Title: In Re: Amendments to Rule Regulating The Florida Bar 4-1.5 - Fees and Costs for Legal Services

State: florida

Issuer: Florida Supreme Court

Document:

Supreme Court of Florida 
 
 
____________ 
 
No. SC14-2112 
____________ 
 
 
IN RE:  AMENDMENTS TO RULE REGULATING 
THE FLORIDA BAR 4-1.5—FEES AND COSTS FOR LEGAL SERVICES. 
 
[September 17, 2015] 
 
PER CURIAM. 
 
This matter is before the Court on the petition of The Florida Bar proposing 
that the Court amend the Rules Regulating The Florida Bar.  We have jurisdiction.  
See art. V, § 15, Fla. Const.   
As part of its biennial rule amendments, The Florida Bar proposed 
amendments to Rule Regulating The Florida Bar 4-1.5 (Fees and Costs for Legal 
Services).  Specifically, the Bar proposed an amendment to subdivision 4-1.5(e) to 
provide definitions for the terms “retainer,” “flat fee,” and “advance fee” and to 
provide guidance, in the comments to rule 4-1.5, as to whether such fees should be 
deposited into an attorney’s operating account or trust account.  It also  proposed a 
new subdivision (E) to be added to rule 4-1.5(f)(4) to address fees for subrogation 
and lien resolution in personal injury or wrongful death cases where there is a 
 
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contingency fee agreement.  Pursuant to Bar Rule 1-12.1(g), the Bar published 
formal notice of its intent to file a petition recommending amendments to the Bar 
Rules in The Florida Bar News.  This notice was published on August 15, 2014, 
and allowed interested persons thirty days after the filing of the Bar’s petition to 
provide comments to the Court.  Five comments were filed.  Oral argument was 
heard in this matter on May 5, 2015.    
 
Upon consideration of the petition, the comments filed, and the presentations 
of those who participated in oral argument, we adopt the amendments to 
subdivision 4-1.5(e) as proposed by the Bar.  Rule Regulating The Florida Bar 
4-1.5 (Fees and Costs for Legal Services) is hereby amended as set forth in the 
appendix to this opinion.  New language is indicated by underscoring; deletions are 
indicated by struck-through type.  The comments are offered for explanation and 
guidance only and are not adopted as an official part of the rules.  The amendments 
shall become effective on October 1, 2015, at 12:01 a.m. 
As for the proposed new subdivision (E) to rule 4-1.5(f)(4), after oral 
argument, the Bar filed a motion for partial stay, seeking a stay of the Court’s 
consideration of this proposal and an opportunity to submit an alternative proposal.  
The motion is hereby granted, and The Florida Bar is directed to file a new petition 
with its alternative proposal on or before January 15, 2016.   
It is so ordered. 
 
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LABARGA, C.J., and PARIENTE, LEWIS, QUINCE, CANADY, POLSTON, 
and PERRY, JJ., concur. 
 
THE FILING OF A MOTION FOR REHEARING SHALL NOT ALTER THE 
EFFECTIVE DATE OF THESE AMENDMENTS.  
 
Original Proceeding – Rules Regulating The Florida Bar 
 
John F. Harkness, Jr., Executive Director, Gregory William Coleman, President 
2014-15, Ramón A. Abadin, President-elect 2014-15, Jay Cohen, Chair, Special 
Committee on Lien Resolution, Andrew Blaise Sasso, Board of Governors, Mary 
Ellen Bateman, DEUP Division Director, and Elizabeth Clark Tarbert, Ethics 
Counsel, The Florida Bar, Tallahassee, Florida, 
 
 
for Petitioner 
 
Dan Cytryn and Joshua G. Simon of the Law Offices Cytryn & Velazquez, P.A., 
Coral Springs, Florida; John William Staunton of Staunton & Faglie, PL, 
Clearwater, Florida; Floyd Benjamin Faglie of Staunton & Faglie, PL, Monticello, 
Florida; Carl B. Schwait, Gainesville, Florida; Charles Allen Morehead, III of 
Abramowitz, Pomerantz & Morehead PA, Sunrise, Florida; Jana McConnaughhay 
of Waldoch and McConnaughhay, P.A., Tallahassee, Florida; and Shannon 
McKenzie Miller of The Miller Elder Law Firm, Gainesville, Florida,  
 
