In a fee-shifting case, can a lawyer charge a contingent fee that exceeds the reasonable attorney's fee the court awards?

Plain-English summary

The committee took up whether, in a case where a court may award attorneys' fees by statute (for example, the Consumer Protection Act), a lawyer may propose and enforce a contingent fee that could leave the client owing more than the court awards as a reasonable fee. The committee concluded it is not per se unethical to set the fee as a percentage of the client's total recovery, regardless of the court's fee award.

The committee's reasoning turned on the difference between two determinations. A statutory fee award to a successful party is within the court's discretion and is usually calculated using different factors (the committee pointed to the Washington Supreme Court's Bowers decision) from those that bear on a reasonable fee the client owes the lawyer under RPC 1.5(a). The committee canvassed federal authority splitting on whether a statutory award caps the client's liability, including Cooper v. Singer (limiting the client's obligation to the award) and contrary decisions, and concluded that Washington lawyers, in view of the Ninth Circuit's Hamner v. Rios, need not follow Cooper.

The committee concluded that, absent a clear statutory declaration or a binding court ruling that the statutory award limits the client's liability, a lawyer can collect more than the court awards without running afoul of RPC 1.5. It set out three fee-agreement structures it viewed as consistent with the rules and cautioned that agreeing to a contingent percentage does not by itself make the resulting fee reasonable; reasonableness under RPC 1.5 remains specific to the case.

Currency note

This opinion (formerly Published Informal Opinion 88-1) was issued in 1986, before the 2006 revisions to the Washington Rules of Professional Conduct. RPC 1.5 on fees was later renumbered and amended, and the federal and state fee-shifting case law it discusses has continued to develop. Treat this page as historical context, not current guidance. Verify against current rules and current case law before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Must a contingent fee in a fee-shifting case be capped at the amount the court awards?

A: No. The committee concluded it is not per se unethical to propose or enforce a contingent fee set as a percentage of the client's total recovery, regardless of the court's fee award.

Q: Why isn't the court-awarded statutory fee the ceiling on what the client owes?

A: The committee explained that a statutory fee award is determined using different factors from those relevant to the reasonable fee a client owes the lawyer, so the two amounts can properly differ. It noted the Bowers factors used to set a statutory award and how they diverge from the RPC 1.5(a) factors.

Q: Did the committee say Washington lawyers must follow Cooper v. Singer?

A: No. The committee noted that Cooper limited a client's fee obligation to the court-awarded amount, but concluded that, in view of the Ninth Circuit's decision in Hamner v. Rios, Washington lawyers need not follow Cooper on attorney-fee questions in section 1988 cases.

Q: What fee structures did the committee identify as permissible?

A: The committee listed three options: (1) the court award sets or limits the client's obligation; (2) the obligation is a percentage of the damages or total recovery regardless of the court's fee award; or (3) the obligation is the greater of the court-awarded amount or a specified percentage. It suggested that, for the second and third options, the fee agreement expressly acknowledge that the client's obligation is likely to vary from the court award.

Q: Does agreeing to a contingent percentage make the fee automatically reasonable?

A: No. The committee said the fact that attorney and client agree to a contingent fee does not mean the resulting fee will be reasonable; under RPC 1.5, reasonableness is judged on the particular case, and a percentage reasonable in one case may be unreasonable in another.

Background and rules framework

The opinion interprets Washington RPC 1.5 as it stood in 1986, the fee rule (corresponding to Model Rule 1.5), focusing on RPC 1.5(a)'s reasonableness factors. It reads those factors against the standard for a statutory "reasonable attorney's fee" award, drawing on the Washington Supreme Court's decision in Bowers v. Transamerica Title Insurance Company under RCW 19.86.090 (the Consumer Protection Act) and on federal fee-shifting decisions under 42 U.S.C. section 1988.

Citations and references

Rules of Professional Conduct:

• Washington RPC 1.5(a) (reasonableness of fees), corresponding to Model Rule 1.5.

