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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.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

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Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Ohio Legal Ethics Narrative

I. CLIENT-LAWYER RELATIONSHIP

1.5 RULE 1.5 FEES AND EXPENSES

1.5:100 Comparative Analysis of Ohio Rule

1.5:101 Model Rule Comparison

Ohio Rule 1.5(a) differs from MR 1.5(a) in the following respects:

"illegal or clearly excessive fee" has been substituted for "unreasonable fee or an unreasonable amount for expenses".

A new second sentence has been added. (Purporting to provide guidance as to when a fee is excessive -- i.e., it is excessive when a prudent lawyer would have the firm conviction that it is "in excess of a reasonable fee.")

Subdivisions (a)(1)-(8) are identical to MR 1.5(a)(1)-(8).

Ohio Rule 1.5(b) differs from MR 1.5(b) in the following respects:

In the first sentence, "nature and" has been added before "scope"; "unless" has been substituted for "except when"; "client whom the lawyer has regularly represented" has been substituted for "regularly represented client"; and "as previously charged." has been substituted for "or rate."

In the second sentence, "changes" has been changed to "change"; "is subject to division (a) of this rule and" has been added after "expenses"; "promptly" replaces "also" after "shall"; and ", preferably in writing" has been added after "client".

Ohio Rule 1.5(c) differs from MR 1.5(c) in the following respects:

In the opening sentence, "of this rule" has been added after "division (d)".

The remainder of MR 1.5(c) has been placed in new subdivision (c)(1). In the first sentence of subdivision (c)(1), "Each" has been substituted for "A"; and "and the lawyer" has been added after "client". In the second sentence, "shall" has been substituted for "must". The last sentence of MR 1.5(c) has been deleted.

A new subdivision (c)(2) (dealing with closing statements to the client when the lawyer is entitled to a contingent fee) has been added.

Ohio Rule 1.5(d) differs from MR 1.5(d) in the following respects:

In subdivision (d)(1), "spousal or child" has been substituted for "alimony or";

A new subdivision (d)(3) (dealing with "earned upon receipt" or "nonrefundable", etc., fees) has been added.

Ohio Rule 1.5(e) (dealing with division of fees between lawyers not in same firm) has been substituted for the text of MR 1.5(e) on the same subject.

Ohio Rule 1.5(f) (dealing with resolution of fee disputes between lawyers) has no counterpart in MR 1.5.

1.5:102 Ohio Code Comparison

The following sections of the Ohio Code of Professional Responsibility are listed in the Correlation Table (Appendix A to the Rules) as related to Ohio Rule 1.5(a): DR 2-106(A) & (B).

The following section of the Ohio Code of Professional Responsibility is listed in the Correlation Table (Appendix A to the Rules) as related to Ohio Rule 1.5(b): EC 2-18.

The following are listed in the Correlation Table (Appendix A to the Rules) as related to Ohio Rule 1.5(c): EC 2-18, R.C. 4705.15.

The following sections of the Ohio Code of Professional Responsibility are listed in the Correlation Table (Appendix A to the Rules) as related to Ohio Rule 1.5(d): DR 2-106(C), EC 2-19.

The following section of the Ohio Code of Professional Responsibility is listed in the Correlation Table (Appendix A to the Rules) as related to Ohio Rules 1.5(e) & (f): DR 2-107.

1.5:200 A Lawyer's Claim to Compensation

  • Primary Ohio References: Ohio Rule 1.5
  • Background References: ABA Model Rule 1.5
  • Ohio Commentary: Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.112, 2.115-2.117, 2.127, 2.129-2.130
  • Commentary: ABA/BNA § 41:101, ALI-LGL §§ 38-42, Wolfram §§ 9.1-9.6

1.5:210 Client-Lawyer Fee Agreements

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.127 (1996).

In general: Fee agreements may be structured in many different ways. The Rule requires that, regardless of the form of the fee arrangement, the fees be both legal and not clearly excessive. Ohio Rule 1.5(a). The distinction between reasonable and excessive fees is discussed in section 1.5:410. Illegal fees are addressed in sections 1.5:710-:730. The Rule sets forth the requirements for contingent-fee arrangements in 1.5(c), and for fee-splitting arrangements among lawyers who are not in the same firm in 1.5(e). See sections 1.5:600-:610 and 1.5:800, respectively. In addition to these provisions, fee arrangements are also regulated by statute and court rules. See, e.g., ORC 4705.15 (contingency fees); OH Sup R 68(B), 69(B), 70(C), 71.  For an overview of fee agreements in Ohio, see Kenneth R. Donchatz, Fee Agreements: Who Needs Them?, Ohio Law. Nov./Dec. 2006, at 19.

Under the former OHCPR, if the lawyer and client entered into an express agreement as to fees, and the lawyer was not discharged before completion of the representation, that agreement controlled if otherwise proper.  Baer v. Woodruff, 111 Ohio App.3d 617, 676 N.E.2d 1195 (Franklin 1996). Quantum meruit was unavailable in such circumstances as an alternative measure of recovery. Id. Once an express agreement was entered into, it could not be unilaterally changed by the attorney.  Toledo Bar Ass'n v. Bell, 78 Ohio St.3d 88, 676 N.E.2d 527 (1997).

If the lawyer was discharged, with or without just cause, the rule of Fox & Assocs. Co., L.P.A. v. Purdon, 44 Ohio St.3d 69, 541 N.E.2d 448 (1989) (see section 1.16:600), limited his or her claim to compensation to the reasonable value of the services actually rendered prior to the date of discharge -- quantum meruit recovery.  Reid, Johnson, Downes, Andrachick & Webster v. Lansberry, 68 Ohio St.3d 570, 629 N.E.2d 431 (1994). Accord Harraman v. Howlett, 2004 Ohio 5566, 2004 Ohio App. LEXIS 5025 (Morrow); Roberts v. Hutton, 152 Ohio App.3d 412, 2003 Ohio 1650, 787 N.E.2d 1267 (Franklin). Any attempt in the retainer agreement to set in advance a reasonable value for services performed prior to termination was invalid if it did not reflect the true value of that work. Id. at para. 37 (finding invalid clause in contingent-fee contract that defined market value of discharged lawyer's pre-termination services as 33 1/3% of "last best offer" received before termination).

A more complicated fee-issue case was Charles Gruenspan Co., L.P.A. v. Thompson, 2003 Ohio 3641, 2003 Ohio App. LEXIS 3287 (Cuyahoga). There the court faced a situation in which a lawyer had two contracts with the client, each involving a separate matter, one for an hourly fee and the other on a contingency. In a fee dispute following discharge by the client in the litigation covered by the contingent-fee contract, the lower court lumped the fees together and evaluated them all on a quantum meruit basis. Reversing and remanding, the appellate court found that each contract should have been evaluated separately, providing hourly recovery on one and quantum meruit recovery on the other.

There is no reason to think that these pre-Rule decisions are not still good law.

Interest charges: Ohio Rule 1.5 does not address explicitly whether an attorney may charge a client interest on delinquent accounts. Under the former OHCPR, the Board of Commissioners on Grievances and Discipline opined that a lawyer was allowed to charge interest, but only if the fee agreement between attorney and client included both the interest rates to be charged and the time periods when they would apply. Bd. of Comm'rs on Grievances & Discipline Op. 91-12, 1991 Ohio Griev. Discip. LEXIS 18 (June 14, 1991). Accord Ohio State Bar Ass'n Formal Op. 35 (Nov. 20, 1981); Ethics Opinion, Cincinnati Bar Ass'n Report, Oct. 1985, at 8. To support this position, the Board of Commissioners cited a Cleveland Bar Association ethics opinion suggesting that interest may be charged only if the client is advised and expressly agrees to pay interest. Cleveland Bar Ass'n Op. 145 (Mar. 28, 1980). Interest charges must be in compliance with any applicable statutory requirements pertaining to interest rates and related charges, Op. 91-12, 1991 Ohio Griev. Discip. LEXIS 18, and cannot be "clearly excessive." Ohio State Bar Ass'n Informal Op. 82-1 (Mar. 10 1982). It is unsettled whether an interest charge that is in compliance with statutory requirements could nevertheless be found to be clearly excessive; one would think not.

A somewhat different issue arises where a lawyer successfully sues a client in a fee dispute. Absent a superseding written contractual arrangement, the court may make an award of post-judgment interest. Ryan v. Terra Vista Estates, 108 Ohio App.3d 595, 671 N.E.2d 551 (Cuyahoga 1996) (applying ORC 1343.03).

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

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.112, 2.129 (1996).

Under former law, in the absence of a fee agreement the lawyer's right to compensation was determined by application of the doctrine of quantum meruit. Gioffre v. Simakis, 72 Ohio App.3d 424, 594 N.E.2d 1013 (Franklin 1991). See Sonkin & Melena Co., L.P.A. v. Zaransky, 83 Ohio App.3d 169, 614 N.E.2d 807 (Cuyahoga 1992) (providing a good explanation of the doctrine of quantum meruit). As noted, under that doctrine, the lawyer is to be paid the reasonable value of the services rendered, based on the totality of the circumstances, in accordance with the guidelines set forth in former OH DR 2-106.  Reid, Johnson, Downes, Andrachik & Webster v. Lansberry, 68 Ohio St.3d 570, 629 N.E.2d 431 (1994). See generally 1 Restatement (Third) of the Law Governing Lawyers §  39 (2000).

Presumably, this application of quantum meruit will continue under the Rules, although its applicability will be restricted by the Rule 1.5(b) requirement of a fee agreement in all matters except those involving a regularly represented client charged on the same basis as previously charged. See section 1.5:500.

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

1.5:240 Fee Collection Procedures

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.130 (1996).

Fee disputes often can be avoided if the lawyer and client have a clear understanding of the fee arrangement at the outset. See section 1.5:500. Even with such precautions, however, fee disputes still may arise.

Under the former OHCPR, the Board of Commissioners on Grievances and Discipline interpreted OH EC 2-15 (reasonable fees are necessary for the viability of the legal community) and OH EC 2-22 (urging amicable resolution of fee disputes) together, not only to acknowledge the necessity of collecting reasonable fees, but also to encourage the lawyer to be amicable in the effort to do so. Bd. of Comm'rs on Grievances & Discipline Op. 91-16, 1991 Ohio Griev. Discip. LEXIS 13 (June 14, 1991). This might include requiring a lawyer to submit fee disputes to an appropriate bar association fee dispute committee, if the client so desires. Bd. of Comm'rs on Grievances & Discipline Op. 92-1, 1992 Ohio Griev. Discip. LEXIS 20 (Feb. 14, 1992). See Rule 1.5 cmt. [10], discussed in section 1.5:250.

While the explicit focus of former OH EC 2-22 was on avoiding fee controversies, the Board stated that similar concerns apply with respect to costs and expenses as well. Bd. of Comm'rs on Grievances & Discipline Op. 87-001, 1987 Ohio Griev. Discip. LEXIS 28 (Oct. 16, 1987). To help avoid unnecessary disputes over these items, the Board encouraged attorneys to inform the client up front that the client is ultimately liable for costs and expenses incurred. Id. See section 1.8:610, discussing advancement of litigation expenses by the attorney and ultimate liability of the client for those expenses, unless repayment by the client of such expenses is made contingent on the outcome of the litigation. Ohio Rule 1.8(e)(1). For whatever reason, Ohio Rule 1.5(a) deletes the MR 1.5(a) language banning unreasonable expenses. See section 1.5:410, at "Expenses and the reasonableness requirement."

The decision to sue a client for fees or costs is a business decision, not a legal one. Op. 87-001, 1987 Ohio Griev. Discip. LEXIS 28. Before the attorney sues a client for delinquent fees, the attorney should be sure that the fee is reasonable and that every effort has been made by the lawyer to resolve the dispute in an amicable manner. Bd. of Comm'rs on Grievances & Discipline Op. 91-16, 1991 Ohio Griev. Discip. LEXIS 13 (June 14, 1991). If this fails, however, a lawyer may bring suit for unpaid fees, use a collection agency to collect delinquent bills, and/or employ a retaining lien. Bd. of Comm'rs on Grievances & Discipline Op. 92-8, 1992 Ohio Griev. Discip. LEXIS 13 (Apr. 10, 1992) (common-law right to retaining lien codified in former OH DR 5-103(A), now Rule 1.8(i)(1); see section 1.8:1130); Op. 91-16, 1991 Ohio Griev. Discip. LEXIS 13 (approving use of a collection agency, but warning that former OH DR 4-101(C)(4) allowed an attorney to reveal only those secrets and confidences of the client necessary to collect delinquent fees). The applicable rule is now stated in Ohio Rule 1.6(b)(5). See section 1.6:340. See generally, as to limits on fee-collection methods, 1 Restatement (Third) of the Law Governing Laywers §  41 (2000).