 
Responding with Comments 
 
 
 
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APPENDIX 
 
RULE 4-1.5 FEES AND COSTS FOR LEGAL SERVICES  
(a) - (d) [no change] 
(e)  Duty to Communicate Basis or Rate of Fee or Costs to Client and 
Definitions. 
(1) Duty to Communicate.  When the lawyer has not regularly represented 
the client, the basis or rate of the fee and costs shall be communicated to the 
client, preferably in writing, before or within a reasonable time after 
commencing the representation.  A fee for legal services that is nonrefundable 
in any part shall be confirmed in writing and shall explain the intent of the 
parties as to the nature and amount of the nonrefundable fee.  The test of 
reasonableness found in subdivision (b), above, applies to all fees for legal 
services without regard to their characterization by the parties. 
The fact that a contract may not be in accord with these rules is an issue 
between the attorney and client and a matter of professional ethics, but is not 
the proper basis for an action or defense by an opposing party when fee-
shifting litigation is involved. 
(2) Definitions. 
(A) 
Retainer.  A retainer is a sum of money paid to a lawyer to 
guarantee the lawyer’s future availability.  A retainer is not payment for 
past legal services and is not payment for future services. 
(B) 
Flat Fee.  A flat fee is a sum of money paid to a lawyer for all 
legal services to be provided in the representation.  A flat fee may be 
termed “non-refundable.” 
(C) 
Advance Fee.  An advanced fee is a sum of money paid to the 
lawyer against which the lawyer will bill the client as legal services are 
provided. 
(f) - (i) [no change] 
 
5 
STATEMENT OF CLIENT’S RIGHTS FOR CONTINGENCY FEES 
[no change] 
COMMENT 
Bases or rate of fees and costs 
When the lawyer has regularly represented a client, they ordinarily will have 
evolved an understanding concerning the basis or rate of the fee.  The conduct of 
the lawyer and client in prior relationships is relevant when analyzing the 
requirements of this rule.  In a new client-lawyer relationship, however, an 
understanding as to the fee should be promptly established.  It is not necessary to 
recite all the factors that underlie the basis of the fee but only those that are directly 
involved in its computation.  It is sufficient, for example, to state the basic rate is 
an hourly charge or a fixed amount or an estimated amount, or to identify the 
factors that may be taken into account in finally fixing the fee.  Although hourly 
billing or a fixed fee may be the most common bases for computing fees in an area 
of practice, these may not be the only bases for computing fees.  A lawyer should, 
where appropriate, discuss alternative billing methods with the client.  When 
developments occur during the representation that render an earlier estimate 
substantially inaccurate, a revised estimate should be provided to the client.  A 
written statement concerning the fee reduces the possibility of misunderstanding.  
Furnishing the client with a simple memorandum or a copy of the lawyer’s 
customary fee schedule is sufficient if the basis or rate of the fee is set forth. 
General overhead should be accounted for in a lawyer’s fee, whether the 
lawyer charges hourly, flat, or contingent fees.  Filing fees, transcription, and the 
like should be charged to the client at the actual amount paid by the lawyer.  A 
lawyer may agree with the client to charge a reasonable amount for in-house costs 
or services.  In-house costs include items such as copying, faxing, long distance 
telephone, and computerized research.  In-house services include paralegal 
services, investigative services, accounting services, and courier services.  The 
lawyer should sufficiently communicate with the client regarding the costs charged 
to the client so that the client understands the amount of costs being charged or the 
method for calculation of those costs.  Costs appearing in sufficient detail on 
closing statements and approved by the parties to the transaction should meet the 
requirements of this rule. 
Rule 4-1.8(e) should be consulted regarding a lawyer’s providing financial 
assistance to a client in connection with litigation. 
 
