In a contingent fee case, which litigation costs must the client pay, and can the lawyer bill the client for an in-house investigator?
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This page answers the general question as of 1985. Ezel answers yours: whether it's allowed on your facts, under the current Massachusetts Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer with a contingent fee agreement asked whether, under SJC Rule 3:05 (contingent fees) and Rule 3:07 (professional ethics), he could charge the client an hourly rate for an investigator on his own staff, and whether costs like telephone, copying, travel, and filing fees could be passed on.
The committee read Rule 3:05 to create two categories of cost. Paragraph 5(f) requires the agreement to make the client liable for "expenses and disbursements." Paragraph 5(d) requires the agreement to state whether and to what extent the client is liable to pay "compensation" other than from the recovery. Reading the two together sensibly, the committee said "expenses and disbursements" should be read narrowly so the client is not automatically obliged to pay everything that might broadly be called an expense (a broad reading could deter clients from such arrangements), while "compensation" in 5(d) can include other costs the lawyer may recover by advance agreement.
By custom and tradition, "expenses and disbursements" means out-of-pocket items such as filing fees, deposition costs, expert-witness fees, and substantial, identifiable travel, printing, copying, and telephone charges, but not general overhead. Overhead may be charged only by a specific advance agreement under 5(d) that discloses the basis for the charge, and no charge labeled "costs" should exceed actual cost. An outside investigator's services would be a required disbursement under 5(f); an investigator who is a member of the lawyer's staff would fall under the permissive, by-agreement category in 5(d). The committee noted it can be hard to tell whether an investigator is truly "staff," that the answer depends on the facts, and that charging for a staff investigator is acceptable so long as the lawyer reaches agreement with the client on that charge when the contingent fee agreement is made.
Currency note
This opinion was issued in 1985, before Massachusetts's adoption of the 2015 revisions to the Rules of Professional Conduct. 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, deadline, or requirement mentioned here.
Common questions
Q: Which costs must a contingent fee client pay?
A: Per the opinion, out-of-pocket "expenses and disbursements" under SJC Rule 3:05 paragraph 5(f), which by custom includes filing fees, deposition costs, expert-witness fees, and substantial, identifiable travel, printing, copying, and telephone charges, but not general overhead.
Q: Can the lawyer bill the client for overhead or for a staff investigator?
A: Only by a specific advance agreement under paragraph 5(d) that discloses the basis for the charge. The committee treated a staff investigator's time as a by-agreement charge, while an outside investigator's fee is a required disbursement.
Q: Can a "costs" charge exceed what the item actually cost?
A: No. The committee said no charge represented as "costs," whether under 5(f) or 5(d), should exceed the actual cost.
Background and rules framework
The opinion interpreted SJC Rule 3:05, the rule permitting contingent fee agreements (an exception to the common-law bars on champerty and maintenance), specifically the cost provisions in paragraphs 5(d) and 5(f), subject to judicial review under paragraph 6. The subject matter, what a lawyer may charge a contingent fee client and the duty to disclose the basis of charges, corresponds today to Model Rule 1.5 (fees, including the writing and disclosure requirements for contingent fees).
Citations and references
Rules of Professional Conduct:
- SJC Rule 3:05, paragraphs 5(d), 5(f), 6 (contingent fees; expenses, compensation, judicial review)
- Model Rule 1.5 (fees and contingent fee agreements)
See also
Source
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