Finally, there are instances in the cases in which it would appear that the decision to sue a client for fees is a bad business decision.  E.g., Donald Harris Law Firm v. Dwight-Killian, 166 Ohio App.3d 796, 2006 Ohio 2347, 853 N.E.2d 364 (Erie).  In Donald Harris, the agreed upon fee was $450, of which the client paid $270.  Although it was made clear to the client that the firm would not go forward with the bankruptcy petition for which the firm had been engaged unless the fee was paid in full, the client thereafter decided she did not want to proceed with the bankruptcy.  The firm nevertheless sued the client for the balance ($180), plus interest, because it had prepared a "preliminary" petition.  The client counterclaimed for a refund of the $270, asserting that the firm told her that if she decided not to go forward, the firm would refund any payments already made.  The lower court ruled against the firm on its claim and for the client on her refund counterclaim.  The court of appeals affirmed.  One wonders how many dollars the firm spent chasing $180 and ending up having to pay $270.

Bringing a suit for fees may also trigger a claim for malpractice in response. In fact such a counterclaim may be compulsory. Compare Climaco, Seminatore, Delligatti & Hollenbaugh v. Carter, 100 Ohio App.3d 313, 653 N.E.2d 1245 (Franklin 1995) (treating the two claims as so intertwined as to trigger the compulsory counterclaim rule in the ordinary case; here the original claim was for malpractice and the fee counterclaim would have been compulsory), with Ross v. Burns, No. 1996CA00190, 1997 Ohio App. LEXIS 1023 (Stark) (finding that fee claim and malpractice claim on the facts of this case were not so linked as to make one a compulsory counterclaim to the other).

1.5:250 Fee Arbitration

Ohio Rule 1.5 cmt. [9] provides that if a mandatory procedure has been prescribed for settling fee disputes between a client and a lawyer, such as arbitration or mediation by a local or the state bar association, the lawyer must comply. The comment urges that the lawyer conscientiously consider submitting to such procedures, even where voluntary.

When arbitration is agreed upon by the lawyer and client as the means to resolve a fee dispute, the lawyer ignores the arbitration award at his peril.  After failing to appear at the arbitration hearing, at which the client was awarded $10,000+, respondent's failure to comply with the award resulted in a violation of DR 1-102(A)(6)Cuyahoga County Bar Ass'n v. Kehn, 112 Ohio St.3d 547, 2007 Ohio 809, 862 N.E.2d 92.

While fee arbitration is a favored form of dispute resolution, it was opined under the former OHCPR that it would be improper to include in the engagement letter a requirement that the client submit all fee disputes to arbitration. Bd. of Comm'rs on Grievances & Discipline Op. 96-9, 1996 WL 734408 (Dec. 6, 1996). It is doubtful that this Board opinion survives under the new Rules. See ABA, Annotated Model Rules of Professional Conduct 80 (6th ed. 2007), noting that the Comment [9] procedure "may be one upon which the parties agree before representation," citing ABA Formal Op. 02-425 (Feb. 20, 2002) (retainer agreement requiring arbitration of fee disputes permissible if client is fully apprised of pros and cons and gives informed consent). As the ABA opinion indicates, in any resolution procedure envisioned by Comment [9], mandatory or otherwise for the lawyer, the client would have to consent thereto, even though the comment does not expressly so state. See 1 Restatement (Third) of the Law Governing Lawyers §  42(1) & cmt. b(iv) (2000).

See section 1.5:800 at "Disputes between lawyers over fee splitting" for discussion of arbitration between lawyers of different firms in the fee-splitting context.

1.5:260 Forfeiture of Lawyer's Compensation

In contrast to the lawyer's right to quantum meruit compensation even if discharged by the client for cause (see section 1.16:600), a lawyer's withdrawal from representation without just cause results in forfeiture of the fee; the lawyer may not recover for the services rendered either under the contract or on a quantum meruit theory.  W. Wagner & Co., L.P.A. v. Block, 107 Ohio App.3d 603, 669 N.E.2d 272 (Erie 1995); Sandler v. Gossick, 87 Ohio App.3d 372, 622 N.E.2d 389 (Cuyahoga 1993).

It should be noted that one of the sanctions for conflict-of-interest violations is fee forfeiture, and at least one court in Ohio (a federal district court finding violations of the OHCPR), in addition to ordering disqualification, precluded the lawyer from recovering any fee.  Baker v. Bridgestone/Firestone, Inc., 893 F. Supp. 1349 (N.D. Ohio 1995). See section 1.7:260.

1.5:270 Remedies and Burden of Persuasion in Fee Disputes

The material in this section is excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.115-2.117 (1996).

The rate to be charged for legal services depends a great deal on the standards of the legal community. A fee is considered "clearly excessive" and therefore improper under Ohio Rule 1.5(a) 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." While this requirement suggests a high standard of proof in disciplinary cases before one is sanctioned for charging an excessive fee, the courts, under the identical language of former OH DR 2-106(B), usually have not relied explicitly on this standard. For the most part, it seems as though the court determines what a reasonable fee would be, and then if the fee charged is substantially in excess of that, treats the fee as clearly excessive. See, e.g., Office of Disciplinary Counsel v. Curren, 39 Ohio St.3d 117, 529 N.E.2d 930 (1988) ($67,000 constituted excessive fee where Court found $30,000 to be reasonable); Office of Disciplinary Counsel v. Stinson, 25 Ohio St.3d 130, 495 N.E.2d 434 (1986) ($9,400 constituted excessive fee where $2,000 found to be reasonable); Lake County Bar Ass'n v. Ostrander, 41 Ohio St.2d 93, 322 N.E.2d 653 (1975) ($19,600 constituted excessive fee where $3,800 found to be reasonable).

To the extent questions of reasonableness arise in a contract dispute over payment of the fee, the burden of proof is on the attorney to show the fee's reasonableness.  Heller v. McLaughlin, No. 70072, 1996 Ohio App. LEXIS 4179 (Cuyahoga Sept. 26, 1996). Accord Climaco, Seminatore, Delligatti & Hollenbaugh v. Carter, 100 Ohio App.3d 313, 653 N.E.2d 1245 (Franklin 1995); Wilson v. Lynch & Lynch Co., L.P.A., 99 Ohio App.3d 760, 651 N.E.2d 1328 (Geauga 1994). See Monastra v. D'Amore, 111 Ohio App.3d 296, 676 N.E.2d 132 (Cuyahoga 1996) (on need for expert testimony to refute reasonableness of attorney fees claim, unless issues are within understanding of layperson). See generally, as to a lawyer's burden of proof in fee disputes, 1 Restatement (Third) of the Law Governing Lawyers §  42(2) (2000).

If the contract between an attorney and a client bases the fee on an hourly rate and the exact number of hours to be worked is not specified, the attorney has the burden to show, in an action for the alleged fees due, that the hours charged were fairly and properly charged. Jacobs v. Holston, 70 Ohio App.2d 55, 434 N.E.2d 738 (Lucas 1980). To help meet this burden, an attorney should keep time records of the work done for each client. In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991). In a case where the attorney failed to provide an itemized list specifying the time spent on each charge, the court, in its discretion in fixing a fee award for civil contempt, reduced the attorney's estimated fee by one half. Dayton Women's Health Ctr., Inc. v. Enix, 86 Ohio App.3d 777, 621 N.E.2d 1262 (Montgomery 1993). While an attorney has an implied duty to keep track of the time spent on a case to determine attorney fees, according to one Ohio appellate court time records are not mandatory, Cannell v. Bulicek, 8 Ohio App.3d 331, 457 N.E.2d 891 (Cuyahoga 1983). Nor are they expressly required by Rule 1.5.

In establishing the reasonable value of services in the context of a statutory fee award, evidence of the novelty of the issue may need to be presented if novelty is asserted as a reason for increasing the fee. Moraine v. Baker, 34 Ohio Misc. 77, 297 N.E.2d 122 (C.P. Montgomery 1971) (where no evidence is brought to court's attention establishing novelty or difficulty of legal issues involved, fees cannot be inflated based on such grounds).

A disciplinary case in which the failure to produce billing records undercut the respondent's argument with respect to work allegedly done for the client on a domestic relations matter is Disciplinary Counsel v. Carlson, 111 Ohio St.3d 281, 2006 Ohio 5707, 855 N.E.2d 1218 (respondent testified he had lost client's file; fee charged found excessive). The failure adequately to document time spent (or to be able to reconstruct it) was also fatal to respondent's argument that his fee was not excessive in Columbus Bar Ass'n v. Farmer, 111 Ohio St.3d 137, 2006 Ohio 5342, 855 N.E.2d 462.  Underscoring that the burden of persuasion as to such matters is on the lawyer, the Court stressed that the respondent "still has not provided even the roughest estimate of how much time he devoted to each task." Id. at para. 34. As a result,

[r]espondent has failed to provide any reliable explanation for charging the Martins nearly $9,000 in legal fees.  Absent this accounting, we can only conclude that his fees were clearly excessive.

Id. at para. 35.

1.5:300 Attorney-Fee Awards (Fee Shifting)

  • Primary Ohio References: ORC 119.092, 309.13, 2323.51, 2335.39, 4112.05(G)
  • Background References: ABA Model Rule 1.5
  • Commentary: ABA/BNA § 41:311, Wolfram § 16.6

1.5:310 Paying for Litigation: The American Rule

Under the American Rule, which has been adopted in Ohio, parties to litigation usually have to pay their own attorney fees and cannot recover them as costs from the other side if they prevail. E.g., Krasny-Kaplan Corp. v. Flo-Tork, Inc., 66 Ohio St.3d 75, 609 N.E.2d 152 (1993); Sorin v. Bd. of Educ., 46 Ohio St.2d 177, 347 N.E.2d 527 (1976). Nevertheless, this general principle is subject to both common-law and statutory exceptions.

1.5:320 Common-Law Fee Shifting

While a party is usually responsible for its own attorney fees under the American Rule, the common law recognizes instances in which this responsibility can be shifted to the losing party in litigation.

Perhaps most noteworthy is the so-called "bad faith" exception, which permits an award of attorney fees to the prevailing party when a court has determined that the opposing party has acted maliciously or in bad faith. See, e.g., State ex rel. Rose v. James, 57 Ohio St.3d 14, 565 N.E.2d 547 (1991); State ex rel. Durkin v. Ungaro, 39 Ohio St.3d 191, 529 N.E.2d 1268 (1988); TOL Aviation, Inc. v. Intercargo Ins. Co., 2006 Ohio 6061, 2006 Ohio App. LEXIS 6008 (Lucas); McClure v. Fischer Attached Homes, 146 Ohio Misc.2d 67, 2008 Ohio 2676, 889 N.E.2d 602 (C.P. Clermont). The Sixth Circuit Court of Appeals has held, as a matter of federal law, that the bad-faith exception does not permit an award of attorney fees based upon a party's exercise of bad faith in the conduct giving rise to the underlying cause of action.  Shimman v. Int'l Union of Operating Eng'rs, 744 F.2d 1226 (6th Cir. 1984) (en banc). Rather, the exception applies only where the losing party has demonstrated bad faith during the course of the litigation, or in the filing of the suit itself. Id. It appears that this rule is observed, at least implicitly, by Ohio state courts as well. See, e.g., Sorin v. Bd. of Educ., 46 Ohio St.2d 177, 347 N.E.2d 527 (1976); Vinci v. Ceraolo, 79 Ohio App.3d 640, 607 N.E.2d 1079 (Cuyahoga 1992) (citing Shimman with approval). But see McClure supra, where the bad faith exception was invoked based on the underlying filing of an improper lien. For a case in which the bad-faith exception was found inapplicable, see Murphey, Young & Smith Co., L.P.A. v. Billman, Nos. 84AP-49, 84 AP-198, 1984 Ohio App. LEXIS 11643 (Franklin Nov. 20, 1984) (presentation of "colorable" defenses sufficient to preclude finding of bad faith). See also Rubin v. Schottenstein, Zox & Dunn, 119 F. Supp.2d 787 (S.D. Ohio 2000) (nothing in record from which ill-will, malice, or bad faith could reasonably be inferred).

A second common-law exception to the American Rule permits a successful plaintiff to seek recovery of attorney fees as an element of compensatory damages if punitive damages are allowable and awarded under Ohio tort law. See, e.g., Zappitelli v. Miller, 114 Ohio St.3d 102, 2007 Ohio 3251, 868 N.E.2d 968; Galmish v. Cicchini, 90 Ohio St.3d 22, 35, 734 N.E.2d 782, 795 (2000); Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 644 N.E.2d 397 (1994); Summa Health Sys. v. Viningre, 140 Ohio App.3d 780, 749 N.E.2d 344 (Summit 2000). Compare TOL Aviation supra (following rule; no finding below that prevailing insured entitled to punitive damage award in bad faith action against insurer; therefore award of attorney fees to insured reversed). However, a plaintiff's right to recover additional attorney fees for services rendered on appeal in such cases has not been recognized in Ohio. See Shimman v. Int'l Union of Operating Eng'rs, 744 F.2d 1226 (6th Cir. 1984) (en banc) (applying state law regarding attorney fees to state-law assault and battery claim pendent to federal claims). And see ORC 2307.80(C)(1) & (D)(1), enacted as part of Ohio's Tort Reform Act, effective April 7, 2005. Those provisions insulate manufacturers from punitive damages if they have complied with government standards concerning the matter at issue.

