Charging Client for Out-of-Office Consultations
Opinion rules that a law firm may charge a client for the expenses associated with an out-of-office consultation so long as advertisements referencing the service indicate that the client will be charged for the service and the client consents to the charge prior to the visit.
A personal injury law firm (Firm) advertises that it will provide home/hospital visits to potential clients. Firm also advertises that it works on a contingency fee basis and that consultations are free. The fee agreement recites a contingency fee, and further states that costs will be billed separately and in addition to the contingency fee.
May Firm charge a client for the actual cost of the out-of-office consultation (mileage) in addition to the contingency fee?
Yes. A lawyer may enter into a fee agreement with a client that requires the client to pay court costs and expenses of litigation in addition to a contingent fee on any amount recovered for the client. See Rule 1.5(c); RPC 235; 2004 FEO 8. However, the fee and expenses that are ultimately charged and collected from the client must not be clearly excessive in violation of Rule 1.5(a).
May Firm charge a flat fee for the out-of-office consultation irrespective of the actual costs of meeting with the client? For example, may Firm charge a $200 flat fee for any client that requests an out-of-office visit?
A distinction must be made between charges for expenses versus fees for legal services. Firm may not charge a set amount for an expense irrespective of the actual cost to Firm. Rule 1.5(a) provides that a lawyer shall not “charge or collect a clearly excessive amount for expenses.” If a lawyer travels only a short distance to visit a prospective client, it would be clearly excessive for Firm to charge the client $200 as a mileage expense.
However, lawyers may charge flat fees for providing legal services provided the requirements set out in 2008 FEO 10 are met. Lawyer at Firm may charge a flat fee for an initial consultation so long as the client understands and agrees that the flat fee is the entire payment for the specified legal work to be performed by the lawyer, regardless of the amount of time that it takes the lawyer to perform the legal work; the flat fee will be earned by the lawyer immediately upon payment; and when the lawyer’s representation ends, the client will not be entitled to a refund of any portion of the flat fee unless the legal work is not completed or it can be demonstrated that the flat fee is clearly excessive under the circumstances. Id.
If Firm advertises that consultations are free, the $200 charge necessarily must be a charge for expenses rather than legal fees. Firm may not charge $200 for every out-of-office consultation, irrespective of the actual expense Firm incurred.
If the answer to Inquires #1 or #2 is “yes,” must Firm disclose the charge for the out-of-office consultation prior to meeting with a client?
Yes. Firm must specifically disclose the charge for the out-of-office visit, and get the client’s consent to the deduction of the expense from any recovery, prior to making such a visit.
In addition, Firm must clearly disclose any charges associated with out-of-office consultations in advertisements stating that Firm will provide out-of-office consultations and that consultations are free. Rule 7.1 provides that a lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. It is misleading for Firm to advertise that it will provide out-of-office consultations, and that consultations are free if Firm intends to charge clients for expenses related to the out-of-office visit. See 2004 FEO 8 (unless lawyer invariably makes the repayment of costs advanced contingent upon the outcome of each matter, advertisement for legal services that states that there is no fee unless there is a recovery must also state that costs advanced must be repaid at the conclusion of the matter).
If the answer to Inquiries #1 or #2 is “yes,” must Firm disclose the charge for the offsite visit in its contingent fee agreement?
Yes. Rule 1.5(c) provides that a contingent fee agreement must be in writing and must state the method by which the fee is to be determined, including litigation and other expenses to be deducted from the recovery. Firm must disclose in the contingent fee agreement the charge for the offsite visit as an expense to be deducted from the recovery.