Statutes:

• RCW 19.86.090 (Consumer Protection Act; award of reasonable attorney's fees), cited in the opinion.
• 42 U.S.C. section 1988 (Civil Rights attorney's-fee awards), referenced in the opinion.

Cases:

• Cooper v. Singer, 719 F.2d 1496 (10th Cir. 1983), statutory fee award limits a client's fee obligation.
• Wheatley v. Ford, 679 F.2d 1037 (2d Cir. 1982), cited in accord with Cooper.
• Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974), cited among contrary authority.
• Pharr v. Housing Authority, 704 F.2d 1216 (11th Cir. 1983), contingent fee exceeding the award.
• Hamner v. Rios, 769 F.2d 1404 (9th Cir. 1985), plaintiff pays the difference where the contingent fee exceeds the award.
• Sears v. Atchison, Topeka & Santa Fe Railway Co., 779 F.2d 1450 (10th Cir. 1985), questioning Cooper.
• Bowers v. Transamerica Title Insurance Co., 100 Wn.2d 581, 675 P.2d 193 (Wash. 1983), factors for a statutory reasonable-fee award.

See also

• WSBA Ethics Op. 1024: contingent fee agreement with a collection-agency client
• WSBA Ethics Op. 1025: contingent fee in a civil forfeiture, not a criminal matter
• ABA Formal Op. 94-389: contingent fees

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=89

Original opinion text

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

Advisory Opinion: 978
Year Issued: 1986
RPC(s): 88-1
Subject: Contingent Fee Agreements in Cases Where the Court Sets a Reasonable Attorney's Fee [Published Informal Opinion 88-1.]

[Formerly published as Published Informal Opinion 88-1. All Informal Opinions are consolidated in this database.]

I. Issue A lawyer has asked whether, in a case where the court may award attorneys' fees pursuant to statute, he can propose and enforce a contingent fee agreement that may result in the client's obligation to pay a larger fee than the court awards as a reasonable attorneys' fee. For example, if a lawyer is asked to bring a suit under the Consumer Protection Act, must the lawyer provide in a contingent fee agreement that in no case will the client be obligated to pay the lawyer more than the court awards the plaintiffs for attorneys' fees? If the fee agreement contains no such limitation, it is unethical for the lawyer to attempt to collect a fee pursuant to the terms of a contingent fee agreement that is in excess of the amount awarded by the court for attorneys' fees?

II. Conclusion Although often not clearly articulated by the courts, the amount of a fee award to a successful party pursuant to a statute such as the Consumer Protection Act is within the court's discretion and usually is determined using different factors from those relevant in determining what a reasonable fee is for the successful client to pay his or her lawyer. Thus, it is not per se unethical for the lawyer to propose or enforce a contingent fee agreement that sets the fee as a percentage of the client's total recovery, regardless of the court fee award.

III. Discussion A court award of reasonable attorneys' fees could be found to preempt the amount of fee otherwise payable under a contingent-fee agreement on two bases. First, a court could find that the statutory provision for an award of reasonable attorneys' fees was intended, under the statutory scheme, to make the successful party whole, including abatement of further liability for attorneys' fees to the successful attorney. Whether a statute is intended to have this result is a legal question.