Note that the TOL court seems to come down on both sides of the interplay between the bad faith and punitive damages elements on the issue of awarding attorney fees. First, with respect to the underlying litigation, the court of appeals appears to hold that bad faith alone will support an attorney fee award as a part of compensatory damages, even if there are no punitive or other actual damages, citing, e.g., Vance v. Roedersheimer, 64 Ohio St.3d 552, 597 N.E.2d 153 (1992). But in the follow-up bad faith litigation against the insurer, despite a finding of bad faith, attorney fees were denied in the absence of a showing that the plaintiff was entitled to punitive damages, citing Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552, 644 N.E.2d 397 (1994). The appellate court’s conclusory explanation in TOL was that in the underlying action the fees were compensatory, whereas in the follow-up suit the attorney fees “are not so much compensation to the insured as they are punishment to the insurer.” 2006 Ohio App. LEXIS 6008, at para. 88.

The final class of common-law exceptions to the American Rule involves the creation of a common fund through a class-action recovery. Ohio law allows an award of attorney fees to a plaintiff who, at his own expense, files a suit that is successful in creating, enlarging, or protecting a monetary or property fund shared by members of a class. See, e.g., Smith v. Kroeger, 138 Ohio St. 508, 37 N.E.2d 45 (1941); Wyser-Pratte v. Van Dorn Co., 49 F.3d 213 (6th Cir. 1995).

1.5:330 Statutory Fee Shifting

The American Rule is also sometimes altered by statute. A number of statutory provisions in Ohio allow prevailing parties to seek to recover some or all of their attorney fees from their opponents. Typical provisions allow an award of attorney fees to the prevailing party when:

  • The state's position in initiating a lawsuit is not substantially justified, and the prevailing party has not engaged in any dilatory conduct that unnecessarily delayed the final resolution of the case. ORC 2335.39. See Cincinnati City School Dist. Bd. of Educ. v. State Bd. of Educ., 176 Ohio App.3d 678, 2008 Ohio 2845, 891 N.E.2d 352 (local school district was “prevailing eligible party” under statute for attorney fees purposes). The same holds true for adjudicative proceedings initiated by administrative agencies. ORC 119.092.

  • The opposing party has engaged in frivolous conduct, either through its actions during the course of litigation or by the commencement of the suit itself, and such conduct has adversely affected the prevailing party. ORC 2323.51.

  • A successful suit is filed by a taxpayer against a county government or agent, to prevent or enjoin the misapplication or illegal withdrawal of funds from the county treasury. ORC 309.13.

  • A civil claim is brought under Ohio's RICO statute, ORC 2923.31 et. seq. A prevailing plaintiff "shall" be awarded reasonable attorney fees, ORC 2923.34(G); a prevailing defendant "may" be granted attorney fees. ORC 2923.34(H). See Bourke v. Carnahan, 163 Ohio App.3d 818, 2005 Ohio 5422, 840 N.E.2d 1101 (Franklin).

  • The Ohio Civil Rights Commission has determined that an individual or entity has engaged in unlawful housing or lending discrimination. ORC 4112.05(G).

  • The consumer files or maintains in bad faith a groundless action under the Ohio Consumer Sales Practices Act, or the supplier knowingly violates the Act. ORC 1345.09(F). See Borror v. MarineMax of Ohio, Inc., 2007 Ohio 562, 2007 Ohio App. LEXIS 525 (Ottawa).

  • The relator newspaper confers a public benefit in successfully seeking records under the Ohio Public Records Act, ORC 149.43. See, e.g., State ex rel. Beacon Journal Publ'g Co. v. Maurer, 91 Ohio St.3d 54, 741 N.E.2d 511 (2001).

Closely related to statutes such as ORC 2323.51 are the various court rules that permit the assessment of attorney fees against an offending party or lawyer for frivolous or otherwise improper conduct. See OH Civ R 11, OH App R 23, and SCt R XIV(5). These provisions, as well as ORC 2323.51, are discussed in detail in section 3.1:300.

In addition to the common-law (see section 1.5:320) and statutory exceptions, fee shifting may be provided for as a matter of contract. While the general rule apparently remains that a contractual provision that permits a party to recover its attorney fees as a cost of enforcing the contract is unenforceable as against public policy, Miller v. Kyle, 85 Ohio St. 186, 97 N.E. 372 (1911), the Supreme Court has recognized exceptions to the rule. See Nottingham Homeowner's Ass'n v. Darby, 33 Ohio St.3d 32, 514 N.E.2d 702 (1987) (condo-ownership declaration); Worth v. Aetna Cas. & Sur. Co., 32 Ohio St.3d 238, 513 N.E.2d 253 (1987) (indemnification agreement). Although the Court in Nottingham found that a "rule of law which prevents parties from agreeing to pay the other's attorney fees . . . is outmoded, unjustified and paternalistic," 33 Ohio St.3d at 36, 37, 514 N.E.2d at 705, 707, the Court distinguished, rather than overruled, Miller. The touchstone of enforceability appears to be one of an agreement to pay fees that "can fairly be said to be the product of a 'free and understanding negotiation, . . .' between 'parties of equal bargaining power and similar sophistication.'" Vermeer of S. Ohio, Inc. v. Argo Constr. Co., 144 Ohio App.3d 271, 278, 760 N.E.2d 1, 6 (Hamilton 2001) (quoting from Worth, 32 Ohio St.3d at 243, 513 N.E.2d at 258, and from Newman v. Salamander Indus. Prods., Inc., Nos. C-970811, C-970843, C-970879, 1999 Ohio App. LEXIS 1667, at *18-19 (Hamilton Apr. 16, 1999)). Both Vermeer and Newman provide helpful overviews of the current status of the contractual fee-shifting issue in Ohio. See 144 Ohio App.3d at 276-78, 760 N.E.2d at 5-6; 1999 Ohio App. LEXIS 1667, at *18-19.

1.5:340 Financing Litigation [see 1.8:600]

1.5:400 Reasonableness of a Fee Agreement

  • Primary Ohio References: Ohio Rule 1.5(a), (d)(3)
  • Background References: ABA Model Rule 1.5(a)
  • Ohio Commentary: Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.112-2.113, 2.116-2.127
  • Commentary: ABA/BNA § 41:301, ALI-LGL § 34, Wolfram § 9.3.1

1.5:410 Excessive Fees

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.112-2.113, 2.116-2.125, 2.127.1 (1996).

Legal fees - In general: The basic principle underlying the fees-for-legal-services provisions is that a "lawyer shall not make an arrangement for, charge, or collect an illegal or clearly excessive fee." Ohio Rule 1.5(a). Excessive fees limit the availability of legal services to the public by making them less affordable, take advantage of the lawyer-client relationship, and cast the profession in a negative light. Reasonable fees, in contrast, enhance the availability of legal services by making them more affordable, and promote the provision of legal services by attorneys. Adequate compensation works to maintain the integrity and independence of the legal profession and to reduce the possibility that an under-compensated lawyer might be tempted to cut corners in representing a client or to take on more matters than the lawyer can handle effectively. If not for the possibility of collecting reasonable legal fees, there would likely be fewer and less-qualified lawyers to protect lay persons' legal rights.

The fee assessed ultimately must comply with the standards set forth in Ohio Rule 1.5(a). The only case known to date in which the court applied the Rule 1.5(a) criteria in awarding reasonable attorney fees is McClure v. Fischer Attached Homes, 146 Ohio Misc.2d 70, 2008 Ohio 2677, 889 N.E.2d 612. The other case applying Rule 1.5(a) to date, In re Estate of Keytack, 147 Ohio Misc.2d 114, 2008 Ohio 3831, 892 N.E.2d 529, found that attorneys who had entered into 10% contingent fee contracts with their clients but had not obtained court approval of same as required by Sup R 70(C) and had done no legal work on the matter were not entitled to the fees requested: “the claimed fee is clearly excessive in the absence of proof of any legal services.” Id. at para. 10. Judicial interpretations of the former rule, identical to the OHRPC standard, arose not only in disciplinary cases, but also in cases involving lawyer-client fee disputes and cases involving court-awarded attorney fees in which the factors set forth in former OH DR 2-106(B) often were examined for guidance. See, e.g., Bittner v. Tri-County Toyota, Inc., 58 Ohio St.3d 143, 569 N.E.2d 464 (1991) (in making attorney-fee award under the Consumer Sales Practices Act, the court should be guided by OH DR 2-106(B) factors);  In re J.F., 162 Ohio App.3d 716, 2005 Ohio 4258, 834 N.E.2d 876 (reversing and remanding fee award because probate court failed to review appellant law firm's agreement and services under the standards set forth in Sup R 71 and DR 2-106); In re Estate of Wirebaugh, 84 Ohio App.3d 1, 616 N.E.2d 245 (Wood 1992) (in making attorney-fee award, probate court should be guided by OH DR 2-106(B) factors); Meacham v. Miller, 79 Ohio App.3d 35, 606 N.E.2d 996 (Jackson 1992) (trial court should consider OH DR 2-106(B) factors in award of attorney fees to tenant against landlord under ORC CH 5321); cf. Dayton Women's Health Ctr., Inc. v. Enix, 86 Ohio App.3d 777, 621 N.E.2d 1262 (Montgomery 1993) (appellate court presumed, absent evidence to the contrary, that fee award set by trial court was based on consideration of factors found in OH DR 2-106).

In In re Thamann, 152 Ohio App.3d 574, 2003 Ohio 2069, 789 N.E.2d 654 (Hamilton), the court held that a probate court must hold a hearing before determining the reasonableness of a fee award. Thus, it was error to "automatically" set a fee award in a contingent-fee wrongful death matter, "without reviewing the reasonableness of the attorney fees as required by . . . [OH] DR 2-106." Id. at ¶ 12. Accord In re Thompson, 150 Ohio App.3d 98, 2002 Ohio 6065, 779 N.E.2d 816 (Hamilton).

Particular note should be made of the 2007 decision in Disciplinary Counsel v. Johnson, 113 Ohio St.3d 344, 2007 Ohio 2074, 865 N.E.2d 873.  This important case, decided under former OH DR 2-106(A) (identical to the first sentence of Rule 1.5(a)), is discussed at a number of points in this section infra.

Activities proscribed - In general: To ensure proper behavior throughout the compensation process, Ohio Rule 1.5(a) specifically prohibits three types of conduct -- making an agreement for, charging, or collecting an illegal or clearly excessive fee. The case law under the identical language of former OH DR 2-106(A), however, typically did not distinguish between these types of conduct. E.g., Disciplinary Counsel v. Mathewson, 113 Ohio St.3d 365, 2007 Ohio 2076, 865 N.E.2d 891 (failure to return unearned retainer; "charging or collecting" referenced, id. at para. 7); Disciplinary Counsel v. Carlson, 111 Ohio St.3d 281, 2006 Ohio 5707, 855 N.E.2d 1218 ("agreeing to charge or collecting an illegal or clearly excessive fee"). Nevertheless, examples can be found:

In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991), provides an example of entering into an excessive contingency-fee arrangement. (The contract provided for 40% of amount recovered, unilaterally reduced by attorneys to 33%; court awarded 20% as reasonable fees in case involving personal injury to minors in which risk of nonrecovery was minimal.)

Illustrations of an attorney charging or attempting to charge an excessive fee are Cleveland Bar Ass'n v. Mishler, 118 Ohio St.3d 109, 2008 Ohio 1810, 886 N.E.2d 818, Stark County Bar Ass'n v. Hare, 99 Ohio St.3d 310, 2003 Ohio 3651, 791 N.E.2d 966, and Mahoning County Bar Ass'n v. Pagac, 39 Ohio St.3d 1, 528 N.E.2d 948 (1988). In Mishler, respondent charged his client $17,600 but was "unable to reliably account for the fees and expenses he charged" the client, id. at para. 23, thereby violating, inter alia, DR 2-106(A). In Hare, respondent charged his clients $50,000 in legal fees (including an improper nonrefundable retainer of $1,500, see section 1.5:430) for the adoption of twins, even though the evidence indicated that local adoption lawyers charged hourly rates of $125 to $150 for customary total fees of $2,000 to $3,000. On top of this, in his submissions to the probate court, respondent "had dishonestly and selfishly attempted to conceal the exorbitant fee he charged for these adoptions."  Id. at para. 31. For this and numerous other OHCPR violations, respondent was disbarred. In Pagac, the attorney, who charged a flat fee of $3000 for each felony defense, attempted to charge the client an additional $15,000 for five additional felony charges that were "thrown in" to a plea-bargain offer that had to be accepted almost immediately. Because the defense of the extra felony counts required no extra services, the fee charged by the attorney was excessive, and the attorney was suspended for six months. See Columbus Bar Ass'n v. Mills, 109 Ohio St.3d 245, 2006 Ohio 2290, 846 N.E.2d 1253, where, in addition to one instance of double-billing and other aggressive billing practices, respondent filed a case in the wrong court and then "charged [the client] for her time in refiling the case and gave him no credit for her initial mistake." Id. at para. 5. Accord Cleveland Bar Ass'n v. Dixon, 95 Ohio St.3d 490, 2002 Ohio 2490, 769 N.E.2d 816, in which respondent attempted to charge an excessive fee (fee payment later waived as part of a settlement agreement) and was found to have violated OH DR 2-106(A). Id. at para. 10.

