Can a lawyer charge the client an extra fee for getting a subrogation lien reduced, on top of the agreed contingency percentage?

Plain-English summary

A lawyer represented a personal-injury plaintiff under a one-third contingency fee agreement, settled for $9,000, and then got the auto carrier's $3,000 subrogation lien reduced to $2,000 under the common fund doctrine. The question was whether the lawyer could charge the client an extra fee for reducing the lien. The opinion assumed the fee agreement set the lawyer's fee at 33% of the gross recovery before deduction of expenses or liens.

The opinion concluded the lawyer could not. Under Rule 1.5(c), the written contingency fee agreement fixed the fee at 33% of the $9,000 gross recovery, or $3,000, and the lawyer was not entitled to any additional amounts. It further reasoned that the lawyer could not modify the existing fee agreement or enter a second one to obtain a fee for the lien reduction without rebutting the presumption of undue influence by clear and convincing evidence: full disclosure, client consent based on adequate consideration, and the client's opportunity for independent advice. It analogized this to the business-transaction concern in Rule 1.8(a).

The opinion explained that this conclusion is consistent with the common fund doctrine, which is not intended to alter the fee arrangement between lawyer and client but addresses the lawyer's right to a fee from a subrogee who benefits from the lawyer's work. It cited Baier v. State Farm, where the lawyer calculated the client's fee net of the lien and then sued the subrogee to recover a proportionate share, contrasting that with the inquiring lawyer who sought an extra fee from the client.

Currency note

This opinion was issued in 1998, before Illinois adopted the 2010 Illinois Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in January 2010 as generally consistent with the 2010 Rules (referring to Rules 1.5(c) and 1.8(a)), while noting the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Can a lawyer bill the client separately for getting a lien reduced?

A: No. The opinion concluded that under Rule 1.5(c) the lawyer's fee is fixed by the written contingency agreement (33% of the $9,000 gross recovery), and the lawyer is not entitled to any additional amount for reducing the lien.

Q: Could the lawyer amend the fee agreement to add a lien-reduction fee?

A: Only by rebutting the presumption of undue influence. The opinion explained that a fee agreement entered or modified after the lawyer is retained is presumptively fraudulent and requires clear and convincing evidence of full disclosure, adequate consideration, and the client's opportunity for independent advice.

Q: Does the common fund doctrine let the lawyer charge more?

A: No. The opinion held the common fund doctrine does not alter the lawyer-client fee arrangement; it addresses the lawyer's right to a fee from a subrogee who benefits from the lawyer's work, as in Baier v. State Farm.

Background and rules framework

The opinion interpreted Illinois Rule 1.5(c) (contingency fee agreements; Model Rule 1.5(c)), requiring the agreement to state the method of determining the fee and whether expenses are deducted before or after the fee is calculated. It read the mid-representation modification concern through Rule 1.8(a) (business transactions with clients; Model Rule 1.8(a)) and the common fund doctrine.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.5(c) (contingency fee agreements) / Illinois Rule 1.5(c)
• Model Rule 1.8(a) (business transactions with clients) / Illinois Rule 1.8(a)

Cases:

• Baier v. State Farm Insurance Co., 66 Ill.2d 119, 361 N.E.2d 1100 (1977), common fund fee from a subrogee
• In re Pagano, 154 Ill.2d 174, 607 N.E.2d 1242 (1992), rebutting the undue-influence presumption on a fee increase
• Lossman v. Lossman, 274 Ill.App.3d 1, 653 N.E.2d 1280 (Ill.App. 2d Dist. 1995), fee-modification presumption
• Durr v. Beatty, 491 N.E.2d 902 (Ill.App.Ct. 1986), modification of a fee agreement

See also

• ISBA Ethics Op. 97-04: Referral Fees From Nonlawyer Professionals
• ISBA Ethics Op. 99-07: Lawyer for Lender Compensated by Borrower

Source

• Landing page: https://www.isba.org/ethics/opinions/9708