The second possible basis for concluding that a client's liability to the attorney is limited to the amount the court has awarded as reasonable attorneys' fees is to find that the court's determination of reasonable fee for a particular case, calculated using factors similar to those in RPC 1.5(a), is a factual determination that applies not only to the parties in the lawsuit but also, for purposes of RPC 1.5(a), to the fee the successful party owes the lawyer, and that for the successful lawyer to collect more would be unethical behavior. For the lawyer, either basis presents an ethical problem. The lawyer cannot seek to collect a fee that is inconsistent with the statutory scheme, and cannot collect a fee in excess of a reasonable fee. The first approach was followed in Cooper v. Singer, 719 F.2d 1496 (10th Cir. 1983), where the court held that when the plaintiff recovers a reasonable attorney's fee under the Civil Rights Act, the plaintiff's lawyer cannot collect from the client a larger fee than the amount awarded; the plaintiff's fee obligation to his or her lawyer is limited to the amount awarded by the court regardless of the terms of the contingent fee agreement. The court reasoned in reaching this conclusion: "We believe that under the Bar's own regulations, lawyers must take into consideration the availability of statutory fee award provisions in determining their fee arrangements with clients. In Federal Civil Rights actions Congress has provided that a prevailing party shall receive a reasonable attorney's fee, as determined by the courts. A lawyer should recognize that Congress apparently intended section 1988 fee awards to fully satisfy the client's fee obligations, and that a percentage contingent fee arrangement will differ in amount from a court award of reasonable fees. The lawyer's fee arrangements should reflect these factors In the case of the client who was unable to pay under an hourly arrangement, a lawyer can contract to receive the amount that will be awarded by the court to the client under section 1988. Under this form of contingent agreement, he will thus be assured of a reasonable fee, supplemented by an appropriate contingency bonus, if his client prevails. If the client's action includes claims that are not subject to this section 1988 fee award provision, the attorney can structure the fee agreement to provide alternate sources of payment for those claims. In any case the lawyer can and should construct the agreements that harmonize with fee award provisions of Congress." 719 F.2d at 1506.

Accord: Wheatley v. Ford, 679 F.2d 1037 (2d Cir. 1982). Other circuits disagree: Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974); Pharr v. Housing Authority, 704 F.2d 1216 (11th Cir. 1983) (if contingent fee is greater than court-awarded fee, defendant must pay the difference); and Hamner v. Rios, 769 F.2d 1404 (9th Cir. 1985) (if contingent fee exceeds court-awarded fee, plaintiff must pay the difference).

Cooper's interpretation of congressional intent was subsequently brought into question by Sears et al. v. Atchison, Topeka & Santa Fe Railway Company, 779 F.2d 1450 (10th Cir. 1985), where the court described Cooper as a "statement of future operating procedure within this circuit." Moreover, lawyers in Washington state, in view of the 9th Circuit decision in Hamner, need not follow Cooper in dealing with attorney fee questions in §1988 cases.

Absent a clear declaration in a statute or a binding court ruling that a statutory award of reasonable attorneys' fees limits the successful party's liability to his or her lawyer for attorney fees, a lawyer can collect more than the court awards as reasonable attorneys' fees without running afoul of RPC 1.5. Under Washington law, guidance must come from Bowers v. Transamerica Title Insurance Company, 100 Wn.2d 581, 675 P2d 193 (1983), a case involving an award of "reasonable attorneys' fees" under RCW 19.86.090, the Consumer Protection Act. In setting a reasonable fee, the court in Bowers directed that the trial court should consider the number of hours reasonably expended in light of the type of work performed; experience and expertise of the attorneys who performed the work; the time spent on unsuccessful claims, duplicated effort, and otherwise unproductive time; and the reasonable hourly rate determined in light of the attorneys' usual and customary rates; the level of skill required; time limitations imposed by the litigation; the amount of the potential recovery; the attorneys' reputations; and the undesirability of the case. After using these factors to determine the reasonable rate and reasonable number of hours, the court should consider adjusting the award if the attorneys were employed under a contingent fee agreement, and based upon the quality of the work performed.