A typical case in which the attorney is found to have collected an excessive fee is one in which the attorney, hired to represent an estate, withdraws more than a reasonable amount of funds from the estate account without the court's, or the client's, consent. See, e.g., Erie-Huron Counties Joint Certified Greivance Committee v. Meyerhoefer, 99 Ohio St.3d, 2003 Ohio 2467, 788 N.E.2d 1073. This conduct often raised OH DR 9-102 concerns as well. Another case involving collection of an excessive fee is Akron Bar Ass'n v. Naumoff, 62 Ohio St.3d 72, 578 N.E.2d 452 (1991), discussed in section 1.5:500 infra.

Reasonable fees - In general: The determination of what constitutes a reasonable fee requires a case-by-case analysis. In re Guardianship of Rider, 68 Ohio App.3d 709, 589 N.E.2d 465 (Huron 1990) (despite exorbitant amount of fees relative to size of estate, fees still may be reasonable because each case is unique). The Rule provides a nonexclusive list of eight factors to be considered in determining whether a fee is reasonable. Ohio Rule 1.5(a)(1)-(8). Once again, reference to cases decided under the identical language of former OH DR 2-106(B)(1)-(8) is instructive.

Needless to say, padding a client's statement by increasing the time billed over and above that actually worked is the epitome of an excessive fee and violated the reasonableness requirement of OH DR 2-106(A). Disciplinary Counsel v. Hoskins, 119 Ohio St.3d 17, 2008 Ohio 3194, 891 N.E.2d 324 (billing 45 hours as attorney for estate that were in fact attributable to successor counsel); Dayton Bar Ass’n v. Rogers, 116 Ohio St.3d 99, 2007 Ohio 5544, 876 N.E.2d 923 (“respondent billed clients for work he did not do and for work he had no sound reason for doing,” id. at para. 18); Toledo Bar Ass'n v. Batt, 78 Ohio St.3d 189, 677 N.E.2d 349 (1997) (obtaining fees based on such conduct equivalent to misappropriation of client funds; disbarment ordered). Similarly, padding bills with "unnecessary and repetitive tasks," for 2½ years in which respondent represented elderly, mentally impaired sisters, violated 2-106(A). Disciplinary Counsel v. Johnson, 113 Ohio St.3d 344, 2007 Ohio 2074, 865 N.E.2d 873, at para. 3. Billing a client more than double the amount then owing violated 2-106(A), Columbus Bar Ass’n v. Gueli, 119 Ohio St.3d 434, 2008 Ohio 4786, 894 N.E.2d 1231, as did removing $9,000 from a client trust account, when respondent could document having earned only $350 of it. Disciplinary Counsel v. Robertson, 113 Ohio St.3d 360, 2007 Ohio 2075, 865 N.E.2d 886. Likewise, double billing, "which is the practice of 'billing of fees and costs to more than one client for the same work or the same hours,'" violated the disciplinary rule.  Disciplinary Counsel v. Holland, 106 Ohio St.3d 372, 2005 Ohio 5322, 835 N.E.2d 361, at para. 21 (court-appointed counsel failed to apportion among his clients his per-hour in-court services; "[t]hat is, if respondent represented three clients in court in a single three-hour session, he would claim fees for three in-court hours in each case," id. at para. 7). Cf. Office of Disciplinary Counsel v. Holzer, 78 Ohio St.3d 309, 677 N.E.2d 1186 (1997) (charging work done for one client to another client violated former OH DR 1-102(A)(4); see section 8.4:400).

With Holland, compare Disciplinary Counsel v. Agopian, 112 Ohio St.3d 103, 2006 Ohio 6510, 858 N.E.2d 368, where, although a public reprimand was issued for "careless and sloppy timekeeping practice," id. at para. 6, by a lawyer regularly serving as court-appointed counsel for indigent criminal defendants, the effect of the sloppiness was the opposite of that in Holland:  "One panel member noted that Agopian 'wasn't taking one hour … and turning it into three.  It looks to me like he was taking three hours and turning it into one.'" Id. (ellipses in original). The Court in fact overruled the objection of Disciplinary Counsel to the Board's recommendation that the 2-106(A) charge be dismissed.  While that is not surprising, given the facts of the case, the panel found that respondent had violated DR 1-102(A)(4), the disciplinary rule prohibiting lawyer conduct "involving dishonesty, fraud, deceit, or misrepresentation," as well as 1-102(A)(6), and the Board adopted this finding. Given the fact that "there is no evidence of deceit," id. at para. 6, the Agopian case seems an unlikely candidate for invocation of DR 1-102(A)(4). Granted, the respondent "admitted that he had approximated his actual time to perform these services but had nevertheless certified to the court the accuracy of the information," id. at para. 5; however, it was clear that

Agopian did all the work on each individual case but failed to accurately record the exact days of his appearances in court or the specific number of hours that he spent on each case.

Id. at para. 6. In the panel’s words, he "routinely performs services far in excess of the time for which he submits payment requests." Id. The Supreme Court reduced the sanction from a stayed one-year suspension to a public reprimand.

Reasonable fees - Time, labor, and skill required: The first set of factors the Rule identifies as relevant in assessing the reasonableness of the fee is "the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly." Ohio Rule 1.5(a)(1). These factors are often of primary concern. In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991) (highlighting primacy of these factors in context of awarding attorney fees under ORC 2111.18 and applicable court rules). (Of course, the service performed must be "legal service"; if the lawyer is spending his time in social discussions with the client, such hand-holding cannot be billed as lawyer's time at a lawyer's rate. Cincinnati Bar Ass'n v. Alsfelder, 103 Ohio St.3d 375, 2004 Ohio 5216, 816 N.E.2d 218 (violation of former OH DR 2-106(A)). Accord Disciplinary Counsel v. Hunter, 106 Ohio St.3d 418, 2005 Ohio 5411, 835 N.E.2d 707, at ¶ 25 ("respondent charged Lester legal fees for a variety of nonlegal services [such as picking up mail, paying bills, and arranging for lawn care]. This practice of overcharging violates DR 2-106(A)," citing Alsfelder).)

While important as a starting point in computing a reasonable fee, something more than a mere multiplication of the base rate for the lawyer's services by the hours that the lawyer worked on the representation is required. See, e.g., Bertrand v. Lax, 2005 Ohio 3261, 2005 Ohio App. LEXIS 3011 (Portage) (failure to establish 2-106 reasonable or customary fees: "'[a] simple multiplication of hours by a minimum hourly rate is not by itself a proper method to determine such charges,'" id. at para. 28 (citation omitted));  In re Estate of Wirebaugh, 84 Ohio App.3d 1, 616 N.E.2d 245 (Wood 1992) ("time and labor" are but one of many factors to be considered in determining reasonableness of fee); Perry v. LTV Steel Co., 84 Ohio App.3d 670, 618 N.E.2d 179 (Cuyahoga 1992) (language of applicable fee-award statute indicated award should be based on "time and effort" expended, but court looked beyond multiplication of lawyer's base rate by hours worked and reviewed factors similar to OH DR 2-106(B)(2)-(8)); Swanson v. Swanson, 48 Ohio App.2d 85, 355 N.E.2d 894 (Cuyahoga 1976) (because value of legal services may be greater or less than product of base rate and hours spent, multiplying hours spent by rate is deficient method for determining reasonable value for services). The theory, as expressed by the court in Betts supra, is that time alone should not be the determining factor because the more experienced lawyer can do the same work as the less-skilled lawyer can do in a shorter period of time. This explanation, however, seems to overlook the fact that the more experienced lawyer would be likely to charge more per hour for his services. While the product of the hours worked multiplied by the lawyer's hourly rate in and of itself is not sufficient to determine a reasonable fee, if that computation provides a number substantially less than the amount charged, it may indicate that the fee charged is excessive.  Lake County Bar Ass'n v. Lillback, 41 Ohio St.3d 13, 535 N.E.2d 300 (1989) (charging $33,000 in fees for services that, if billed at an hourly rate would amount to approximately $3000 per hour, violated OH DR 2-106).

The inadequacy of rate x time in and of themselves as determining factors of the reasonableness of a fee is strikingly illustrated by Disciplinary Counsel v. Johnson, 113 Ohio St.3d 344, 2007 Ohio 2074, 865 N.E.2d 873.  In Johnson, respondent represented two elderly, mentally impaired, sisters who had been swindled out of $800,000 by their previous attorney.  Respondent diligently (as it turned out, too diligently) sought to recover his clients' lost assets.  He did in fact recover $197,000 of the misappropriated funds, but the problem was that he billed $159,000 in doing so.  There apparently was nothing wrong with his billing records, which showed 1200 hours billed in 1/10-hour increments.  Nor was there any question raised about his hourly rate, which was $150.  But Johnson, irrespective of whether his time and efforts were producing any results for his clients, took a course of action that threatened to milk his clients dry, and he nearly succeeded in doing so. As respondent admitted, "he did not even consider a cost-benefit analysis."  Id. at para. 71.  This state of affairs was graphically summed up by the Court in the following language:

Respondent recovered the most significant assets, over $165,000, in the first six months of representation . . . and billed around $46,000 for his services.  During the remaining 25 months, however, respondent recovered only around $21,000 and yet billed over $100,000 in fees.  In all, he billed $159,452.95 to collect $197,683.45.

Id. at para. 26.  The Court quoted with approval the expert testimony on behalf of the relator that "you can work very, very hard and lots and lots of hours, but if you're not accomplishing anything, you can't reasonably expect to be paid for it, particularly when you're working as a fiduciary.  You're the guardian.  You're not dealing with somebody at arm's length."  Id. at para. 56. (Relator's expert also "found questionable many of respondent's hundreds of billing entries, and noted his serious concern over entries for preparing or reviewing a memo; in which the 'memo' was written on a post-it note," id. at para. 68.)  Overall, the Court found the expert's testimony persuasive:

His remarks underscore a fundamental tenet:  attorney fees are not justified merely because the lawyer has charged his professional time and expenses at reasonable rates; a legitimate purpose must also explain why the lawyer spent the time and incurred those costs.

Id. at para. 71.  The biggest "black hole" in the last 25 months of representation revolved around the malpractice action Johnson filed against his clients' former attorney, Bond.  The detail with respect to this effort is examined in the subsection "Reasonable fees - The amount involved and the results obtained" infra.

As Johnson so vividly illustrates, in a fee-award or contract dispute, even if a lawyer keeps time records, a court still may disagree with the attorney about whether the time spent was required to render the services in question. See Nielson v. Bob Schmidt Homes, Inc., 69 Ohio App.3d 395, 590 N.E.2d 1291 (Cuyahoga 1990). In Bittner v. Tri-County Toyota, Inc., 62 Ohio Misc.2d 345, 598 N.E.2d 925 (Fairfield Mun. Ct. 1992), for example, the trial court had been asked on remand to state the basis for its determination of a statutory award of attorney fees. The court cited four reasons for finding the hours claimed by the attorney to be excessive: (1) conflicting time records, (2) duplication of effort by the two firms involved, (3) poor discovery practice (taking a deposition to prove a claim that was provable by other, more efficient means, such as requests for admissions), and (4) the fact that the original attorney had to bring in an expert attorney, which was evidence that the inexperience of the original attorney most likely caused an inordinate amount of time to be expended at the beginning of the trial. Davis v. Mut. Life Ins. Co., No. C-1-87-727, 1990 WL 375612 (S.D. Ohio Aug. 10, 1990), aff'd in part on other grounds, rev'd in part on other grounds, 6 F.3d 367 (6th Cir. 1993), presented a similar case where an attorney fee request was limited because: (1) some of the time charged was spent on representation of another related case, (2) "legal research" and "trial preparation" notations are too vague to allow the court to determine the time spent working on any given issue, (3) two or more attorneys on the same phone call or at the same conference was a duplication of effort, (4) a lack of clear documentation indicated "padding" of the time records, and (5) the primary attorney being accompanied by another at all times indicated a duplication of effort. Nevertheless, it must be recognized that while hours spent in unnecessary or duplicative efforts should not be included in justifying the reasonableness of the fee charged, substantial discretion remains in assessing whether the time spent was in fact unnecessary or duplicative.  Freeman v. Crown City Mining, Inc., 90 Ohio App.3d 546, 630 N.E.2d 19 (Gallia 1993) (in fee-award case, trial court did not abuse its discretion in finding hours spent by lawyers collaborating on a matter non-duplicative).