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Lawyers should also be mindful of any statutory, constitutional, or other 
requirements or restrictions on attorneys’ fees. 
In order to avoid misunderstandings concerning the nature of legal fees, written 
documentation is required when any aspect of the fee is nonrefundable.  A written 
contract provides a method to resolve misunderstandings and to protect the lawyer 
in the event of continued misunderstanding.  Rule 4-1.5 (e) does not require the 
client to sign a written document memorializing the terms of the fee.  A letter from 
the lawyer to the client setting forth the basis or rate of the fee and the intent of the 
parties in regard to the nonrefundable nature of the fee is sufficient to meet the 
requirements of this rule.   
All legal fees and contracts for legal fees are subject to the requirements of the 
Rules Regulating The Florida Bar.  In particular, the test for reasonableness of 
legal fees found in rule 4-1.5(b) applies to all types of legal fees and contracts 
related to them. 
Terms of payment 
A lawyer may require advance payment of a fee but is obliged to return any 
unearned portion.  See rule 4-1.16(d).  A lawyer is not, however, required to return 
retainers that, pursuant to an agreement with a client, are not refundable.  A 
nonrefundable retainer or nonrefundable flat fee is the property of the lawyer and 
should not be held in trust.  If a client gives the lawyer a negotiable instrument that 
represents both an advance on costs plus either a nonrefundable retainer or a 
nonrefundable flat fee, the entire amount should be deposited into the lawyer’s 
trust account, then the portion representing the earned nonrefundable retainer or 
nonrefundable flat fee should be withdrawn within a reasonable time.  An advance 
fee must be held in trust until it is earned.  Nonrefundable fees are, as all fees, 
subject to the prohibition against excessive fees. 
A lawyer may accept property in payment for services, such as an ownership 
interest in an enterprise, providing this does not involve acquisition of a proprietary 
interest in the cause of action or subject matter of the litigation contrary to rule 
4-1.8(i).  However, a fee paid in property instead of money may be subject to 
special scrutiny because it involves questions concerning both the value of the 
services and the lawyer’s special knowledge of the value of the property. 
An agreement may not be made whose terms might induce the lawyer 
improperly to curtail services for the client or perform them in a way contrary to 
the client’s interest.  For example, a lawyer should not enter into an agreement 
 
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whereby services are to be provided only up to a stated amount when it is 
foreseeable that more extensive services probably will be required, unless the 
situation is adequately explained to the client.  Otherwise, the client might have to 
bargain for further assistance in the midst of a proceeding or transaction.  
However, it is proper to define the extent of services in light of the client’s ability 
to pay.  A lawyer should not exploit a fee arrangement based primarily on hourly 
charges by using wasteful procedures.  When there is doubt whether a contingent 
fee is consistent with the client’s best interest, the lawyer should offer the client 
alternative bases for the fee and explain their implications.  Applicable law may 
impose limitations on contingent fees, such as a ceiling on the percentage. 
Prohibited contingent fees 
Subdivision (f)(3)(A) prohibits a lawyer from charging a contingent fee in a 
domestic relations matter when payment is contingent upon the securing of a 
divorce or upon the amount of alimony or support or property settlement to be 
obtained.  This provision does not preclude a contract for a contingent fee for legal 
representation in connection with the recovery of post-judgment balances due 
under support, alimony, or other financial orders because such contracts do not 
implicate the same policy concerns. 
Contingent fees are prohibited in criminal and certain domestic relations 
matters.  In domestic relations cases, fees that include a bonus provision or 
additional fee to be determined at a later time and based on results obtained have 
been held to be impermissible contingency fees and therefore subject to restitution 
and disciplinary sanction as elsewhere stated in these Rules Regulating The Florida 
Bar. 
Contingent fee regulation 
Subdivision (e) is intended to clarify that whether the lawyer’s fee contract 
complies with these rules is a matter between the lawyer and client and an issue for 
professional disciplinary enforcement.  The rules and subdivision (e) are not 
intended to be used as procedural weapons or defenses by others.  Allowing 
opposing parties to assert noncompliance with these rules as a defense, including 
whether the fee is fixed or contingent, allows for potential inequity if the opposing 
party is allowed to escape responsibility for their actions solely through application 
of these rules. 
Rule 4-1.5(f)(4) should not be construed to apply to actions or claims seeking 
property or other damages arising in the commercial litigation context. 
 
