Can a Texas lawyer charge a contingent fee in a divorce case based on the property awarded to the client?

Plain-English summary

Attorney Black represented Mrs. White in a divorce, under a contract for a contingent fee of one-third the value of the property set aside to her. The question was whether it is unethical for an attorney to represent a divorce client on a written contingent-fee basis like this.

The Committee answered that it is not unethical where the contract does not call for an unreasonable fee. It recognized that by the great weight of authority, a contingent-fee contract in a divorce case is void as against public policy where the contingency relates to alimony, and that some courts extend that policy to all matrimonial actions, reasoning that the lawyer's personal interest tends to prevent reconciliation. The Committee read the Texas view differently, citing White v. Hunt, as permitting contingent fees in divorce cases. Because Texas Canon 12 recognizes the propriety of contingent-fee contracts generally, and assuming the Texas rule allows them in divorce cases, it followed that a written contingent-fee contract with a divorce client is ethical; here, legality determines propriety.

The Committee declined to address several incidental questions, including the wife's capacity to make the contract, the effect of when it was made, her right to recover a reasonable fee from the husband, and what would be a reasonable fee. It noted Canon 11's fee factors and that discipline for overcharging generally requires a willful violation, with a grossly excessive fee serving as possible evidence of overreaching. A contingent fee, like a fixed fee, can be excessive, but a contingent-fee contract in a Texas divorce case is not per se improper so long as Texas courts do not hold that type of contract against public policy. The vote was 9-0.

Currency note

This opinion was issued in 1964, under the former Texas Canons of Ethics, which the Texas Disciplinary Rules of Professional Conduct replaced effective January 1, 1990. Subsequent rule amendments or later opinions may have changed the analysis, and this opinion's conclusion turned expressly on the Texas courts' then-current treatment of contingent fees in matrimonial cases. Treat this page as historical context, not current guidance.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: Did the Committee allow contingent fees in Texas divorce cases?

A: Yes, conditionally. It said a written contingent-fee contract in a divorce case is not unethical so long as Texas courts recognize such contracts as valid and the fee is not unreasonable.

Q: How did Texas differ from other states on this question?

A: The Committee noted that the great weight of authority treats divorce contingent fees as void against public policy, at least where tied to alimony, but it read the Texas view, citing White v. Hunt, as permitting them.

Q: Can a contingent fee in a divorce still be improper?

A: Yes. The Committee said a contingent fee, like a fixed fee, can be excessive, and that a grossly excessive fee may be evidence of overreaching; the contract must not call for an unreasonable fee.

Q: What questions did the Committee leave open?

A: It declined to address the wife's capacity to contract, the effect of the timing of the contract, her right to recover a fee from the husband, and the reasonable range of fees in the situation.

Background and rules framework

The opinion interprets former Texas Canon 12 (contingent-fee contracts) and Canon 11 (the factors for fixing a fee). The modern analog is ABA Model Rule 1.5 (fees), which governs both fee reasonableness and contingent-fee arrangements.

Citations and references

Rules of Professional Conduct:

• MR 1.5 (fees, including contingent fees), as the modern analog
• Texas Canons 11 and 12 (former canons)

Cases:

• Levine v. Levine, 135 N.Y.S.2d 304 (1954), cited for voiding alimony-based contingent fees
• Sobieski v. Maresco, 143 So.2d 62 (Fla. 1962), cited for the majority public-policy view
• State ex rel. Nebraska State Bar Ass'n v. Jensen, 105 N.W.2d 459 (Neb. 1960), cited for the reconciliation rationale
• White v. Hunt, 224 S.W.2d 511 (1949), cited as the Texas view permitting divorce contingent fees

Other opinions cited:

• A.B.A. Opinion No. 27 and A.B.A. Opinion 302 (1961): cited on excessive fees and overreaching

See also

• TX Ethics Op. 310: Contingent Fee on the Hospital-Bill Portion of a Comp Settlement
• TX Ethics Op. 311: Habitual Undercharging Below a Minimum Fee Schedule
• TX Ethics Op. 301: Attorney-Executor Taking a Referral Fee From the Firm He Hired