Charging a client fees without rendering services therefor obviously is improper. E.g., Columbus Bar Ass’n v. Gueli, 119 Ohio 3d 434, 2008 Ohio 4786, 894 N.E.2d 1231 (retaining fees “despite doing nothing”); Cincinnati Bar Ass'n v. Washington, 109 Ohio St.3d 308, 2006 Ohio 2423, 847 N.E.2d 435 (billing multiple insurance-company clients of his firm over $91,000 for work he did not perform). If such conduct is undertaken in combination with other violations, the attorney may be subject to serious penalties, including permanent disbarment. See, under the former OHCPR, Disciplinary Counsel v. Lord, 114 Ohio St.3d 466, 2007 Ohio 4260, 873 N.E.2d 273 (permanent disbarment warranted where attorney with prior disciplinary record violated OH DR 2-106(A) by retaining fees for services not performed, along with multiple violations of ten other disciplinary rules); Disciplinary Counsel v. Griffith, 104 Ohio St.3d 50, 2004 Ohio 5991, 818 N.E.2d 226 (indefinite suspension; multiple violations, including acceptance of retainer to represent client on appeal of criminal conviction but then filing nothing on client's behalf); Mahoning County Bar Ass'n v. Pagac, 39 Ohio St.3d 1, 528 N.E.2d 948 (1988) (attorney suspended for six months for charging client for defense of five felony counts that required no additional services, because felonies were added to "take it or leave it" plea bargain where choice had to be made immediately, and for intimidating client, thereby preventing client from making uncoerced decision about paying fees, in violation of former OH DR 1-102(A)(6) and 2-106(A)).

The quality of the services required to fulfill the representation also is a crucial factor. This often turns on the novelty and difficulty of the underlying issues involved. The greater the skills required to perform the legal services in question, the higher the fee can be while still being considered reasonable.  Perry v. LTV Steel Co., 84 Ohio App.3d 670, 618 N.E.2d 179 (Cuyahoga 1992). See Barnes v. Univ. Hosps., 2006 Ohio 6266, 2006 Ohio App. LEXIS 6251 (Cuyahoga) (award to prevailing plaintiff of attorney fees of over $1 million was fair and appropriate in extremely complex medical malpractice action requiring significant time and resources to litigate), aff’d in part on other grounds, reversed in part on other grounds, 119 Ohio St.3d 173, 2008 Ohio 3344, 893 N.E.2d 142. Conversely, if the issues involved are mundane and the services required are simple, the fee should be limited. Disciplinary Counsel v. McCauley, 114 Ohio St.3d 461, 2007 Ohio 4259, 873 N.E.2d 269 (charging $20,000 (25% contingency fee) to liquidate retirement account; “routine” services did not justify fee); Disciplinary Counsel v. Carlson, 111 Ohio St.3d, 2006 Ohio 5707, 855 N.E.2d 1218 (charging one-third contingent fee with respect to the client's share of estate, the obtaining of which required no special effort on respondent's part, constituted clearly excessive fee); Cleveland Bar Ass'n v. McNally, 109 Ohio St.3d 560, 2006 Ohio 3258, 849 N.E.2d 1022 (charging $5,000 to partition property, after telling client not to worry about fee because case would require only filing a short complaint and a few telephone calls, violated DR 2-106(A)); Butler County Bar Ass'n v. Nash, 66 Ohio St.3d 101, 609 N.E.2d 53 (1993) ($5000 fee excessive under former OH DR 2-106(B)(1) where litigation not complicated, issues not complex, client's case weak, and cursory investigation revealed all this); Swanson v. Swanson, 48 Ohio App.2d 85, 355 N.E.2d 894 (Cuyahoga 1976) (filing six briefs, each involving routine issues, while commendable, does not merit inflated fee; moreover, after some point, attorney cannot be expected to be compensated for time spent in telephone conversations and conferences). Cf.  In re Estate of York, 133 Ohio App.3d 234, 727 N.E.2d 607 (Warren 1999) (probate court reduced amount of attorney fees under previously approved contingent-fee agreement, based on reasoning that case had not required significant preparation nor did it proceed to trial; case remanded, however, because probate court failed to hold hearing to evaluate the fee agreement under OH DR 2-106(B) standards, particularly time, effort, and skill and the results obtained). Another factor that may be considered in determining the difficulty of a case, according to one decision at least, is the eminence of the opposing counsel.  Moraine v. Baker, 34 Ohio Misc. 77, 297 N.E.2d 122 (C.P. Montgomery 1971).

In Office of Disciplinary Counsel v. Galinas, 76 Ohio St.3d 87, 666 N.E.2d 1083 (1996), a lawyer was sanctioned for, inter alia, charging $150,000 in attorney fees for work performed in representing the estate. In finding the fee charged clearly excessive, the Court commented:

There was no litigation surrounding the estate, the estate was not particularly complex, and respondent provided no extraordinary services in representing the estate that could have conceivably justified a fee of that magnitude.

Id. at 89-90, 666 N.E.2d at 1085-86.

For an informative opinion involving reasonable-fee analysis where the underlying claim was difficult to maintain and prevail upon, see Goldauskas v. Elyria Foundry Co., 145 Ohio App.3d 490, 763 N.E.2d 645 (Lorain 2001). In this personal injury action, law firm A, working on a contingent fee, commenced the action on behalf of plaintiff, did a substantial amount of work on the case, and then was discharged and replaced by law firm B, which likewise did significant work on the case. While defendant's motion for summary judgment was pending, the case was settled by law firm B for a significant, undisclosed sum. (The settlement amount was sealed.) Law firm A sought what it deemed its proper share — one-half of the 40% contingent fee. The trial court awarded firm A $300,000 in quantum meruit; on appeal, the court found this amount to be unreasonable and an abuse of discretion and set A's fee at $200,000. The court's analysis was as follows: Both firms agreed that the case, an intentional tort action, was a difficult one to win. There was significant risk of an adverse verdict and likewise a significant risk of loss at the summary judgment stage. Firm A had valued the case as being worth $750,000 - $1,000,000, after trial. All of the testimony indicated that firm A would have taken far less prior to trial and "especially prior to summary judgment, which all believe is highly risky. Hence, we find the trial court's determination of attorney fees to be unreasonable, as it gave . . . firm [A] the same amount as if, by its own estimation, it had pursued the cause through the perils of summary judgment and trial." Id. at 497, 763 N.E.2d at 651. (i.e., $750,000 x 40% = $300,000.) In recomputing the amount, the court of appeals took the high end of firm A's after-trial estimate ($1,000,000), multiplied it by the 40% contingent fee percentage, and applied firm A's 50% entitlement formula to arrive at $200,000 as the appropriate fee in quantum meruit. (While this seems a generous approach, the settlement amount for this truly gruesome accident, obtained by firm B prior to a ruling on defendant's summary judgment motion was, according to the court, "far in excess" of firm A's $1,000,000 valuation after trial, id., and thus firm B's contingency fee was also presumably "far in excess" of the $200,000 fee awarded to firm A.)

Reasonable fees - Forgone employment: The second factor used to determine the reasonableness of a fee under Ohio Rule 1.5(a) is "the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer." Rule 1.5(a)(2). This requires, first, that there be sufficient likelihood that accepting the case will preclude accepting other employment, which turns on how likely it is that another client willing to pay significantly higher fees would have hired the lawyer had the lawyer been available. Charles W. Wolfram, Modern Legal Ethics §  9.3.1, at 519 (1986). Second, the potential sacrifice involved in accepting representation must be "apparent" to the client.  We are aware of no Ohio cases dealing with the apparent-to-the-client requirement.

As a related matter under this provision, a lawyer may charge a reasonable fee to be kept on retainer by a client, thereby assuring that the lawyer will forgo other employment to be available should client needs arise, even if no services actually are performed. Ohio State Bar Ass'n Informal Op. 90-8 (Oct. 31, 1990); Cleveland Bar Ass'n Op. 84-1 (Oct. 19, 1984); cf. Jacobs v. Holston, 70 Ohio App.2d 55, 434 N.E.2d 738 (Lucas 1980). The term "retainer" has several different usages. This and other retainer arrangements are discussed in section 1.5:420.

Reasonable fees - Customary charge: "[T]he fee customarily charged in the locality for similar legal services" is the third guide given to determine a reasonable fee. Ohio Rule 1.5(a)(3). Cf. Hermann, Cahn & Schneider v. Viny, 42 Ohio App.3d 132, 137, 537 N.E.2d 236, 241 (Cuyahoga 1987) (in a fee dispute, "[t]estimony as to the necessary and reasonable value of services by an attorney engaged in a similar area of practice will corroborate an attorney's claim for fees"). If the lawyer is a specialist, reference to the fee customarily charged by similar specialists in the community is appropriate. Freeman v. Crown City Mining, Inc., 90 Ohio App.3d 546, 630 N.E.2d 19 (Gallia 1993). If a service provided is unique, there may be no customary charge for a similar service. In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991).

One ambiguity in the Rule (and the identical language in the Code) is how to define the "locality" for which a customary charge is to be determined. This issue was confronted under the OHCPR by the Sixth District Court of Appeals in Hamilton Mutual Insurance Co. v. Perry, 124 Ohio App.3d 147, 705 N.E.2d 731 (Ottawa 1997), a case involving court-awarded attorney fees to a prevailing-party insured in a declaratory judgment action filed by the insurer. Insured's counsel argued that, given that it had a state-wide practice, a customary charge for a lawyer of similar expertise in Ohio would be appropriate. The insurer argued that the relevant locale was the eleven-county area of northern Ohio in which the action was brought. The trial court found the state-wide definition appropriate in this context, and the appellate court agreed:

We agree with the trial court that the evidence presented in this case shows that the locality to be considered in relation to DR 2-106(B)(3) is the state of Ohio. Appellee's attorneys presented evidence showing that they accept cases from all parts of Ohio and from states other than Ohio. They regularly conduct trials and appeals in all parts of Ohio. Their reputation as successful trial attorneys permits them to conduct a statewide practice from a law office located in Sandusky, Ohio. This court is not persuaded that the purpose of DR 2-106(B)(3) is to compel attorneys who accept cases from various parts of a state (or from more than one state) to vary their hourly fees based upon the prevailing fees charged by other attorneys who do not conduct a statewide practice but who limit their practice to a smaller geographical area.

Id. at 152, 705 N.E.2d at 734. (Cf. discussion of locality standard in context of malpractice duty of care, at section 1.1:330.)

In attorney-fee-award situations, local rules have been used to establish what customary, and hence reasonable, charges would be. See, e.g., Office of Disciplinary Counsel v. Curren, 39 Ohio St.3d 117, 529 N.E.2d 930 (1988) (reasonable guardianship fees set in Clinton County Probate Court by Local Rule 19; one-year suspension warranted for attorney who charged more than double what was reasonable under Rule 19). Former OH EC 2-17 suggested that fee schedules and economic reports of state and local bar associations provide some guidance as to customary charges. The effect of these publications is limited, though, by the finding of the United States Supreme Court in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), that such fee schedules, used inappropriately, may constitute price fixing.

Reasonable fees - The amount involved and results obtained: The fourth guide in determining whether a fee is reasonable is "the amount involved and the results obtained." Ohio Rule 1.5(a)(4). In applying this standard, it is important to recognize that "consideration of 'results obtained' is not synonymous with the monetary amount of the recovery; it encompasses the degree of success enjoyed by the prevailing party." Freeman v. Crown City Mining, Inc., 90 Ohio App.3d 546, 556, 630 N.E.2d 19, 26 (Gallia 1993) (considering identical language in DR 2-106(B)(4)). These factors serve as a rough estimate of the potential malpractice exposure of the lawyer and of the value of the case to the client. See Charles W. Wolfram, Modern Legal Ethics §  9.3.1, at 519 (1986) (discussing fees fixed as a percentage of the value of property). Consideration of the responsibility involved and the results obtained may justify increased fees, even if the services rendered would have been identical to those services rendered for a less valuable case.  In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991). Protecting the client's interest, by winning the case or cases, allows the relative fees to increase.  In re Estate of Ziechmann, 63 Ohio App.3d 717, 580 N.E.2d 31 (Cuyahoga 1989) (fees amounting to 40% of estate found reasonable when services performed involved representing estate in many suits over period of six years and ultimately saved estate $100,000). There are limits, however, to the extent to which this factor figures into the determination of the fee deserved. For example, if a lawyer loses a case, it does not follow that no fees are due, unless there is a contingency-fee arrangement, but the amount deemed reasonable may be less. See Moraine v Baker, 34 Ohio Misc. 77, 297 N.E.2d 122 (C. P. Montgomery 1971). See also Crary v. Goldsmith, 34 N.W.2d 28 (Mich. 1948):

It is true that the efforts of the attorney were abortive and failed to accomplish the desired result. While this cannot operate to deprive an attorney of compensation for services faithfully and intelligently performed, in good faith, it does have a bearing on the amount of compensation for the services rendered.

Id. at 33.

