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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

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Kentucky Legal Ethics

1.5  Rule 1.5 Fees

1.5:100 Comparative Analysis of Kentucky Rule

1.5:101 Model Rule Comparison

In 1989, the Kentucky Supreme Court adopted KRPC 1.5.  MR 1.5(a) states negatively, and more specifically, ("A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.") what is stated positively in KRPC 1.5(a) ("A lawyer&'s fee shall be reasonable.")  Also in paragraph (a) of KRPC 1.5, Kentucky substituted the word "Some" for "The" as the first word in the second sentence. In paragraph (a)(2) {KRPC 1.5(a)(2)}, Kentucky did not include the phrase "if apparent to the client" which is present in MR 1.5(a)(2).  Where KRPC 1.5(b) suggests that the fee agreement be in writing, MR 1.5(b) specifies that such writing is suggested unless the lawyer intends to charge a "regularly represented client" the same rate as in the past.  In paragraph (c) {KRPC 1.5(c)}, Kentucky inserted a second sentence, "Such a fee must meet the requirements of Rule 1.5(a)," which does not appear in MR 1.5(c).  In paragraph (c) {KRPC 1.5(c)}, Kentucky substituted the word "should" for "shall" in MR 1.5&'s second sentence; in MR 1.5&'s third sentence, Kentucky substituted "Upon recovery of any amount in a contingent fee matter" for "Upon conclusion of a contingent fee matter;" Kentucky also deleted the phrase "if there is a recovery" from MR 1.5(c).  Also, MR 1.5(c) contains the phrase "signed by the client" to describe the fee agreement whereas the Kentucky rule does not. {KRPC 1.5(c)} KRPC 1.5(d)(1) provides that a lawyer may not collect a contingent fee for, inter alia, "the amount of alimony, maintenance, support, or property settlement, provided this does not apply to liquidated sums in arrearage."  MR 1.5(d)(1) contains the following phrase instead: "the amount of alimony or support, or property settlement in lieu thereof."  Finally, KRPC 1.5(e)(1) is split into subparagraphs (a) and (b) and adds "and" in (b).

MR 1.5, Comment [1] explains that not all of the factors listed in paragraph (a) are relevant in all situations.  This appears to comport with KRPC 1.5(a) which lists "[s]ome factors to be considered."  See the paragraph above.  Comments which are identical or very similar include:  KRPC 1.5, Comment [1] and MR 1.5, Comment [2]; KRPC 1.5, Comment [2] and MR 1.5, Comment [4]; KRPC 1.5, Comment [3] and MR 1.5, Comments [5] and [3] {MR 1.5, Comment [3]}; KRPC 1.5, Comment [4] and MR 1.5, Comment [7]; KRPC 1.5, Comment [5] and MR 1.5, Comment [9].  KRPC 1.5, Comment [6] reads: "Factor (3) is intended to prohibit unreasonably high fees and does not prevent a lawyer from sharing fees that are less than ‘customary.&'"  MR 1.5 has no corresponding commentary section.

1.5:102 Model Code Comparison

DR 2-106(A) provided that a lawyer "shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee." DR 2-106(B) provided that a fee is "clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee." The factors of a reasonable fee in KRPC 1.5(a) are substantially the same as those listed in DR 2-106(B).  EC 2-17 states that a lawyer "should not charge more than a reasonable fee …."

There was no counterpart to KRPC 1.5(b) in the Disciplinary Rules of the Model Code. EC 2-19 stated that it is "usually beneficial to reduce to writing the understanding of the parties regarding the fee, particularly when it is contingent."

There was also no counterpart to KRPC 1.5(c) in the Disciplinary Rules of the Model Code. EC 2-20 provided that "[c]ontingent fee arrangements in civil cases have long been commonly accepted in the United States," but that "a lawyer generally should decline to accept employment on a contingent fee basis by one who is able to pay a reasonable fixed fee …."

With regard to KRPC 1.5(d), DR 2-106(C) prohibited "a contingent fee in a criminal case." EC 2-20 provided that "contingent fee arrangements in domestic relation cases are rarely justified."

With regard to KRPC 1.5(e), DR 2-107(A) permitted division of fees only if: "(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made. (2) The division is made in proportion to the services performed and responsibility assumed by each. (3) The total fee does not exceed clearly reasonable compensation …."