This list of considerations is similar, although not identical, to the factors listed in RPC 1.5(a) for determining the reasonableness of a fee. While 1.5 requires consideration of the results obtained, it does not consider results obtained, and it does not require, as does Bowers, that the time spent on unsuccessful claims be discounted. Bowers does not expressly mention consideration of the novelty and difficulty of the legal questions, nor does it mention consideration of whether it was apparent to the client that it was likely that acceptance of the representation would preclude acceptance of other work, the time limitations imposed by the client, or the nature and length of the professional relationship with the client. Neither RPC 1.5(a), which does not purport to be an exhaustive list, nor Bowers, which deals with the fees to be assessed against the losing party, suggests consideration of other factors in the successful party's relationship or his or her attorney that may have affected the amount of time expended or what a reasonable rate would be. For example, the fee agreement may cover services that the court does not consider in setting a fee under Bowers; the client may have changed attorneys in midcourse, resulting in duplication; the client may have insisted the lawyer assert the unsuccessful claims; the client may have directed the attorney to do more to prepare for trial than the attorney would reasonably have otherwise done; or a client may have been unreasonably difficult.

A comparison of the Bowers factors, the considerations included in Rule 1.5(a), and the unique factors in a particular attorney-client relationship, make it clear that the reasonable attorneys' fees determined by the court as prescribed in Bowers, are reasonable for an ideal case—one that is completely successful—for the ideal client. the court following the Bowers approach must disregard or discount many factors that under RPC 1.5(a) are appropriate to consider in setting the fee that the client owes. Thus, while the court, following Bowers, makes a finding of fact as to reasonable attorneys' fees for a particular case, it is highly probable that were the court to set the reasonable fee the successful client should pay his or her attorney, a very different amount would be set because of the presence of important considerations the court would not look at in setting the Bowers fee.

IV. Summary In entering into a contingent-fee agreement in a case where the lawsuit may result in an award of reasonable attorneys' fees pursuant to statute, in the absence of a binding court decision as in Cooper or statutory language to the same effect, there are several options that may be consistent with the Rules of Professional Conduct. The attorney and client can agree that (1) the court award will be, or will set a limit on, the client's fee obligation; (2) the client's fee obligation will be a percentage of the damages awarded or of the total recovery awarded plaintiff (for damages and for reasonable attorneys' fees), regardless of the amount awarded by the court as reasonable fees; or (3) the client's fee obligation will be the greater of the court-awarded amount or a specified percentage of what the court awards. If either the second or third alternative is agreed to, later misunderstandings may be avoided if the fee agreement expressly acknowledges that the client's fee obligation is likely to vary from what the court awards, and that this may be appropriate because of factors unique to the attorney-client relationship that the court will not consider in setting reasonable attorneys' fees to be assessed against the unsuccessful party.

The fact that the attorney and client agree to a contingent fee does not mean that the resulting fee will necessarily be reasonable. Both in agreeing to a percentage, and deciding at the conclusion whether a reduction is warranted, the attorney must consider the unique facts of the particular case. Under RPC 1.5, "reasonable" is to be determined in view of the particular case; a reasonable percentage in one case may be unreasonable in another. The court in Bowers alluded to this when it discounted the testimony of an attorney whose practice was 95% contingent-fee work and who testified he had to obtain double the usual hourly rate for cases in which he prevails. "[T]he appropriate incremental factors should be determined, not by the percentage of contingent fee work performed by the attorney, but by references to the chances of success in the litigation." 100 Wn.2d at 601. To minimize attorney-client conflict over fees, the court should be clear as to what it is or is not doing when it awards reasonable attorneys' fees. For example, under RCW 19.86.090, the court may award the successful party a reasonable attorney's fee. The award is to the party, not to the party's lawyer. Nevertheless, the court in Bowers suggested it was an award to the attorneys when it stated: "The documentation supplied by the attorneys in support of their claim for fees was sufficient to allow the computation of the hours expended in the litigation." This confusion about what the court is doing in awarding reasonable attorneys' fees unnecessarily complicates the attorney-client problem relating to fees. Courts, in awarding reasonable attorneys' fees pursuant to statute should state that it is an award to the successful party as a part of its damages, and that the amount awarded may, for quite valid reasons, be a different amount from a reasonable fee owed by the successful party to his or her attorney.