Source

• Landing page: https://www.legalethicstexas.com/resources/opinions/opinion-292/
• Original PDF: https://tcle-web.s3.amazonaws.com/public/documents/Opinion_292.pdf

Original opinion text

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

QUESTION PRESENTED

Attorney Black represented Mrs. White in a divorce case. Her contract with Black provided for a contingent fee of 1/3 of the value of the property set aside to her in the divorce case. His fee, calculated on that basis, would have been several thousand dollars. Is it unethical or improper for an attorney to represent a divorce client on a contingent fee basis evidenced by a written contract, as in this hypothetical fact situation?

18 Baylor L. Rev. 360 (1966)

CONTINGENT FEE IN DIVORCE CASE
An attorney may properly contract for a contingent fee in a divorce case in Texas so long as the Texas courts recognize the validity and legality of a contingent fee contract in matrimonial actions.

It is not unethical where the contingent fee contract does not call for an unreasonable fee.

By the great weight of authority, a contingent fee contract in a divorce case is void as against public policy where the contingency relates to the amount of alimony, Levine v. Levine, 206 Misc. 884, 135 N.Y.S. 2d 304 (1954); see Simpson, CONTRACTS 611 (1954); and Kelly v. Gross, 4 S. W. 2d 296 (1928, er. refused). It has been said that this general policy prohibits contingent fees in all matrimonial actions; see, e.g., Sobieski v. Maresco 143 So. 2d 62 (Fla., 1962; "the majority opinion (is) that attorneys' contingent fee employment contracts in matrimonial actions are against public policy and therefore unenforceable.") In State ex rel Nebraska State Bar Ass'n. v. Jensen, 171 Neb. 1, 105 N. W. 2d 459 (1960), the reason for the rule was stated to be that the attorney's "personal interest . . . tends to prevent a reconciliation between the parties and destroy the family relationship."

The Texas view seems to be, however, that a contingent fee is permissible in divorce cases; White v. Hunt, 224 S. W. 2d 511 (1949, no writ history); cf. Kelly v. Gross supra. Assuming this to be the Texas rule, and since Texas Canon 12 recognizes the propriety of contingent fee contracts generally, it follows that it is ethical for an attorney in a divorce case to make a written contingent fee contract with a client. Here, legality determines propriety. A contingent fee arrangement often facilitates employment of counsel when needed, but later controversy between attorney and client is often avoided if the contract is specific regarding such contingencies as the possibility of settlement.

There are many matters incidentally involved in this hypothetical fact situation which this committee does not feel called upon to discuss. For example, we are not attempting to indicate any view as to the wife's capacity to make a contingent fee contract, nor as to the effect of the time of making the contract (see Anno., 19 A.L.R. 847), nor as to her right to recover a reasonable fee from the husband, nor as to what is the range of a reasonable fixed or contingent fee in the given situation (see Anno., 56 A.L.R.. 2d 13). Canon 11 details the factors or general ethical standards to be considered in fixing a fee by a lawyer who conscientiously attempts to avoid both overcharging and undercharging; but it should also be noted that only a willful violation of the Canons breaches minimum ethical requirements or results in disciplinary action (Art. XII, sec. 8(b), Rules of the State Bar of Texas), a rule which is akin to the line of cases holding that an attorney may be disciplined for overcharging only when he acted fraudulently or without good faith or when he willfully imposed upon the client's confidence; see Anno., 70 A.L.R. 2d 962 (1960). A grossly excessive fee may be evidence, of course, of the requisite conscious overreaching; see In re Myrland, 54 Ariz. 284, 95 P. 2d 56 ( 1939), and A.B.A. Opinion No. 27; cf. A.B.A. Opinion 302 (1961). While it is possible for a contingent fee as well as a fixed fee to be excessive, a contingent fee contract in a divorce case in Texas is not per se improper so long as that type of contract is not held by the Texas courts to be against public policy. (9-0.)

Tex. Comm. On Professional Ethics, Op. 292 (1964)