It would be hard to find a decision that better illustrates the application of the amount involved and results obtained criteria of 2-106(B)(4) than Disciplinary Counsel v. Johnson, 113 Ohio St.3d 344, 2007 Ohio 2074, 865 N.E.2d 873, where the respondent sought to obtain recovery on behalf of his clients in a malpractice action against the clients' former attorney, Bond, who had stolen $800,000 from them.  In that action

[r]espondent established Bond's malpractice, but her insurer succeeded in showing that Bond had stolen assets intentionally and that the policy did not cover theft.  [The clients] thus recovered nothing from the malpractice action.

Respondent's law clerk had warned him as early as November 1998 that the malpractice claim had little chance of success, and in January 1999, another attorney whom respondent consulted agreed with that conclusion.  Notwithstanding this advice, respondent continued to bill for his services in pursuit of malpractice-insurance proceeds through May 2000.

Id. at paras. 9-10.  In doing so, respondent ignored what relator's expert characterized as "'Insurance Law 101,' that 'an insurance company does not have the duty of indemnification of [an insured's] illegal act.'"  The expert further testified as follows:

"[H]e kept that lawsuit alive and kept churning the file creating events * * * to achieve billable hours on something that * * * no rational, competent, ethical lawyer would allow his client to do – He just went on and on and on, billing long after * * * there was nothing to be accomplished with the malpractice case, or no realistic potential of collecting anything."

Id. at para. 64 (ellipsis and brackets by the Court).  "To Murman [relator's expert], respondent's billing his clients an hourly rate to pursue the malpractice lawsuit against Bond's malpractice insurer when there was no reasonable hope of recovery was respondent's biggest ethical violation."  Id. at para. 68.

Reasonable fees - Time limitations: The fifth factor listed in the Rule used to determine a reasonable fee is "the time limitations imposed by the client or by the circumstances." Ohio Rule 1.5(a)(5). The Ohio courts and the Board of Commissioners on Grievances and Discipline have not yet explicitly interpreted this factor, either in the new Rule or its predecessor, OH DR 2-106(B)(5). The idea seems to be that if the attorney is under a tight schedule, as a result of the demands of the client or the circumstances of the case, then a higher fee is warranted. On the other hand, if there are very few time pressures, this might be a reason to limit the fee.

This factor can be distinguished from the first factor, the time and labor required, in that it includes cases where "the client's demand for legal services requires a large infusion of staff that creates inefficiencies in the law office because a client's needs bulk so large at times that other matters cannot be handled simultaneously." Charles W. Wolfram, Modern Legal Ethics §  9.3.1, at 519-20 (1986). While the first factor simply considers the time spent in the representation, the fifth factor takes into account special time considerations that impact the reasonableness of fees. One hour of working "under the gun" is presumably more valuable than one hour of regular work. Furthermore, this factor seems to account for cases where there is no novel or difficult issue requiring special skill "to perform the legal services properly" under Ohio Rule 1.5(a)(1), but where the limit on time makes representation on a mundane issue more difficult.

Reasonable fees - Professional relationship with the client: The sixth factor is "the nature and length of the professional relationship with the client." Ohio Rule 1.5(a)(6). This factor also has received little or no interpretation by Ohio authorities. One commentator, with regard to the corresponding provision in the ABA Code of Professional Responsibility, has suggested that while a new client should be charged market rates, an established client might be charged less in gratitude for past fees. Charles W. Wolfram, Modern Legal Ethics § 9.3.1, at 520 (1986). [Query whether this accurately assesses today's legal marketplace.]

Reasonable fees - Qualifications of the lawyer: The Rule's seventh guide is "the experience, reputation, and ability of the lawyer or lawyers performing the services." Ohio Rule 1.5(a)(7). Former OH EC 2-17 also mentioned the attorney's experience, reputation, and ability as relevant in determining a reasonable fee. See Freeman v. Crown City Mining, Inc., 90 Ohio App.3d 546, 630 N.E.2d 19 (Gallia 1993). These factors support increased fees for at least two reasons. First, the more highly qualified lawyer may simply do a better job for the client. The lawyer's standing in terms of possessing unique skills and abilities, however, should be considered only in determining the reasonableness of a fee where such skills are required in the representation.  In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991). Second, when the fee is determined by an hourly rate, the lawyer's qualifications interact with the first factor, the time and labor required for the representation. A more experienced attorney may be presumed to work more efficiently than a less experienced one. An increase in the fees charged takes this into account.

Reasonable fees - Nature of the fee: "[W]hether the fee is fixed or contingent" is the last factor set forth to be considered in determining a reasonable fee. Ohio Rule 1.5(a)(8). Each type of fee presents its own difficulties.

The Rule's approval of fixed fees is somewhat ambiguous. It clearly allows one to charge a fixed hourly rate for work performed. Also permissible, however, are fixed flat fees whereby a lawyer is paid a fixed fee on a per-matter or per-capita basis. See, under the former rule, Bd. of Comm'rs on Grievances & Discipline Op. 95-2, 1995 Ohio Griev. Discip. LEXIS 12 (Feb. 3, 1995); accord Bd. of Comm'rs on Grievances & Discipline Op. 96-4, 1996 Ohio Griev. Discip. LEXIS 5 (June 14, 1996) (approving per-matter fixed flat fees for criminal representation). In the per-capita situation, a lawyer is hired for a fixed fee to handle all of the cases that may arise in a particular area for the client, with the fee based on an estimate of the number of cases likely to arise. While fixed flat fees are permitted under the Rules, they do pose some danger. Because they are not linked directly either to the hours invested by the attorney on the case or the outcome achieved, they may encourage lawyers to slight the representation. Nevertheless, this does not create a per se barrier to their use as long as the other restrictions of the Rules -- barring excessive fees, requiring client responsibility for litigation expenses, and assuring competent and diligent representation -- are met. Op. 95-2, 1995 Ohio Griev. Discip. LEXIS 12. (The rule requiring client responsibility for litigation expenses has since been modified. See Rule 1.8(e) and section 1.8:610.)

The Rule provides some insight with respect to the fixed-fee situation. Comment [6A] states that a

flat [fixed] fee is a fee of a set amount for performance of agreed work, which may or may not be paid in advance but is not deemed earned until the work is performed.

Ohio Rule 1.5 cmt. [6A]. Comment [5] warns that an

agreement may not be made whose terms might induce the lawyer improperly to curtail services for a client or perform them in a way contrary to the client's interest. For example, a lawyer should not enter into an agreement whereby services are to be provided only up to a stated amount when it is forseeable that more extensive services will be required, unless the situation is adequately explained to the client . . . . However, it is proper to define the extent of services in light of the client's ability to pay.

Ohio Rule 1.5 cmt. [5]. (It is also proper, under Rule 1.2(c), to limit the scope of the representation in any other reasonable way. See section 1.2:510). Note that with respect to the type of agreement counseled against in Comment [5], the example would appear to permit the very type of agreement counseled against, so long as "the situation is adequately explained to the client."

Special problems arise where a third party, such as an insurer, is paying the fixed fee for the lawyer's representation of another, such as an insured. Here the risk of the fee structure undercutting the representation would be borne by one who did not control the fee arrangement. Nevertheless, this practice was approved in Board of Commissioners on Grievances & Discipline Op. 97-7, 1997 Ohio Griev. Discip. LEXIS 2 (Dec. 5, 1997), as long as the fee agreement provides reasonable and adequate compensation and the insurer remains responsible for the expenses of litigation.

If a fee is contingent rather than fixed, a higher fee may be justified because of the inherent risk of nonrecovery for the lawyer if the representation is unsuccessful. See generally 1 Restatement (Third) of the Law Governing Lawyers § 35 cmt. c (2000). The risk factor was given significant emphasis in the court's fee analysis in Goldauskas v. Elyria Foundry Co., 145 Ohio App.3d 490, 763 N.E.2d 645 (Lorain) (2001), discussed above in this section at "Reasonable fees - Time, labor, and skill required." Compare, however, Borror v. MarineMax of Ohio, Inc., 2007 Ohio 562, 2007 Ohio App. LEXIS 525 (Ottawa), where the trial court’s enhancement of attorney fees under the Consumer Sales Practices Act – based in part on the fact that a portion of the fee was contingent, thereby implicating the risk factor – was reversed by the court of appeals in language critical of “the great weight given by the trial court to its conclusion that Borror’s counsel took a ‘risk’ by entering into the contingency fee arrangement.” Id. at para. 60. See also section 1.5:600 concerning contingent fees.

The extent of the risk involved is a product of the degree of effort the lawyer will likely have to expend in pursuing the action, and the likelihood of ultimate recovery.  In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991). Some doubt was cast on this basic description by Judge Ford's concurring and dissenting opinion in Wilson v. Lynch & Lynch Co., L.P.A., 99 Ohio App.3d 760, 651 N.E.2d 1328 (Geauga 1994). Judge Ford argued that the reasonableness of a contingency fee should turn solely on whether the percentage being charged is reasonable, without regard to the extent of the lawyer's efforts.

Regardless of the size of the award, the attorney is entitled to that agreed-upon percentage irrespective of the amount of time spent by that attorney on the file. The size of the fee is not subject to review as long as it is not unreasonable in proportion to the sum recovered by the client. In other words, as long as the percentage is reasonable, the size of the fee generated should not be questioned.

Id. at 777, 651 N.E.2d at 1339 (emphasis added).

For a penetrating analysis under general law, stressing the importance of the risk factor in determining the reasonableness of a contingent fee, see Judge O'Malley's opinion in In re: Sulzer Hip Prosthesis & Knee Prosthesis Liability Litig., 290 F. Supp.2d 840, 850-56 (N.D. Ohio 2003) ("the obvious but critical characteristic of a contingent fee arrangement [is] the presence of risk. That is why the attorney's fee is called 'contingent.'" Id. at 850.).

It is per se unreasonable, however, to allow a lawyer to charge a fee whereby the client pays an hourly fee until a settlement or judgment is obtained, at which point the attorney has the option to keep the hourly fee or receive a contingency fee instead, whichever is higher. Bd. of Comm'rs on Grievances & Discipline Op. 95-7, 1995 Ohio Griev. Discip. LEXIS 8 (June 2, 1995). In reaching this conclusion, the Board of Commissioners on Grievances and Discipline reasoned: "Under such circumstances, reasonableness is not a determinative factor and the contingency is illusory. By waiting until after settlement or recovery to choose the most advantageous fee, the attorney is assured of getting the larger of two fees without incurring any risk of nonrecovery." Op. 95-7, 1995 Ohio Griev. Discip. LEXIS 8, at *5 (acknowledging but rejecting a Michigan opinion approving the practice). A variation on this theme was the contingent-fee contract that respondent had his clients enter into in Cuyahoga Bar Ass'n v. Levey, 88 Ohio St.3d 146, 724 N.E.2d 395 (2000); it "provided for an hourly charge if respondent was discharged 'whether or not successful completion' occurred." Id. (emphasis in original). Such a contract was held to violate the excessive fee provisions of OH DR 2-106(A). Likewise violative of 2-106(A) was the lawyer's conduct in Office of Disciplinary Counsel v. Watson, 95 Ohio St.3d 364, 2002 Ohio 2222, 768 N.E.2d 617, where, after entering into a contingent-fee contract, respondent was discharged "and then attempted to obtain a fee based on an hourly rate" by suing his ex-client for $ 20,000 in attorney fees. Id. at paras. 3, 5. The violation of DR 2-106(B) in Cincinnati Bar Ass’n v. Lawson, 119 Ohio St.3d 58, 2008 Ohio 3340, 891 N.E.2d 749, was similar: respondent took on a wrongful death action on a contingency basis but filed no lawsuit, and after six months the client fired him and asked for return of the file. Days later respondent’s associate sent the client a letter refusing to return the file unless the client paid an unspecified amount of legal fees. “Agreeing that his associate had tried to convert the contingent fee into an hourly fee, [respondent] admitted during the panel hearing to a violation of  DR 2-106(B) . . . .” Id. at para. 29.

Neither the Board's opinion in Opinion 95-7 nor the Ohio Supreme Court's case law directly addresses the propriety of a mixed fee in which a lawyer, without double billing, charges both a fixed fee and a contingent fee, but the Ohio State Bar Association's general counsel reads the case law as implicitly finding mixed fees improper in Ohio. See Eugene P. Whetzel, Contingency Fee Arrangement in Civil Cases, Ohio Law., Jan./Feb. 2003, at 24, 28. But cf. Borror v. MarineMax of Ohio, Inc., 2007 Ohio 562, 2007 Ohio App. LEXIS 525 (Ottawa), where the court noted without comment that Borror and his counsel had agreed at the outset of the litigation that fees would be paid on an hourly basis but shortly before trial negotiated a contingency fee arrangement from that point forward.

Reasonable fees - Other "relevant circumstances": Rule 1.5(a) states that reasonableness of the fee is to be determined by factors "includ[ing]" those set forth in subdivisions (a)(1)-(8). See Rule 1.5 cmt. [1]: "The factors specified in divisions (a)(1) through (8) are not exclusive."