1.5:200 A Lawyer&'s Claim to Compensation

1.5:210 Client-Lawyer Fee Agreements

KRPC 1.5(a) provides that lawyers shall assess only reasonable fees.  Although a fee agreement is encouraged early in lawyer-client discussions, KBA E-247 (1981) mandates that an attorney may not refuse to appear at a court hearing because his client has not made arrangements to pay his fee. 

1.5:220 A Lawyer&'s Fee in Absence of Agreement

If a client and lawyer have not made a valid contract providing for another measure of compensation, a client owes a lawyer who has performed legal services for the client the fair value of the lawyer&'s services.  ALI-LGL §39See Dean v. Holiday Inns, Inc., 860 F.2d 670 (6th Cir. 1988) for an example of how to apply a reasonable hourly rate.

1.5:230 Fees on Termination [see 1.16:600]

If a client-lawyer relationship ends before the lawyer has completed the services due for a matter and the lawyer&'s fee has not been forfeited, a lawyer may recover the lesser of the fair value of the lawyer&'s services and the ratable proportion of the compensation provided by any otherwise enforceable contract between lawyer and client for the services performed.  ALI-LGL §40.  However, a lawyer may be permitted to recover the ratable proportion of the compensation provided by the contract if the termination is not attributed to the lawyer&'s misconduct, the lawyer has performed severable services, and allowing contractual compensation would not burden the client&'s choice of counsel or the client&'s ability to replace counsel. ALI-LGL §40.

1.5:240 Fee Collection Procedures

A lawyer may not employ collection methods forbidden by law, use confidential information when not permitted, or harass the client.  ALI-LGL §41.  An attorney may sue a client in order to collect a fee, provided the attorney follows the guidelines set forth in KBA E-237 (1980).  The opinion permits an attorney to file criminal charges under KRS 514.060 against a client for failure to pay attorney fees; however, since the attorney who does so is impliedly certifying that the action is brought not for the purpose of collecting a fee but in the interest of justice, the attorney must fully prosecute the case to its conclusion. KBA E-237 (1980).  Furthermore, the U.S. Supreme Court has held that the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (1995), which forbids "debt collectors" from engaging in unfair or abusive practices and from making false or misleading representations, applies to lawyers collecting fees.  Heintz v. Jenkins, 514 U.S. 291 (1995).

1.5:250 Fee Arbitration

In Kentucky Bar Ass&'n v. Delahanty, 878 S.W.2d 795 (Ky. 1994), an attorney charged with assessing unreasonable fees, failing to adequately communicate the basis of the fee to his client, and failing to reasonably return papers and property to the client upon request warranted the attorney&'s public reprimand and the requirement that the attorney submit the fee dispute for fee arbitration.

1.5:260 Forfeiture of Lawyer&'s Compensation

A lawyer who unlawfully withdraws or commits misconduct before completing services, in some circumstances will forfeit the right to compensation for services.  ALI-LGL §§ 37, Comment [e] and 40, Comment [e].

1.5:270 Remedies and Burden of Persuasion in Fee Disputes

A fee dispute between a lawyer and a client may be adjudicated in any appropriate proceeding, including a suit by either a lawyer or a client, an arbitration to which both parties consent, or a proceeding ancillary to a pending suit in which the lawyer performed the services in question.  ALI-LGL §42.  

1.5:300 Attorney-Fee Awards (Fee Shifting)

1.5:310 Paying for Litigation: The American Rule

Kentucky follows the "American Rule," thus, under Kentucky law, except for fee-shifting statutes which provide that the trial court may assess attorney fees for one party against another, each party is responsible for its own attorney fees and expenses. Thompson v. The Budd Co., 199 F.3d 799 (6th Cir. 1999), cert. denied, 530 U.S. 1229 (2000); Motorists Mut. Ins. Co. v. Glass, 996 S.W.2d 437 (Ky. 1997); Louisville Label, Inc. v. Hildesheim, 843 S.W.2d 321 (Ky. 1992).  The Kentucky Court of Appeals has held that although attorney fees are not generally allowable as costs in absence of a statute or express contractual provision, this rule does not supercede the equitable rule that an award of counsel fees is within the discretion of the court depending on the circumstances of each particular case. Batson v. Clark, 980 S.W.2d 566 (Ky. App. 1998).

1.5:320 Common-Law Fee Shifting

Absent a fee-shifting statute or express contractual provision, Kentucky law generally does not allow the recovery of attorney fees from another party.

