule 1.5 Fees

Basis or Rate of Fee.

When the lawyer has regularly represented a client, they ordinarily will have evolved an

understanding concerning the basis or rate of the fee. In a new client-lawyer relationship,

however, an understanding as to the fee should be promptly established. It is not necessary to

recite all the factors that underlie the basis of the fee, but only those that are directly involved in

its computation. It is sufficient, for example, to state that the basic rate is an hourly charge or a

fixed amount or an estimated amount, or to identify the factors that may be taken into account in

finally fixing the fee. When developments occur during the representation that render an earlier

estimate substantially inaccurate, a revised estimate should be provided to the client. A written

statement concerning the fee reduces the possibility of misunderstanding. Furnishing the client

with a simple memorandum or a copy of the lawyer’s customary fee schedule is sufficient if the

basis or rate of the fee is set forth.

Prohibited Contingent Fees.

Paragraph (d) prohibits a lawyer from charging a 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. The amount of alimony, support or property awarded to a

client shall not be used by a lawyer as a basis for enhancing the fee. This provision does not

preclude a contract for a contingent fee for legal representation in connection with the recovery

of postjudgment balances due under support, alimony or other financial orders because such

contracts do not implicate the same policy concerns.

Terms of Payment.

A lawyer may require advance payment of a fee, but is obliged to return any unearned portion.

See Rule 1.16(d). A lawyer 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 1.8(j). However, a fee paid

in property instead of money may be subject to special scrutiny because it involves questions

concerning both the value of the services and the lawyer’s special knowledge of the value of the

property.

An agreement may not be made whose terms might induce the lawyer improperly to curtail

services for the client or perform them in a way contrary to the client’s interest. For example, a

lawyer 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. A lawyer should not exploit

a fee arrangement based primarily on hourly charges by using wasteful procedures. When there

is doubt whether a contingent fee is consistent with the client’s best interest, the lawyer should

offer the client alternative bases for the fee and explain their implications. Applicable law may

impose limitations on contingent fees, such as a ceiling on the percentage. See MCR 8.121.

Division of Fee.

A division of fee is a single billing to a client covering the fee of two or more lawyers who are

not in the same firm. A division of fee facilitates association of more than one lawyer 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 lawyer and a trial specialist. Paragraph (e)

permits the lawyers to divide a fee on agreement between the participating lawyers if the client is

advised and does not object. It does not require disclosure to the client of the share that each

lawyer is to receive.

Disputes over Fees.

If a procedure has been established for resolution of fee disputes, such as an arbitration or

mediation procedure established by the bar, the lawyer should conscientiously consider

submitting to it. Law may prescribe a procedure for determining a lawyer’s fee, for example, in

representation of an executor or administrator, of a class, or of a person entitled to a reasonable

fee as part of the measure of damages. The lawyer entitled to such a fee and a lawyer

representing another party concerned with the fee should comply with the prescribed procedure.