One circumstance requiring special consideration, as set forth in former OH EC 2-15, may be whether the client is "unable to pay all or a portion of a reasonable fee." Bd. of Comm'rs on Grievances & Discipline Op. 91-16, 1991 Ohio Griev. Discip. LEXIS 13 (June 14, 1991). The Ethical Consideration advised that "reasonable fees should be charged in appropriate cases to clients able to pay them." This suggests that on some occasions, based on the appropriateness of the case and the ability of the client to pay, even an otherwise reasonable fee should not be charged. Charles W. Wolfram, Modern Legal Ethics §  9.3.1, at 521 (1986) ("Courts have occasionally determined that a fee was excessive in part on the basis of the modest resources of the client").

A similar circumstance, mentioned in former OH EC 2-17, is the "commendable and longstanding [and now outmoded?] tradition of the bar" to consider specially the fees lawyers charge to other lawyers or their immediate families. Query whether this traditional, special consideration given to fellow lawyers and relatives under the Code should any longer be taken into account in determining a reasonable fee. If it were, then an attorney might be guilty of charging an excessive fee to fellow lawyers and relatives, while the same fee for the same services would not be excessive if charged to other clients.

An unusual application of former DR 2-106(A) occurred in Disciplinary Counsel v. Johnson, 113 Ohio St.3d 344, 2007 Ohio 2074, 865 N.E.2d 873. Respondent's clients were paid $100,000 from the Client Security Fund, because their prior lawyer had misappropriated some $800,000 of their assets.  Respondent admitted "that he had charged for his help in securing money from the Client Security Fund . . . ."  Id. at para. 23.  Gov Bar R VIII (6)(B), however, states that unless authorized by the Board of Commissioners of The Clients' Security Fund of Ohio (an exception not present here),

[n]o attorney fees may be paid from the proceeds of an award made to a claimant under authority of this rule.

Id.  Although respondent admitted that he had charged time in connection with the Security Fund recovery, he apparently did not in fact collect for that time:  "if his final bills had been paid, [he] would have consumed a substantial portion of the awards from the Client Security Fund."  113 Ohio St.3d 344, at para. 71.  Nevertheless, even though not paid for the time charged in pursuing the awards, respondent was found to have violated the "[n]o attorney fees may be paid" language of Gov Bar R VIII 6(B), which in turn violated DR 2-106(A).

A lawyer may enter into competitive bidding for legal work as long as the ultimate fee arrangement comports with the Rule 1.5(a) guidelines. Ohio State Bar Ass'n Informal Op. 77-4 (Apr. 6, 1977) (opining on former OHCPR). See generally Rees Morrison, Michael Roster & Jimmy Holland, Corporations Are Paring Use of Outside Counsel, Nat'l L.J., Apr. 17, 1995, at C12 (discussing corporations putting their legal work out for competitive bidding by law firms). See also section 1.18:200, noting Ohio's deletion of MR 1.18 cmt. [5], applicable in "beauty contest" situations.

Expenses and the reasonableness requirement: Ohio Rule 1.5(a) addresses the reasonableness of lawyers' fees. It does not, as does MR 1.5(a) & cmt. [1], address the reasonableness of other expenses and disbursements for which a lawyer may bill. To the extent expenses are treated at all in the Rules, it is found in Ohio Rule 1.5 cmt. [2]. It was opined under the OHCPR that the identical standards set forth in former OH DR 2-106(B)(1)-(8) should apply to these other billing matters as well. Cincinnati Bar Ass'n Op. 95-96-02 (n.d.). See also ABA Formal Op. 93-379 (Dec. 6, 1963).

As a related concern, care must be taken to assure that the client understands what expenses of the representation are to be billed separately. For example, secretarial and paraprofessional services typically are considered part of overhead to be recouped as part of the lawyer's hourly rate or percentage fee. They may be billed for separately only if the client is informed of and agrees to the arrangement. See Ohio Rule 1.5 cmt. [2]. Absent that, separate billing for these services may result in charging a clearly excessive fee. Columbus Bar Ass'n v. Brooks, 87 Ohio St. 3d 344, 721 N.E.2d 23 (1999).

It has been held, however, in the context of attorney fees awarded as sanctions under ORC 2323.51 and OH Civ R 11, that a law clerk's time can properly be included in the fee award, rather than as overhead. All Climate Heating & Cooling, Inc. v. Zee Props., Inc., No. 01AP-784, 2002 Ohio App. LEXIS 1951 (Franklin Apr. 25, 2002). Accord Ron Scheiderer & Assoc. v. London, Nos. CA95-08-022, CA95-08-024, 1996 Ohio App. LEXIS 3296 (Madison Aug. 5, 1996) (paralegal's hourly rates properly included in fee award; "[w]here expenses can be clearly and directly traced to the costs associated with a particular matter, those expenses are not properly considered as part of an attorney's 'overhead,'" id. at *6), aff'd on other grounds, 81 Ohio St.3d 94, 689 N.E.2d 552 (1998); Jackson v. Brown, 83 Ohio App.3d 230, 614 N.E.2d 847 (Cuyahoga 1992). See also Borror v. MarineMax of Ohio, Inc., 2007 Ohio 562, 2007 Ohio App. LEXIS 525 (Ottawa) (paralegal time included in trial court’s award of attorney fees and expenses to prevailing party in Consumer Sales Practices Act case; issue apparently abandoned on appeal).

Cincinnati Bar Ass'n Op. 95-96-02 (n.d.) commented on the propriety of a law firm's adding mark-ups to charges it incurs or pays on the client's behalf and passing on certain costs associated with after-hours work on a client's behalf. The opinion addressed six hypothetical situations: (1) hiring an outside attorney to help on a matter and billing the client a higher hourly rate for the service than the attorney charged the firm; (2) hiring an expert witness to help on a matter and billing the client a higher hourly rate for the service than the expert witness charged the firm; (3) charging the client more for deposition transcripts than the firm was charged; (4) charging the client for overtime and the costs of transportation home for secretarial personnel; (5) charging the client for evening meals delivered to the office for lawyers working late; and (6) factoring in wear and tear into per page photocopy charges passed through to the client. In each situation, the bar association looked to the eight factors in former OH DR 2-106(B) as a guide. Again, see Ohio Rule 1.5 cmt. [2].

With respect to the mark-up of the hourly rate of an outside attorney used on a matter, the bar association felt the practice would be justified only if two conditions were met. First, the hourly rate charged, with the mark-up included, must remain reasonable in relation to the rates usually charged in the community for such legal services. See former OH DR 2-106(B)(3) (on the significance of local custom). Second, there must be some justification for the mark-up. The firm must have incurred some extra expense (such as the outside lawyer's use of the firm's facilities) or incurred some additional risk (such as covering the work of the outside lawyer on the firm's professional liability policy) to justify the increase in fee. The bar association also advised that the rules pertaining to fee division in former OH DR 2-107 should apply to this situation. See section 1.5:800.

Adding a mark-up to the fees charged by an expert witness presents a similar problem. Here, however, the bar association stressed that adding such a mark-up was not customary in the community and, as such, absent a clear justification, would be unreasonable, even if the amount charged was itself reasonable and the client knowingly consented to the mark-up. See former OH DR 2-106(B)(3) (on the significance of local custom). The bar association also warned that an unjustified mark-up of the expert's fee might constitute fee splitting with a nonlawyer in violation of former OH DR 3-102(A). See section 5.4:200.

Similarly, the bar association indicated that a mark-up of the amount charged for deposition transcripts would be unreasonable absent some economic justification for the increase. If the firm incurs photocopy expenses or delivery charges in connection with the handling of the transcripts, those charges actually incurred can be passed through to the client. Once again, see Ohio Rule 1.5 cmt. [2].

The bar association concluded that it was appropriate to charge a client for secretarial overtime and transportation, but only if the overtime and related travel expenses were occasioned by time limits imposed by the client or the circumstances. See former OH DR 2-106(B)(5). If they were, the client could be charged the direct costs associated with the overtime, plus an allocation of overhead expenses. Whether the expenses incurred by the secretary for transportation home should be charged and, if so, in what amount depend on community practice.

The propriety of charging a client for late meals turns on the reason the charges were incurred. If the attorneys are working late generally and happen to be working on a particular client's matter, the charge would be inappropriate. If, in contrast, the exigencies of the client's case necessitated the evening hours, passing through reasonable costs would be appropriate. See former OH DR 2-106(B)(5).

Finally, with respect to photocopy charges, the bar association was of the opinion that a lawyer could charge a client for the direct cost associated with the service plus a reasonable allocation of overhead expenses directly associated with the service, which includes wear and tear on the photocopy machine. As with any charge to a client, the overall charge must be reasonable. Under Ohio Rule 1.5 cmt. [2], reasonable charges of this nature are permissible with client consent.

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

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.126 (1996).

As part of a fee arrangement, a lawyer and a client may enter into a retainer agreement. The term "retainer" has at least four very different meanings. First, it can represent a payment required to secure the lawyer's agreement to handle a case, with separate fees charged for the work performed. Second, it sometimes describes an arrangement where the lawyer, for a fee, agrees to be available to the client for a specific period of time should the client need the lawyer's services. Third, it can refer to a deposit of funds by the client from which the lawyer will draw necessary funds to cover fees and expenses. If the representation requires less than the full amount deposited, the remainder is remitted to the client. (See Rule 1.5 cmt. [4] obligating the return of any unearned portion of an advance fee payment.) The fourth use of the term "retainer" involves a nonrefundable prepayment for services to be rendered.

Comment [6A] discusses advance-fee payments, including the "true" or "classic" retainer, which ensures the lawyer's availability and precludes adverse representation. Continuing, the comment notes that

[w]hat is often called a retainer is in fact an advance payment to ensure that fees are paid when they are subsequently earned, on either a flat fee or hourly basis. A flat fee is a fee of a set amount for performance of agreed work, which may or may not be paid in advance but is not deemed earned until the work is performed. An earned upon receipt fee [as to which see Rule 1.5(d)(3) and section 1.5:430 of the treatise] is a flat fee paid in advance that is deemed earned upon payment regardless of the amount of future work performed.

Ohio Rule 1.5 cmt. [6A]. See generally ABA, Annotated Model Rules of Professional Conduct 79-80 (6th ed. 2007) (commentary).

Retainers to secure availability have been approved, particularly where this potentially entails forgoing employment for a competitor or opponent of the client. Cuyahoga County Bar Ass'n v. Okocha, 83 Ohio St.3d 3, 697 N.E.2d 594 (1998); Columbus Bar Ass'n v. Klos, 81 Ohio St.3d 486, 692 N.E.2d 565 (1998). But where there is "no employment opportunity to lose," charging a "lost opportunity" fee because of the inability to represent any other party in this termination-of-marriage case resulted in a clearly excessive fee, for "once Guldman [the client] had consulted respondent, respondent was ethically foreclosed from any other representation in the case because of the parties' adverse interests and the fact that Guldman's husband had his own lawyer." Columbus Bar Ass'n v. Halliburton-Cohen, 106 Ohio St.3d 98, 2005 Ohio 3956, 832 N.E.2d 42, at ¶¶ 6, 16.

Retainers for security for fees and expenses ("advance payment to ensure that fees are paid when they are subsequently earned," in the language of Comment [6A]) also have been approved. Okocha; Klos. However, failure to return the unspent portion of the retainer fee when the agreement so requires can constitute charging an excessive fee. Toledo Bar Ass'n v. Lubitsky, 63 Ohio St.3d 669, 590 N.E.2d 746 (1992). Accord Office of Disciplinary Counsel v. Treneff, 98 Ohio St.3d 348, 2003 Ohio 1011, 785 N.E.2d 434. Such behavior with respect to retainer fees was also found to violate former OH DR 9-102(B)(4), see Cleveland Bar Ass'n v. Glatki, 88 Ohio St.3d 381, 726 N.E.2d 993 (2000) (failure to return unearned portion of retainer upon request by client); accord Greene County Bar Ass'n v. Fodal, 100 Ohio St.3d 310, 2003 Ohio 5852, 798 N.E.2d 1082, and former OH DR 9-102(A), which required that all funds of clients paid to a lawyer or law firm, other than advances for costs and expenses, be paid into a separate bank account containing no funds belonging to the lawyer or firm. See Office of Disciplinary Counsel v. Zingarelli, 89 Ohio St.3d 210, 729 N.E.2d 1167 (2000), where the client paid the lawyer a retainer, which the lawyer deposited in his office account containing personal and other business funds. The Court held:

Since the agreed-upon fee had not yet been earned and was therefore refundable at the time respondent made the deposit, respondent violated DR 9-102(A) by commingling [the client's] money with his own. Accordingly, we hold that harm to the client is not a necessary element for there to be a violation of DR 9-102(A).

Id. at 219, 729 N.E.2d at 1175. See Ohio Rule 1.15(a) and section 1.15:200.