1.5:330 Statutory Fee Shifting

Several statutes allow for the recovery of attorney fees from the opposing party, including KRS 344.450, governing Civil Rights Act litigation; KRS 403.220, governing divorce proceedings; KRS 342.310, governing frivolous lawsuits under workers&' compensation claims (See also Peabody Coal Co. v. Goforth, 857 S.W.2d 167 (Ky. 1993)); and KRS 304.12-235, governing an insurance company&'s failure to settle claims in good faith. Knott v. Crown Colony Farm, Inc., 865 S.W.2d 326 (Ky. 1993).

1.5:340 Financing Litigation [see 1.8:600]

  According to SCR 3.130(1.8)(e)(1), a lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, with two exceptions: a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter, and a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client. KBA E-51 (1971) is very clear that a lawyer may not subsidize a client during the course of litigation, and KBA E-342 (1990) states that a lawyer representing commercial creditors in collection cases on a contingent fee basis may not agree to advance litigation expenses without the clients having to repay these advances under any circumstances of success or failure of the case. The lawyer may not, in essence, be expected to buy the client&'s legal work.  KBA E-375 (1995) asserts that a lawyer may not, during the course of representation, loan money to his or her client for financial assistance other than the expenses of litigation. Kentucky Bar Ass&'n v. Mills, 808 S.W.2d 804 (Ky. 1991).

1.5:400 Reasonableness of a Fee Agreement

1.5:410 Excessive Fees

KRPC 1.5(a) states that reasonableness is determined by several factors, including the following: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to properly perform the service; (2) the likelihood that the acceptance will preclude other employment by the lawyer; (3) the fee customarily charged in the locality; (4) the amount involved and the results obtained; (5) the time limitations; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer; and (8) whether the fee is fixed or contingent. Although an attorney's customary hourly fee is important in determining the reasonableness of a fee request, In re Atwell, 148 Bankr 483 (WD Ky. 1993) held that it is neither controlling nor conclusive, and bankruptcy courts have power to review a requested rate to determine whether attorney's customary charge is reasonable under the circumstances.

In Kentucky Bar Ass&'n v. Profumo, 931 S.W.2d 149 (Ky. 1996), the court held that to receive dual compensation as executor and estate's attorney, and avoid excessive fees, one must have been appointed and identified as both the executor and attorney in will so as to evince testator's intention that attorney be compensated in both capacities.  See the following cases for further examples of excessive attorney fees: Yeager v. Kentucky Bar Ass&'n, 84 S.W.3d 454 (Ky. 2002); Kentucky Bar Ass&'n v. Fish, 2 S.W.3d 786 (Ky. 1999);  Veal v. Kentucky Bar Ass&'n, 867 S.W.2d 190 (Ky. 1993); Kentucky Bar Ass&'n v. Newberg, 839 S.W.2d 280 (Ky. 1992); Kentucky Bar Ass&'n v. White, 818 S.W.2d 263 (Ky. 1991);  Kentucky Bar Ass&'n v. Hinnant, 815 S.W.2d 400 (Ky. 1991).

1.5:420 "Retainer Fees:" Advance Payment, Engagement Fee, or Lump-Sum Fee

A lawyer may require advance payment of a fee, but is obliged to return any unearned portion.  KRPC 1.5, Comment [2][See Declining or Terminating Representation, infra, at 1.16.]  A lawyer may receive tangible or intangible property in replace of a monetary fee, but such a payment is subject to the same "reasonableness" guidelines.  However, this type of fee may be subject to additional scrutiny.  KRPC 1.5, Comment [2].

KBA E-327 (1988) states that an attorney may not automatically charge an additional attorney fee to a physician or health care provider for forwarding payments for medical services which are to be paid out of the proceeds of a client's settlement with an insurer or third party.  In addition, KBA E-303 (1985) states that an attorney who has agreed to represent a client for a statutory or a lump sum or contingent fee may not pass on additional charges for law clerk or paralegal services in the absence of an agreement; however, if the client agrees to pay the attorney charges on an hourly rate, charges for law clerk or paralegal services may be separately stated, but such services should not be billed as attorney time.

