Can a lawyer charge a contingent fee based on property recovered for a wife in a divorce case?

Plain-English summary

The committee considered whether a lawyer could enter a contingent fee contract under which, for representing the wife in a divorce action, he would receive a stated fraction of the value of the property recovered for her. It answered no.

The committee explained that a lawyer generally may not acquire a financial interest in a client's cause of action under DR 5-103, because it may compromise the independence of professional judgment (EC 5-7), and that a contingent fee creates such an interest. DR 5-103(A)(2) nonetheless permits contingent fees in civil cases as an exception, justified because a contingent fee may be the only means by which a layperson can obtain a lawyer of his choice. The committee gave two reasons that justification fails in divorce. First, citing EC 2-20, it reasoned that in a divorce either a spouse owns substantial property or neither does; if neither does, the contract is pointless, and if either does, the wife can obtain counsel without a contingent fee, so the condition that justifies the exception does not exist. Second, a divorce may be settled by reconciliation, and a contingent fee tied to property recovered may motivate the wife's lawyer to interfere with possible reconciliation; the committee cited Overstreet v. Barr, in which the court held such a contract void as against public policy for that reason. The committee concluded the lawyer could not properly enter the described contract.

Currency note

This opinion was issued in 1977 under Kentucky's former Code of Professional Responsibility (in effect 1971 to 1990), before the Kentucky Bar Association's 1990 adoption of the Rules of Professional Conduct (SCR 3.130) and the substantial 2009 revisions to those rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against the current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a divorce lawyer charge a contingent fee on property recovered?

A: No. The committee concluded such a contract is improper because the justification for contingent fees does not apply in a divorce and the fee may discourage reconciliation.

Q: Why doesn't the usual contingent-fee justification apply?

A: The committee reasoned that if either spouse owns substantial property, the wife can obtain counsel without a contingent fee; if neither does, the contract is pointless. Either way, the condition justifying the exception is absent.

Q: What case did the committee rely on?

A: Overstreet v. Barr, in which the court held a contingent fee contract between a wife and her lawyer in a divorce void as against public policy because it could motivate interference with reconciliation.

Citations and references

Rules of Professional Conduct:

• DR 5-103 (acquiring an interest in litigation); EC 2-20, EC 5-7; modern analog Model Rule 1.5(d) (prohibited contingent fees in domestic relations matters)

Cases:

• Overstreet v. Barr, 255 Ky. 82, 72 S.W.2d 1014 (1934), contingent fee in divorce void as against public policy

See also

No sibling opinions yet indexed.

Source

• Landing page: https://kybar.org/For-Members/Rules-Ethics-Information/Ethics-Opinions
• Original PDF: https://kybar.org/Portals/0/Admin/Ethics%20Opinions/KBA_E-168.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

KENTUCKY BAR ASSOCIATION
Ethics Opinion KBA E-168
Issued: July 1977

This opinion was decided under the Code of Professional Responsibility, which was in effect from 1971 to 1990. Lawyers should consult the current version of the Rules of Professional Conduct and Comments, SCR 3.130 (available at http://www.kybar.org), before relying on this opinion.

Question:

May a lawyer properly enter into a contingent fee contract under which, for his services in representing the wife in a divorce action, he is to receive from the wife a stated fraction of the value of the “property recovered” for her in the action?

Answer:

No.

References:

DR 5-103; EC 2-20, 5-7; Overstreet v. Barr, 255 Ky. 82, 72 S.W.2d 1014 (1934)

OPINION

In general, a lawyer may not properly acquire a financial interest in his client’s cause of action, DR 5-103, because it may compromise the independence of his professional judgment, EC 5-7. The substance of EC 5-7 and the structure of DR 5-103(A) both make clear that a lawyer acquires such a financial interest when he makes a contingent fee contract with his client. Nonetheless, DR 5-103(A)(2) permits a lawyer to make such contracts in civil cases as an exception to the general rule. This exception is made “because [a contingent fee contract] may be the only means by which a laymen can obtain the services of a lawyer of his choice.” EC 5-7.
EC 2-20 says that “[b]ecause of the human relationships involved and the unique character of the proceedings, contingent fee arrangements in domestic relation cases are rarely justified.” There are two reasons why this is so.
In a divorce case, either one or both spouses owns substantial property, or neither owns substantial property. If neither owns substantial property, then the kind of contract described in the question is pointless. If either owns substantial property, then the wife will have no difficulty obtaining the services of a lawyer of her choice without resort to a contingent fee contract. Thus the condition which justifies such a contract as an exception to the general rule does not exist.
A divorce case differs from an action for damages in that settlement may take the form of reconciliation of the parties. The kind of contract described in the question may motivate the wife’s lawyer to interfere with possible reconciliation of the parties. In Overstreet v. Barr 255 Ky. 82, 72 S.W.2d 1014 (1934), the court held a contingent fee contract between a wife and her lawyer in a divorce case to be void as against public policy for this reason.
We have concluded that a lawyer may not properly enter into a contract such as that described in the question.

Note to Reader
This ethics opinion has been formally adopted by the Board of Governors of the Kentucky Bar Association under the provisions of Kentucky Supreme Court Rule 3.530 (or its predecessor rule). The Rule provides that formal opinions are advisory only.