The American Bar Association Standing Committee on Ethics and Professional Responsibility recently released a Formal Opinion 11-458, Changing Fee Agreements During Representation.
The opinion is just one more reason lawyers need to have explicit conversations with clients at the outset of the engagement about their fees, and especially about the scope of the representation that will be provided for those fees.
Lawyers would be well advised to not only spell out the scope of the services to be provided in their retainer or engagement agreement, but also to provide clients with some guidance about what is not included in the fee agreement and what changes in scope or circumstance would cause a change in the fee.
Lawyers who bill on an hourly basis must also anticipate regular rate increases and advise clients in the original engagement that regular fee increases may be anticipated. Clients may agree to these increases as part of the original fee agreement, without the necessity for the firm to return to each and every client for every regular fee increase.
All of these issues should be memorialized in writing. In addition to having the client sign the engagement agreement, it is always a good idea to have clients initial certain portions of the agreement, such as those describing scope and fees. If the time comes when the fee needs to be changed during the representation or if any questions arise later, it will be easier to point the client (and potentially the court) back to those provisions and the client's explicit written agreement to the terms.
At the first sign that a change in the scope and/or a change in the fee is necessary, the lawyer should contact the client and reiterate those provisions, gaining the client's explicit agreement once again to proceed. If the client refuses to agree to the change in fee and no compromise can be reached at that time, the lawyer may wish to advise the client that they may seek other representation and/or consider withdrawing from the representation. (These conditions should also be enumerated within the engagement agreement).
The ABA opinion emphasizes the necessity that any change in fee be reasonable under the circumstances, and notes that any change in a fee agreement made a significant period of time after the initial retention of the lawyer will be regarded with suspicion, even if the client agrees. Thus, the better (and earlier) the lawyer can articulate the need for an increase in fees, and the more specifically the lawyer can describe the change in circumstances and reasonableness of the requested change, the more likely that the change will be seen as acceptable.