1.5:430 Nonrefundable Fees

KBA E-380 (1995) deals extensively with nonrefundable fees in Kentucky, and is reproduced at length here:

Traditionally, a true retainer is a payment made by the Client to secure the lawyer&'s or law firm&'s availability "to handle the client&'s legal problems during the period of time ... but [the client] has no expectation that the fee already paid will cover specific items ... . It is quite common for the initial payment to be supplemented by an hourly charge [that may or may not be less than the lawyer&'s normal hourly charge]." Charles Wolfram, Modern Legal Ethics (St. Paul: West, 1986), 506. A retainer, like any other payment, must be reasonable, judged in light of the factors enumerated in Rule 1.5(a). The lawyer who receives a RETAINER has earned the fee by promising to be available for future work, and the funds so received need not be put in a trust account. See Baranowski v. State Bar, 154 Cal. Reptr. 752, 593 P.2d 613 (Cal. 1979).

A retainer, as described above, is to be distinguished from an advance fee payment, which some lawyers call "retainers." The client&'s expectation is that the lawyer will perform the particular services requested and draw on the prepaid fees as services are rendered and then considered earned according to some previously established basis, usually the lawyer&'s hourly rate. If any of the prepayment were left at the close of the representation, it would be refunded to the client pursuant to Rule 1.15 and 1.16(d).

Lawyers may designate some amount of a client&'s written fee payment for a particular case or matter as a "NON-REFUNDABLE RETAINER" with the intention to make it clear to the client that a portion of the fee is earned at the time of payment and commencement of the representation, and that if the client discharges the lawyer, this advanced fee payment will not be returned. For example, a lawyer may agree to represent a client in a divorce case and require the payment of a "non-refundable retainer" as there is initial work and responsibility assumed in the process of accepting the matter and defining client rights. Moreover, the client, when establishing the lawyer - client relationship intentionally creates a conflict of interest that would preclude representation of the other spouse. Some clients are irresolute - indeed, some would flit from lawyer to lawyer. The non-refundable retainer secures an appropriate degree of commitment from the client and ensures that the lawyer will be compensated for time and responsibility invested and for the risk assumed in the early stages of a matter.

The Committee acknowledges that the practice of accepting "non-refundable retainers" has been rejected by some courts, disciplinary counsel, and commentators, on the grounds that (1) all fees must be "reasonable" under Rule 1.5(a), and a non-refundable retainer deprives a client of the right to receive a refund on the unearned portion of a previously collected fee, and (2) that such arrangements "chill" the client&'s "absolute right" to discharge counsel. See, e.g., In re: Cooperman, 633 N.E.2d 1069 (N.Y. 1994) aff&'g, 591 N.Y.S.2d 855 (N.Y. App. Div. 1993); Brickman & Cunningham, Non-refundable Retainers Revisited, 72 N.C.L. Rev. 1 (1993). The Cooperman court took the position that the taking of a "non-refundable retainer" is a per se violation of the Rules of Professional Conduct and rejected the argument that such arrangements are a violation only if they are pegged to an "unreasonable fee." We disagree with this analysis.

Rule 1.5(a) requires that lawyers&' fees be "reasonable" and an examination of what is "reasonable" is not insulated from review simply because it has been labeled "non-refundable" in the written fee agreement. Wolfram, in Modern Legal Ethics, gives the following example: "A client who has just paid a lawyer $50,000 to perform all occupational health and safety work for a factory that burns down the next day, obviating the need for any legal work, can probably recover the retainer even if it was solemnly called "non-refundable" in the agreement." 

In determining the "reasonableness" of a lawyer&'s fee, the factors mentioned in Rule 1.5(a) apply, and the lawyer has the responsibility to prove the "reasonableness" of the fee applying principles of equity and fairness. Although "reasonableness" at the time of contracting is relevant, consideration is also to be given to whether events occurred after the fee agreement was made which rendered the fee agreement fair at the time it was entered into, but unfair at the time of enforcement. See McKenzie Const., Inc. v. Maynard, 758 F.2d 97 (3rd Cir. 1985). Hence, the client may be entitled to a return of some portion of the "non-refundable" fee retainer upon the termination of the representation, depending upon all the circumstances; that is, the "reasonableness" of the fee.

Accepting representation often precludes a lawyer from taking on other matters, at present and in the future, and the employment of a lawyer may confer immediate benefits on the client. We also note that the client does not have an absolute right to discharge counsel, rather, the client has the absolute power to do so. The lawyer-client arrangement is a contractual arrangement, and while the lawyer has obligations, the lawyer also has rights. The client who discharges a lawyer has an obligation to the lawyer for the payment of "reasonable" compensation. The question in every case is whether the compensation claimed is "reasonable" under the terms of the agreement and under the circumstances.

