Utahlking Ethics Opinions to Me? (Also Texas)

I’m interested in writing today about two recent ethics opinions that manage to go together quite nicely.  Utah Ethics Adv. Op. 18-04 and Texas Professional Ethics Committee Op. 679.  Both involve RPC 1.8 (or at least both should).  And, not only does neither opinion do a very good job with the subject matter it tackles but both tackle subjects where lawyers need to tread very carefully and could use really good advice.

But, as just a quick aside before doing so, I wanted to express some gratitude from last week and point you to a very important story worth reading.  As the culmination of a many-months-long project, I had the chance to share the stage last week at the ABA Forum on Franchising with two excellent lawyers – Shannon McCarthy Associate General Counsel for Chihuly, Inc. and Kevin Kennedy, General Counsel of Wiggin and Dana in Connecticut — and talk about a tricky and delicate topic – lawyers and obligations to report other lawyers with a particular emphasis on issues involving harassment and other toxic behavior.  I was really fortunate to get to work with them both.  For a story that offers something of a how-not-to manual offered by the experience of one of the world’s largest law firms, you can go read up here.

Now, back to regularly-scheduled programming…

While I missed it around the time it came out, the Utah State Bar put out an interesting ethics opinion explaining to lawyers a way they might be able ethically to mitigate their risk exposure in the event of third-party claims against the lawyer based on the client’s conduct.

The opinion declares that “[a]n attorney may include an indemnification provision in a retainer agreement at the commencement of representation that requires the client to indemnify the attorney and related entities against claims that arise from the client’s behavior or negligence.”

In explaining this outcome, the Utah opinion points out that nothing about RPC 1.8(h) directly prohibits it.  However, it doesn’t just stop there, it goes on to explain … just kidding actually.  It stops there on that issue.

As a practical matter, that is sort of a shame because lawyers ought to be cautioned a bit about the problems associated with starting the relationship with a client off with that sort of provision — particularly because if you are that concerned about that risk of liability from the client’s conduct, then maybe a rethink about whether to take them on is in order.  But, if one is going to do it, the beginning of the relationship is certainly more viable than mid-stream.

Speaking of which, that brings me to the Texas opinion, which tasked itself with answering this question:

May a lawyer renegotiate his fixed, flat fee for representing a client in litigation after the litigation is underway if the matter turns out to be greater in scope and complexity than the lawyer and client contemplated?

If Texas was interested in doing this right, it would recognize that the answer lies in application of its version of Model Rule 1.8(a) because that situation is a business transaction between lawyer and client.  Instead, Texas actually announced that its version of that rule does not apply to a mid-stream renegotiation of a fee.

Instead, the opinion points out that Texas courts have considered the issue and have said that it can occur but that there is a “presumption of unfairness.”  Rejecting the opportunity to apply Rule 1.8 to these circumstances is all the more baffling because — providing guidance to interpret ethics rules is the kind of thing ethics opinion writing bodies are supposed to do, rather than providing guidance about what court decisions mean.

In the end though, I’m likely being too harsh on the Texas opinion because it, at least, summarizes pretty nicely the analysis of the dynamic from the lawyer side of things and why, in most situations, effectuating an enforceable renegotiation will be unlikely:

The fundamental nature of a flat or fixed fee is that there is risk to the lawyer that the legal work and time required may exceed what the lawyer might have earned if the lawyer instead billed by the hour.  The client knows with certain that the total fee charged, no matter how much lawyer time or effort is involved, will not exceed the fixed amount.  The client’s risk in a flat or fixed fee agreement is the possibility of paying more than the client would have paid under an hourly billing agreement if the lawyer is able to complete the representation is [sic] less time than originally expected.  Because the lawyer is better able to anticipate the time and legal work required, the lawyer should be mindful that he knowingly assumed the risk — and should not unreasonably seek to change the fee agreement simply because the lawyer agreed to a fixed fee that, in hindsight, is no longer adequate.

(emphasis added).  And, also, amen to that.