Can a Maine lawyer agree, in a contingent fee contract, that the client will never be responsible for litigation disbursements regardless of outcome?

Plain-English summary

A lawyer asked whether, in a contingent fee agreement, he could provide that the client would not be responsible for any of the disbursements regardless of outcome. The Commission concluded the arrangement would not violate the Bar Rules.

The governing provision was Bar Rule 3.7(d), which barred a lawyer from advancing or guaranteeing financial assistance to a client during contemplated or pending litigation, except that the lawyer "may advance or guarantee the expenses of litigation," including court costs and the expenses of investigation, medical examination, and obtaining and presenting evidence. Under the plain language, the Commission reasoned, a lawyer may agree to bear his own disbursements so long as they are litigation expenses. The Commission reinforced this with the rule's drafting history: Rule 3.7(d) was based on Model Code Disciplinary Rule 5-103(B), but the Maine drafters deliberately omitted the Model Code's proviso that the client "remains ultimately liable for such expenses," because the Select Commission viewed that proviso as unrealistic, unenforced, and often inimical to clients' interests and inconsistent with broadening access to courts.

The Commission added that Bar Rule 8, on contingent fee agreements, did not cut the other way. Rule 8(e)(6) requires the written agreement to state the attorney's anticipated expenses and disbursements "if any" for which the client is to be liable, language that presupposes a lawyer may agree to absorb those expenses. In a footnote the Commission read the "reasonable expenses and disbursements" reference in Rule 8(a) to apply only where the client has agreed to pay the lawyer's fees; where the client does not, the agreement is "contingent" and Rule 8(e)(6) governs. The Commission noted that the ABA later took the same approach in Model Rule 1.8(e), which lets a lawyer advance court costs and litigation expenses with repayment contingent on the outcome.

Currency note

This opinion was issued in 1996, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). 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 Treat this page as historical context, not current guidance.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: Could a Maine lawyer promise a contingent-fee client would never owe litigation disbursements?

A: The opinion concluded yes. It read Bar Rule 3.7(d) to allow a lawyer to advance and guarantee litigation expenses, so a lawyer could agree to absorb the client's disbursements entirely as long as they were litigation expenses.

Q: Did the client have to stay "ultimately liable" for advanced costs?

A: No. The opinion stressed that Maine's drafters deliberately omitted the Model Code proviso requiring the client to remain ultimately liable, viewing it as unrealistic, unenforced, and at odds with broadening access to courts.

Q: Did the contingent-fee rule (Rule 8) require the client to bear expenses?

A: No. The opinion concluded Rule 8(e)(6), which requires stating the expenses "if any" for which the client is to be liable, presupposes that a lawyer may agree to absorb those expenses.

Background and rules framework

The opinion interprets Maine Bar Rule 3.7(d) (financial assistance to clients; advancing and guaranteeing litigation expenses) together with the contingent-fee provisions of Bar Rule 8(a) and 8(e)(6). It traces Rule 3.7(d) to Model Code Disciplinary Rule 5-103(B), noting Maine's deliberate omission of the "client remains ultimately liable" proviso. These provisions correspond to ABA Model Rule 1.8(e), which permits advancing court costs and litigation expenses with repayment contingent on the outcome.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.8(e) (advancing litigation expenses; repayment contingent on outcome)
• Maine Bar Rule 3.7(d), 8(a), 8(e)(6)

Other opinions cited:

• Model Code of Professional Responsibility, Disciplinary Rule 5-103(B) (the source provision, with its "ultimately liable" proviso omitted in Maine)

See also

• NY State Bar Op. 464: Contingent Repayment of Costs
• NY State Bar Op. 653: Litigation Expenses and Withdrawal

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=89691

Original opinion text

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

Issued by the Professional Ethics Commission

Date Issued: September 9, 1996

Question

In entering into a contingent fee agreement with a client, a lawyer wishes to provide that, regardless of outcome, the client will not be responsible for any of the disbursements. The lawyer asks whether this arrangement would violate the Maine Bar Rules.

Opinion

In the view of the Professional Ethics Commission, the arrangement would not violate the Bar Rules.

The rule applicable to this situation is Bar Rule 3.7(d) which provides:

Financial assistance. While representing a client in connection with contemplated or pending litigation, a lawyer shall not advance or guarantee financial assistance to the client, except that a lawyer may advance or guarantee the expenses of litigation, including court costs, expense of investigation, expenses of medical examination, and expenses of obtaining and presenting evidence.

The thrust of this provision is plain: in representing a client, a lawyer may not provide financial assistance such as living expenses to the client, but the lawyer may both advance and guarantee litigation expenses. Thus, under the plain language of the rule, a lawyer entering into a contingent fee agreement, or any other agreement with a client, may agree to bear the cost of his or her disbursements, so long as they constitute ?the expenses of litigation.?

This conclusion is supported by the history of the adoption of Rule 3.7(d). As the reporter?s notes make clear, the rule was based on Disciplinary Rule 5‑l03(b) of the American Bar Association Model Code of Professional Responsibility, which is identical to Rule 3.7(d) except that the disciplinary rule contained a proviso at the end specifying that the advance or guarantee of litigation expenses may only occur if ?the client remains ultimately liable for such expenses.? This proviso was omitted from Bar Rule 3.7(d) by its drafters, the Select Commission on Professional Responsibility. The reporter?s notes indicate the reason why the proviso was eliminated:

The Commission believes the provison was unrealistic and unenforced and that it might often prove inimical to clients? interests. The rule was inconsistent with the modern assessment of the need to broaden access to courts.

It is thus clear that the drafters of Rule 3.7(d) intended that lawyers be able to advance litigation expenses to clients without restriction.[1]

The provisions of Bar Rule 8, relating to contingent fee agreements, are not to the contrary. Rule 8(e)(6) provides that the required written contingent fee agreement include ?a statement regarding the attorney?s anticipated expenses and disbursements, if any, for which the client is to be liable? (emphasis added). Thus, the rule does not prohibit a lawyer from agreeing to absorb the client?s litigation expenses.[2]

Footnotes

[1]This approach was later followed by the American Bar Association in the adoption of its Model Rules of Professional Conduct, which replaced the Model Code. Model Rule 1.8(e) provides:

A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1) A lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent upon the outcome of the matter; and

(2) A lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

[2] The requirement of Rule 8(e) that the agreement indicate if the client is to be liable for litigation expenses might be thought to be inconsistent with the final sentence of Rule 8(a) which provides that, in order to count as a ?contingent fee agreement,? an agreement ?shall not include an arrangement with a client, express or implied, that the client in any event is to pay the attorney the reasonable value of the attorney?s services and reasonable expenses and disbursements.? The Commission thinks, however, that the reference to ?reasonable expenses and disbursements? in Rule 8(a) is meant to apply only in circumstances where there is an agreement in which the client agrees to pay the lawyer?s fees. When the client does not undertake to pay such fees (and expenses and disbursements), the agreement becomes ?contingent? within the meaning of Rule 8, and the requirement of Rule 8(e)(6) that it state whether the client is to be liable for litigation expenses applies.