We agree with those authorities who hold that a "reasonable" fee may be made "non-refundable" and deposited into the lawyer&'s general office account as any other earned fee. Accordingly, we find that in order for a non-refundable fee retainer to be valid the arrangement must meet the following criteria:

1. The arrangement must be fully explained to the client, orally, and in a written fee agreement that is signed by the client;

2. The arrangement must specify the dollar amount of the retainer, and its application of the scope of the representation, and/or the time frame in which the agreement will exist; and

3. The total fee to be charged must be "reasonable."

See Alaska Op. 87-1; Pennsylvania Op. 85-120; Utah Op. 136 (1993); Wisconsin Op. E-93-4.

The Committee finds that a "non-refundable retainer" is not prohibited by Rule 1.5, is not necessarily unearned in all cases, and is not "unreasonable" as a matter of law. A declaration that all non-refundable fee retainer agreements are unethical and are in violation of the Rules of Professional Conduct is an over-simplistic approach and is not derived from any fair reading of the text of Rule 1.5.

1.5:500 Communication Regarding Fees

Unless the lawyer regularly represents the client, the basis of the fee should be communicated to the client in writing before or within a reasonable time after commencing the representation.  KRPC 1.5(b).  A written statement concerning the fee reduces the possibility of misunderstanding. Failure to communicate to the clients the nature of the fee in Kentucky Bar Ass&'n v. Basinger, 53 S.W.3d 92 (Ky. 2001), played a role in an attorney&'s 60-day suspension from the practice of law. 

1.5:600 Contingent Fees

1.5:610 Special Requirements Concerning Contingent Fees

KRPC 1.5(c) permits contingency fees except in the cases included in 1.5:700, infra.  A contingent fee agreement must be in writing and should state the method by which the fee is to be determined, including the percentages that shall accrue to the lawyer in the event of settlement, trial, or appeal.  KRPC 1.5(c).  The agreement should also specify what expenses will be deducted, and whether such expenses are to be deducted before or after the contingent fee is calculated. KRPC 1.5(c).  Applicable law may impose limitations on contingent fees, such as a ceiling on the percentage. KRPC 1.5, Comment [3].

A lawyer representing a client on a contingent fee basis may borrow funds from a lending institution to cover litigation expenses.  If the lawyer wants to deduct interest and lender fees from any proceeds recovered for the client, the loan must be treated as a business transaction within the meaning of Rule 1.8(a).  This means that the lawyer may not deduct any amount beyond what the lender is actually charging; the terms must be fair and reasonable; and the client must have a reasonable opportunity to seek advice from independent counsel.  The lawyer may not grant a security interest in the contingent fee as collateral for the loan.  KBA E-420 (2002).

In Rasner v. Kentucky Bar Ass&'n, 57 S.W.3d 826 (Ky. 2001), public reprimand was warranted for attorney's conduct in pursuing a one-third contingent fee to recover insurance proceeds arising out of a motor vehicle accident and failing to have a written contingent fee agreement with client. KBA E-362 (1994) permits the Kentucky lawyer referral service (KLRS) to include a requirement of truthful reporting and verification of fees in contracts with participating lawyers, by inserting into its contract with member attorneys the following term: "In all contingency fee cases, the member attorney must submit to the KLRS Director (or allow the KLRS Director to review) documentation adequate to confirm the total amount of the settlement," and member attorneys may comply with it; in addition, if the consent of the client and attorney is deemed necessary under KRPC 1.6, it must be provided for in the KLRS contract and in the contract between the member attorney and his or her client, and if the settlement agreement requires confidentiality, the KLRS should also be bound by such agreement.

See also KBA E-339 (1990); KBA E-333 (1988); KBA E-269 (1983); KBA E-359 (1993); KBA E-221 (1979); KBA E-205 (1979); and KBA E-168 (1977) for further information and guidelines regarding contingent fees.

