Can a lawyer agree to a flat fee set in advance for each insurance defense case, regardless of how much work each case requires?

Plain-English summary

Opinion E-83-15 addressed an arrangement in which an insurance company proposed to contract with an attorney to act as defense counsel in personal injury claim matters for a set fee in each case up to the time of trial. The fee would be a blanket fee, arranged in advance for any case referred to the attorney or the firm, and would not take into account the amount of work to be done in each individual case. The question was whether such an arrangement is ethical.

The committee began with SCR 20.12(1), which provided that a lawyer may not enter into an agreement for, charge, or collect an illegal or clearly excessive fee, and SCR 20.12(2), which listed factors bearing on reasonableness (time and labor required, novelty and difficulty, the fee customarily charged locally, time limitations, and the amount involved and results obtained). The committee treated those factors as guides only and noted that discipline or refusal of a fee award follows only when a fee is clearly excessive and unreasonable, citing ABA Formal Opinion 190 (1939) and State v. MacIntyre. It pointed to ABA opinions permitting a fixed fee set in advance, including ABA Formal Opinion 190 (a client may fix a rate the attorney adheres to regardless of time and effort, since "a lawyer has the right to contract for any fee he chooses so long as it is not clearly excessive") and Informal Opinions 1389 and 1237.

Finding nothing improper in the proposed arrangement, the committee reminded attorneys who agree to such arrangements of their duty to represent a client both competently and zealously (SCR 20.31, 20.32, 20.34, 20.35). It also observed that under the standard insuring agreement the attorney chosen by the insurance company also represents the insured, and that the lawyer's primary duty is to the insured, citing Baker v. Northwestern National Casualty Co.

Currency note

This opinion was issued in 1983, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it analyzes fees under the former Code (SCR 20.12) and the then-current Code of Professional Responsibility. Fees are now governed by SCR 20:1.5 / Model Rule 1.5, and the insurer-insured relationship implicates SCR 20:1.7 / Model Rule 1.7. 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 Wisconsin lawyer accept a flat fee set in advance for each insurance defense case?

A: Yes. The committee found nothing improper in such a blanket fee arrangement, so long as the fee is not clearly excessive under SCR 20.12.

Q: Did it matter that the blanket fee ignored the amount of work in each case?

A: No. Relying on ABA opinions, the committee treated a fixed fee set in advance as permissible; the controlling limit is that the fee not be clearly excessive, not whether it tracks the work in each matter.

Q: Whom does the insurance defense lawyer represent under this arrangement?

A: Per the opinion, the attorney chosen by the insurer also represents the insured, and the lawyer's primary duty is to the insured.

Background and rules framework

The opinion interpreted the former Code's fee rule, SCR 20.12(1)-(2), which barred clearly excessive fees and listed reasonableness factors, together with the duties of competent and zealous representation (SCR 20.31, 20.32, 20.34, 20.35). It relied on ABA Formal Opinion 190 and Informal Opinions 1389 and 1237 for the permissibility of fixed fees set in advance. Fees are now governed by SCR 20:1.5 / Model Rule 1.5.

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20.12(1), 20.12(2) / Model Rule 1.5 (illegal or clearly excessive fees; reasonableness factors) (former Code provisions)
• Wis. SCR 20.31, 20.32, 20.34, 20.35 (competent and zealous representation) (former Code provisions)

Cases:

• State v. MacIntyre, 238 Wis. 406, 298 N.W. 200 (1941), discipline only for clearly excessive fees
• Baker v. Northwestern National Casualty Co., 22 Wis. 2d 77, 125 N.W.2d 370 (1963); 26 Wis. 2d 306, 132 N.W.2d 493 (1965), insurer-retained counsel also represents the insured

Other opinions cited:

• ABA Formal Opinion 190 (1939): a lawyer may contract for any fee not clearly excessive, including a fixed rate
• ABA Formal Opinion 328: dual practice (cited generally)
• ABA Formal Opinion 329; ABA Informal Opinions 1389 (1977) and 1237 (1972): fixed fees set in advance

See also

• WI Ethics Op. E-84-19: Representing Insurer and Insured With a Punitive Damages Claim
• WI Ethics Op. E-85-3: Multiple Representation in Medical Malpractice Actions
• WI Ethics Op. E-89-2: Contingent Fee for a Divorce Appeal

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-83-15.pdf