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Rule 4-1.5(f)(4)(B) is intended to apply only to contingent aspects of fee 
agreements.  In the situation where a lawyer and client enter a contract for part 
noncontingent and part contingent attorney’s fees, rule 4-1.5(f)(4)(B) should not be 
construed to apply to and prohibit or limit the noncontingent portion of the fee 
agreement.  An attorney could properly charge and retain the noncontingent 
portion of the fee even if the matter was not successfully prosecuted or if the 
noncontingent portion of the fee exceeded the schedule set forth in rule 
4-1.5(f)(4)(B).  Rule 4-1.5(f)(4)(B) should, however, be construed to apply to any 
additional contingent portion of such a contract when considered together with 
earned noncontingent fees.  Thus, under such a contract a lawyer may demand or 
collect only such additional contingent fees as would not cause the total fees to 
exceed the schedule set forth in rule 4-1.5(f)(4)(B). 
The limitations in rule 4-1.5(f)(4)(B)(i)c. are only to be applied in the case 
where all the defendants admit liability at the time they file their initial answer and 
the trial is only on the issue of the amount or extent of the loss or the extent of 
injury suffered by the client.  If the trial involves not only the issue of damages but 
also such questions as proximate cause, affirmative defenses, seat belt defense, or 
other similar matters, the limitations are not to be applied because of the contingent 
nature of the case being left for resolution by the trier of fact. 
Rule 4-1.5(f)(4)(B)(ii) provides the limitations set forth in subdivision 
(f)(4)(B)(i) may be waived by the client upon approval by the appropriate judge.  
This waiver provision may not be used to authorize a lawyer to charge a client a 
fee that would exceed rule 4-1.5(a) or (b).  It is contemplated that this waiver 
provision will not be necessary except where the client wants to retain a particular 
lawyer to represent the client or the case involves complex, difficult, or novel 
questions of law or fact that would justify a contingent fee greater than the 
schedule but not a contingent fee that would exceed rule 4-1.5(b). 
Upon a petition by a client, the trial court reviewing the waiver request must 
grant that request if the trial court finds the client:  (a) understands the right to 
have the limitations in rule 4-1.5(f)(4)(B) applied in the specific matter; and 
(b) understands and approves the terms of the proposed contract.  The 
consideration by the trial court of the waiver petition is not to be used as an 
opportunity for the court to inquire into the merits or details of the particular action 
or claim that is the subject of the contract. 
The proceedings before the trial court and the trial court’s decision on a waiver 
request are to be confidential and not subject to discovery by any of the parties to 
the action or by any other individual or entity except The Florida Bar.  However, 
 
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terms of the contract approved by the trial court may be subject to discovery if the 
contract (without court approval) was subject to discovery under applicable case 
law or rules of evidence. 
Rule 4-1.5 (f)(4)(B)(iii) is added to acknowledge the provisions of Article 1, 
Section 26 of the Florida Constitution, and to create an affirmative obligation on 
the part of an attorney contemplating a contingency fee contract to notify a 
potential client with a medical liability claim of the limitations provided in that 
constitutional provision.  This addition to the rule is adopted prior to any judicial 
interpretation of the meaning or scope of the constitutional provision and this rule 
is not intended to make any substantive interpretation of the meaning or scope of 
that provision.  The rule also provides that a client who wishes to waive the rights 
of the constitutional provision, as those rights may relate to attorney’s fees, must 
do so in the form contained in the rule. 
Rule 4-1.5(f)(6) prohibits a lawyer from charging the contingent fee percentage 
on the total, future value of a recovery being paid on a structured or periodic basis.  
This prohibition does not apply if the lawyer’s fee is being paid over the same 
length of time as the schedule of payments to the client. 
Contingent fees are prohibited in criminal and certain domestic relations 
matters.  In domestic relations cases, fees that include a bonus provision or 
additional fee to be determined at a later time and based on results obtained have 
been held to be impermissible contingency fees and therefore subject to restitution 
and disciplinary sanction as elsewhere stated in these Rules Regulating The Florida 
Bar. 
Fees that provide for a bonus or additional fees and that otherwise are not 
prohibited under the Rules Regulating The Florida Bar can be effective tools for 
structuring fees.  For example, a fee contract calling for a flat fee and the payment 
of a bonus based on the amount of property retained or recovered in a general civil 
action is not prohibited by these rules.  However, the bonus or additional fee must 
be stated clearly in amount or formula for calculation of the fee (basis or rate).  
Courts have held that unilateral bonus fees are unenforceable.  The test of 
reasonableness and other requirements of this rule apply to permissible bonus fees. 
Division of fee 
A division of fee is a single billing to a client covering the fee of 2 or more 
lawyers who are not in the same firm.  A division of fee facilitates association of 
more than 1 lawyer in a matter in which neither alone could serve the client as 
 