1.5:620 Quantum Meruit in Contingent Fee Cases

KBA E-269 (1983) held that a client may discharge his attorney without cause in the face of a contingent fee contract, for it has long been held that a client may discharge his attorney at any time, with or without cause, even where a contingent fee has been agreed upon. Henry v. Vance, 111 Ky. 72, 83. S.W. 273 (1901). Notwithstanding such discharge, the Court in Henry held that the remedy of the attorney, if the discharge was without cause, was an action on quantum meruit for services already rendered, or if no services had been rendered before the discharge, an action to recover damages for a breach of contract.  The opinion noted that the latter remedy is not consistent with more recent judicial and ethical opinions and asserted that according to Gilbert v. Walbeck, 339 S.W.2d 450 (Ky. 1960), the contingent fee contract was no longer of significance because the attorney was discharged before he completed the contract and held that recovery must be on the basis of quantum meruit. The opinion cited with approval LeBach v. Hampton, 585 S.W.2d 434 (Ky. App. 1979), which held that "our courts have used the term quantum meruit to indicate that the discharged attorney cannot rely upon the contract to collect a full fee but must deduct from the contract fee the reasonable costs of services of other attorneys required to complete the contract."

1.5:700 Unlawful Fees

1.5:710 Contingent Fees in Criminal Cases

A lawyer shall not agree to a contingent fee for representing a defendant in a criminal case.  KRPC 1.5(d)(2).  However, KBA E-283 (1984) permits an attorney who represents a criminal defendant to either individually or through other persons, solicit funds to pay for costs and for attorney's fees, provided that the fees are reasonable, the terms of employment are made clear, the attorney states the total fees needed, the attorney remits any unearned portion of the fees, and he does not divide the fees with any laymen.

1.5:720 Contingent Fees in Domestic Relations Matters

A lawyer shall not agree to a contingent fee in a domestic relations matter where the fee would be based on the securing of a divorce, or upon the amount of alimony, maintenance, support, or property settlement.  KRPC 1.5(d)(1). KBA E-364 (1994) held that a lawyer may not take a divorce case on a contingent fee, even if the only remaining issues involved were property settlement issues, but could take a contingent fee in a case arising from a divorce case (1) involving the recovery of money or property the payment of which was in arrears, or (2) in a case in which marital assets were newly discovered after the action was final. An attorney may also take a contingent fee to recover past due child support.

1.5:730 Other Illegal Fees in Kentucky

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.  KRPC 1.5, Comment [3].  For example, a lawyer should not enter into an agreement for services provided only up to a stated amount when it is foreseeable that more extensive services will likely be required.  This type of agreement may unfairly cause the client to bargain for further assistance in the midst of a proceeding.  KRPC 1.5, Comment [3].  In addition, a lawyer should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures.  KRPC 1.5, Comment [3].

In Kentucky Bar Ass&'n v. Vincent, 819 S.W.2d 313 (Ky. 1991), the court ordered an attorney to be disbarred from the practice of law for misconduct including (1) conversion of $2095 of his client's funds to his own use over three years; (2) receipt of fees to settle a child support case which was never concluded and to form a corporation that was never formed; (3) attempting to limit his liability to his client for his malpractice and attempting to secure an agreement from his client that the client would not report him to the bar association for violation of disciplinary rules; (4) failure to segregate his client's funds, to render an appropriate accounting of the funds, or to promptly pay over these funds to his clients, and (5) receipt of $9,850 which was not earned and not based on any services rendered, all of which constituted conduct involving dishonesty, fraud, deceit, and misrepresentation and which were violations of several disciplinary rules.

Furthermore, a lawyer may not compensate an expert witness on a contingent fee basis, or for a set fee with a "bonus" if recovery exceeds a particular amount.  A lawyer may contract for other litigation support services on either of these bases, so long as the services do not include presentation of expert testimony, and the lawyer does not split fees with a nonlawyer.  KBA E-394 (1996).

1.5:800 Fee Splitting (Referral Fees)

KRPC 1.5(e) permits a division of fees between lawyers who are not in the same firm only when: (1) the division is in proportion to the services performed by each lawyer, or by written agreement with the client that each lawyer will assume joint responsibility; (2) the client is advised of and does not object to the participation of all the lawyers; and (3) the total fee is reasonable.  KBA E-288 (1984) provides that the Kentucky lawyer referral service may fund its program by contributions from participating attorneys through 10% of any fee collected from further compensation.  KBA E-55 (1971) establishes the guidelines for the division of a legal fee when one attorney refers a matter to another attorney.  Also See Kentucky Bar Ass&'n v. Hash, 961 S.W.2d 796 (Ky. 1998), where an attorney's violations of Rules and Regulations of North Carolina State Bar prohibiting division of legal fee with lawyer not associated in same firm, resulted in the attorney&'s disbarment in North Carolina, and warranted the attorney&'s disbarment in Kentucky as reciprocal discipline.