Can a contingent fee agreement pay the greater of a percentage or a flat fee, and can it bar the client from settling unless the settlement covers attorney's fees?

Plain-English summary

A lawyer asked about two contingent-fee provisions. Under the first, on settlement the attorney would receive either a percentage of the recovery or a flat fee, whichever was greater, while on a recovery after trial the attorney would receive a straight 40%. Under the second, the client would not settle unless the settlement included a reasonable amount for attorney's fees, with reasonableness to be submitted to the court if necessary.

The committee was of the unanimous opinion that the first provision would be permissible under the RPCs. It said the second provision might be improper if it would prevent the client from having the determination of whether or not to settle, as required by RPC 1.2(a).

The committee determined that whether a client could waive the rights under RPC 1.2(a) is a legal question on which it could render no opinion, but noted a strong feeling among members that any requirement that a client waive that right would be unenforceable.

Currency note

This opinion was issued in 1993, before the Washington State Bar Association's adoption of the 2006 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 Treat this page as historical context, not current guidance.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: Can a contingent fee pay the greater of a percentage or a flat fee on settlement?

A: The committee was unanimous that a provision giving the attorney the greater of a percentage or a flat fee on settlement, with a straight 40% on a recovery after trial, would be permissible under the RPCs.

Q: Can a fee agreement bar the client from settling unless the settlement covers attorney's fees?

A: The committee said such a provision might be improper if it would prevent the client from deciding whether to settle, as required by RPC 1.2(a).

Q: Did the committee decide whether the client could waive the right to decide on settlement?

A: No. It said whether a client could waive RPC 1.2(a) rights is a legal question it could not opine on, though members felt strongly that any required waiver would be unenforceable.

Background and rules framework

The opinion applied RPC 1.2(a) (corresponding to ABA Model Rule 1.2(a)), which reserves to the client the decision whether to settle, and RPC 1.5 (corresponding to ABA Model Rule 1.5), which governs fees including contingent fees. The committee accepted the alternative greater-of fee structure under RPC 1.5 but flagged that a clause conditioning settlement on a fee award could collide with the client's RPC 1.2(a) authority.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.2(a) (allocation of authority; client's right to settle); Washington RPC 1.2(a)
• ABA Model Rule 1.5 (fees; contingent fees); Washington RPC 1.5

See also

• WA Ethics Op. 1512: Withdrawal From an Appeal and Settlement Authority
• WA Ethics Op. 1518: Referral Fee Tied to a Donation Promise

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=598

Original opinion text

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

Advisory Opinion: 1517
Year Issued: 1993
RPC(s): RPC 1.2; 1.5
Subject: Contingent fee agreement terms; authority to settle

The Committee reviewed your inquiry concerning the use of contingent fee agreements which would provide (1) in the event of settlement the attorney will receive either a percentage of the recovery or a flat fee, whichever is greater, while in the event of a recovery following trial, the attorney will simply receive 40%; or (2) the client will not settle the case unless the settlement included a reasonable amount for attorney's fees, reasonableness to be submitted to the court if necessary. The Committee was of the unanimous opinion that a fee agreement provision such as that described in item (1) above, would be permissible under the RPCs, but a provision such as that described in (2) might be improper if it would prevent the client from having the determination of whether or not to settle a case as required by RPC 1.2(a). The Committee determined that the question of whether the client could waive the rights under 1.2(a) is a legal question on which it could render no opinion, but there was strong feeling that any requirement that a client waive that right would be unenforceable.