10 
well, and most often is used when the fee is contingent and the division is between 
a referring lawyer and a trial specialist.  Subject to the provisions of subdivision 
(f)(4)(D), subdivision (g) permits the lawyers to divide a fee on either the basis of 
the proportion of services they render or by agreement between the participating 
lawyers if all assume responsibility for the representation as a whole and the client 
is advised and does not object.  It does require disclosure to the client of the share 
that each lawyer is to receive.  Joint responsibility for the representation entails the 
obligations stated in rule 4-5.1 for purposes of the matter involved. 
Disputes over fees 
Since the fee arbitration rule (chapter 14) has been established by the bar to 
provide a procedure for resolution of fee disputes, the lawyer should 
conscientiously consider submitting to it.  Where law prescribes a procedure for 
determining a lawyer’s fee, for example, in representation of an executor or 
administrator, a class, or a person entitled to a reasonable fee as part of the measure 
of damages, the lawyer entitled to such a fee and a lawyer representing another 
party concerned with the fee should comply with the prescribed procedure. 
Referral fees and practices 
A secondary lawyer shall not be entitled to a fee greater than the limitation set 
forth in rule 4-1.5(f)(4)(D)(ii) merely because the lawyer agrees to do some or all 
of the following: (a) consults with the client; (b) answers interrogatories; 
(c) attends depositions; (d) reviews pleadings; (e) attends the trial; or (f) assumes 
joint legal responsibility to the client.  However, the provisions do not contemplate 
that a secondary lawyer who does more than the above is necessarily entitled to a 
larger percentage of the fee than that allowed by the limitation. 
The provisions of rule 4-1.5(f)(4)(D)(iii) only apply where the participating 
lawyers have for purposes of the specific case established a co-counsel 
relationship.  The need for court approval of a referral fee arrangement under rule 
4-1.5(f)(4)(D)(iii) should only occur in a small percentage of cases arising under 
rule 4-1.5(f)(4) and usually occurs prior to the commencement of litigation or at 
the onset of the representation.  However, in those cases in which litigation has 
been commenced or the representation has already begun, approval of the fee 
division should be sought within a reasonable period of time after the need for 
court approval of the fee division arises. 
In determining if a co-counsel relationship exists, the court should look to see 
if the lawyers have established a special partnership agreement for the purpose of 
 
11 
the specific case or matter.  If such an agreement does exist, it must provide for a 
sharing of services or responsibility and the fee division is based upon a division of 
the services to be rendered or the responsibility assumed.  It is contemplated that a 
co-counsel situation would exist where a division of responsibility is based upon, 
but not limited to, the following:  (a) based upon geographic considerations, the 
lawyers agree to divide the legal work, responsibility, and representation in a 
convenient fashion.  Such a situation would occur when different aspects of a case 
must be handled in different locations; (b) where the lawyers agree to divide the 
legal work and representation based upon their particular expertise in the 
substantive areas of law involved in the litigation; or (c) where the lawyers agree to 
divide the legal work and representation along established lines of division, such as 
liability and damages, causation and damages, or other similar factors. 
The trial court’s responsibility when reviewing an application for authorization 
of a fee division under rule 4-1.5(f)(4)(D)(iii) is to determine if a co-counsel 
relationship exists in that particular case.  If the court determines a co-counsel 
relationship exists and authorizes the fee division requested, the court does not 
have any responsibility to review or approve the specific amount of the fee division 
agreed upon by the lawyers and the client. 
Rule 4-1.5(f)(4)(D)(iv) applies to the situation where appellate counsel is 
retained during the trial of the case to assist with the appeal of the case.  The 
percentages set forth in subdivision (f)(4)(D) are to be applicable after appellate 
counsel’s fee is established.  However, the effect should not be to impose an 
unreasonable fee on the client. 
Credit Plans 
Credit plans include credit cards.  If a lawyer accepts payment from a credit 
plan for an advance of fees and costs, the amount must be held in trust in 
accordance with chapter 5, Rules Regulating The Florida Bar, and the lawyer must 
add the lawyer’s own money to the trust account in an amount equal to the amount 
charged by the credit plan for doing business with the credit plan.