With respect to the first meaning of "retainer" discussed above, the Ohio Supreme Court has held that a retainer charged simply for agreeing to undertake representation, coupled with a separate fee for services rendered, constitutes an improper, excessive fee. Cuyahoga County Bar Ass'n v. Okocha, 83 Ohio St.3d 3, 697 N.E.2d 594 (1998). See section 1.5:430.

1.5:430 Nonrefundable Fees

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.126 (1996).

While there is disagreement nationally on this issue, nonrefundable or earned-upon-receipt retainers unrelated to legal services to be performed or forgone, were prohibited under the former OHCPR, e.g., Cuyahoga County Bar Ass'n v. Okocha, 83 Ohio St.3d 3, 697 N.E.2d 594 (1998); see Lake County Bar Ass'n v. Ryan, 109 Ohio St.3d 301, 2006 Ohio 2422, 847 N.E.2d 430, at para. 22 (rejecting respondent's claim to have legitimately charged such retainers; "except for limited circumstances not present here, this practice was declared unethical years ago," citing Okocha). Accord Stark County Bar Ass'n v. Watterson, 103 Ohio St.3d 322, 2004 Ohio 4776, 815 N.E.2d 386 (citing Okocha; reiterating that such retainers are improper except in limited circumstances not present here; charging nonrefundable retainer on top of contingent fee is excessive).  (In the related fee litigation, the court of appeals affirmed a judgment for the client for the amount obtained in settlement, to which the lawyer asserted he was entitled; since the lawyer had been discharged or had withdrawn, his compensation was to be measured by the quantum meruit doctrine; and since the lawyer had chosen not to appear for trial ("'[appellant] will not be attending any trial in this matter'") and thus presented no evidence as to the reasonable value of the services rendered, he could not prove entitlement to any of the settlement proceeds. Watterson v. King, 166 Ohio App.3d 704, 2006 Ohio 2305, 852 N.E.2d 1278 (Stark).)

Nonrefundable fees are now controlled by the provisions of Ohio Rule 1.5(d)(3). Pursuant to division (d)(3), fees so denominated are still prohibited, but with a caveat -- "[a] lawyer shall not enter into an arrangement for, charge, or collect" such fees

unless the client is simultaneously advised in writing that if the lawyer does not complete the representation for any reason, the client may be entitled to a refund of all or part of the fee based on the value of the representation pursuant to division (a) of this rule.

Comment [6A] elaborates as follows:

The reasonableness requirement and the application of the factors in division (a) may mean that a client is entitled to a refund of an advance fee payment even though it has been denominated "nonrefundable," "earned upon receipt," or in similar terms that imply the client would never receive a refund. So that a client is not misled by the use of such terms, division (d)(3) requires certain minimum disclosures that must be included in the written fee agreement.

Rule 1.5 cmt. [6A].

Comment [4] states that "[a] lawyer may require advance payment of a fee, but is obliged to return any unearned portion." While it can be argued that this "obligation" and the fact that the client "may" be entitled to a refund of such fees under Rule 1.5(d)(3) and Comment [6A] are inconsistent, we think they are compatible and should be so read. Thus, to the extent an advance payment is "unearned" by the client (applying the tests of 1.5(a)(1)-(8)), to that same extent the client will be entitled to a refund, tested by the very same factors. To summarize,

  • "Nonrefundable," etc., advance-fee payments are permitted only if accompanied by the written disclosure specified in division (d)(3); and

  • A refund to the client to whom such disclosure has been made would depend upon "application of the factors set forth in division (a)." In other words, the nonrefundable fee must be tested against the eight factors in division (a) used to determine its reasonableness; to the extent the nonrefundable fee is wanting in this regard -- i.e., not fully "earned" -- the client then will be entitled to a refund, which the lawyer is "obliged" to return. Rules 1.5 cmts. [4] & [6A].

1.5:500 Communication Regarding Fees

  • Primary Ohio References: Ohio Rule 1.5(b)
  • Background References: ABA Model Rule 1.5(b)
  • Ohio Commentary: Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.128
  • Commentary: ABA/BNA §41.110, ALI-LGL § 38, Wolfram § 9.2.1

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.128 (1996).

Fee disputes often can be avoided if the lawyer and client have a clear understanding of the fee arrangement at the outset. To this end, a full explanation of the proposed fee arrangement and the reasons for it is now required by Ohio Rule 1.5(b) Under 1.5(b), the lawyer "shall" communicate to the client, preferably in writing, at or within a reasonable time after the engagement,

[t]he nature and scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible . . . .

This need not be done where

the lawyer will charge a client whom the lawyer has regularly represented on the same basis as previously charged.

Any change in the basis or rate of the fee or expenses is subject to division (a) and must promptly be communicated to the client, preferably in writing. Id.

The Rule 1.5(b) communication obligation can be satisfied, according to Comment [2], "with at least a simple memorandum or copy of the lawyer's customary fee arrangements that states that the general nature of the legal services to be provided, the basis, rate or total amount of the fee and whether and to what extent the client will be responsible for any costs, expenses or disbursements in the course of the representation." Rule 1.5 cmt. [2]. The client must agree in advance before the lawyer can seek reimbursement for the reasonable cost of nonlegal services auxiliary to the representation (such as copying) performed in-house. Id.

Note that the general reference in Comment [2] to "whether and to what extent" the client will be responsible for expenses is, with respect to the specific category of litigation expenses, presumably trumped by Rule 1.8(e)(1), which provides that any litigation expenses advanced by the lawyer are ultimately to be borne by the client unless made contingent on the outcome of the litigation. See section 1.8:610.

While a written agreement is not required for other than contingency-fee arrangements, reducing the terms of the required notice to a writing, is recommended. As stated in Comment [2]:

The detail and specificity of the communication required by division (b) will depend on the nature of the client-lawyer relationship, the work to be performed, and the basis of the rate or fee. A writing that confirms the nature and scope of the client-lawyer relationship and the fees to be charged is the preferred means of communicating this information to the client and can clarify the relationship and reduce the possibility of a misunderstanding.

Ohio Rule 1.5 cmt. [2]. See section 1.5:610 for a discussion of the writing requirement for contingency-fee arrangements. To the extent compensation for the representation is to be paid by a third party, this must be fully disclosed to and consented to by the client. See Ohio Rule 1.7 cmt. [23]. Fee-sharing arrangements with lawyers in different firms also require written disclosure of the terms to the client and the client's consent. Rule 1.5(e)(2). See section 1.5:800.

The absence of a written fee agreement does not render the fee contract unenforceable as a matter of contract law. For example, in Cannell v. Rhodes, 31 Ohio App.3d 183, 509 N.E.2d 963 (Cuyahoga 1986), the Eighth District Court of Appeals rejected a client's claim that an oral contract for interest on attorney fees was unenforceable because it was not in writing. The new Rules likewise impose no ethical requirement of a written contract, provided the lawyer has complied with the notice provisions of Rule 1.5(b). Note, however, that in at least one place the comments refer to matters "that must be included in the written fee agreement." Ohio Rule 1.5 cmt. [6A]. Despite this language in Comment [6A], it is clear that Rule 1.5(b) does not impose a written fee-agreement requirement – rather, the lawyer must communicate to the client the matters set forth in division (b), "preferably in writing."

The failure to have a written fee agreement may nevertheless have evidentiary implications, should a fee dispute arise. In Akron Bar Ass'n v. Naumoff, 62 Ohio St.3d 72, 578 N.E.2d 452 (1991), the Court found that an attorney had charged and collected an excessive fee when he collected one-third of a settlement, based on an alleged contingent-fee agreement that had not been reduced to writing. (The case involved a nontort claim to which the ORC 4705.15 writing requirement did not apply.) The original agreement between the attorney and client called for fees to be charged on an hourly basis. The attorney claimed to have discussed the change to a contingent-fee arrangement with the seventy-five year old client. The client denied having been informed of the change. Because the contingent-fee arrangement was not in writing and the hourly-rate arrangement was, the Court recognized the latter as the fee arrangement between the attorney and the client. The $14,700 collected by the attorney, therefore, was clearly in excess of the $2,400 calculated under the hourly-rate contract.

Even if the fee agreement is in writing, care in drafting is still required. In Columbus Bar Ass'n v. Klos, 81 Ohio St.3d 486, 692 N.E.2d 565 (1998), the Ohio Supreme Court relied on the general ambiguity of the contract as one of the factors leading to a conclusion that the contract called for an excessive fee in violation of former OH DR 2-106. See also Cleveland Bar Ass'n Op. (unnumbered) (June 3, 1999) (attorney, as fiduciary, has burden of proof when contract ambiguity arises).

The contract or notice should also make clear the parties' responsibilities with respect to expenses. See section 1.8:600. If a lawyer contemplates incurring extraordinary expenses, the lawyer should inform the client to secure the client's consent or allow the client to seek other counsel. Columbus Bar Ass'n v. Zauderer, 80 Ohio St.3d 435, 687 N.E.2d 410 (1997). Under Rule 1.5(b), a lawyer would now be obligated to inform the client of any such contemplated extraordinary expenses.

1.5:600 Contingent Fees

  • Primary Ohio References: Ohio Rule 1.5(c), ORC 4705.15
  • Background References: ABA Model Rule 1.5(c)
  • Ohio Commentary: Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.137, 2.139, 2.142-2.144
  • Commentary: ABA/BNA § 41:901, ALI-LGL § 35, Wolfam §9.4

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.137, 2.139, 2.142 (1996).

Contingency-fee agreements have long been recognized as acceptable fee arrangements for many types of civil litigation. As defined by statute, contingent-fee agreements make compensation to attorneys for legal services contingent "in whole or in part, upon a judgment being rendered in favor of or a settlement being obtained for the client and is either a fixed amount or an amount to be determined by a specified formula, including, but not limited to, a percentage of any judgment rendered in favor of or settlement obtained for the client." ORC 4705.15(A)(1).

The essential element of a contingent-fee arrangement is the risk that the attorney will not be paid because some designated result is not achieved. Charles W. Wolfram, Modern Legal Ethics §  9.4.1, at 526 (1986). Given this, the Board of Commissioners on Grievances and Discipline opined that it was improper under the former OHCPR for a lawyer to charge a fee whereby the client pays an hourly fee until a settlement or judgment is obtained, at which point the attorney has the option to keep the hourly fee or receive a contingency fee instead, whichever is higher. Bd. of Comm'rs on Grievances & Discipline Op. 95-7, 1995 Ohio Griev. Discip. LEXIS 8 (June 2, 1995). As the Board reasoned: "It is not based upon the factors that determine reasonableness under the Code, nor is it based upon any degree of risk of nonrecovery. It is, on its face, based upon greed." Id. at *3. The Board expressed no opinion on the propriety of a mixed fee in which an attorney charges both a fixed and a contingent fee.

The use of contingent fees is regulated in the Rules by Ohio Rule 1.5(c) and Rule 1.5(d)(1) & (2). Pursuant to division (c),

[a] fee may be contingent on the outcome of the matter for which service is rendered, except in a matter in which a contingent fee is prohibited by division (d) of this rule or other law.

Rules 1.5(c)(1) & (2) set forth the requisites for written contingent-fee agreements, which are mandatory, and for contingent-fee closing statements. Both are discussed in section 1.5:610.

The prohibitions contained in Rule 1.5(d)(1) & (2) are reviewed in section 1.5:710-:720.

Comment [3] addresses, in a very general way, the reasonableness standard of division (a) in the context of contingent fees:

In determining whether a particular contingent fee is reasonable, or whether it is reasonable to charge any form of contingent fee, a lawyer must consider the factors that are relevant under the circumstances.

Ohio Rule 1.5 cmt. [3]. See discussion in section 1.5:410 at "Reasonable fees - Nature of the fee." Comment [3] goes on to note that other applicable law may place limits on contingent fees, such as a ceiling on the allowable percentage, or require that the lawyer offer an alternative basis for the fee.

Rule 1.5(c) allows lawyers to enter into contingency-fee agreements as an exception to the general prohibition against acquiring a proprietary interest in a client's cause of action. Accord Ohio Rule 1.8(i)(2) (recognizing exception for reasonable contingent fee in civil case). See section 1.8:1120. Such arrangements are particularly helpful where the client could not otherwise afford to hire an attorney to handle the claim. See 1 Restatement (Third) of the Law Governing Lawyers § 35 cmt. b (2000).

In addition to Rule 1.5, special statutory provisions and court rules also will apply in certain circumstances to further regulate contingency-fee practices. See, e.g., ORC 4705.15(B); OH Sup R 70(I).

There is commentary supporting the view that if there is any question as to whether a contingency fee is in the client's best interest, one should discuss alternative fee arrangements and the implications of choosing any particular course. Charles W. Wolfram, Modern Legal Ethics §  9.4.1, at 530 n.32 (1986). See also 1 Restatement (Third) of the Law Governing Lawyers §  35 cmt. c (2000). Indeed, ABA Informal Op. 86-1521 (Oct. 26, 1986) states that in cases of doubt concerning the appropriateness of use of a contingent fee, the lawyer "must" offer the client the option of a reasonable fixed fee. Id. at 3. To the extent that the issue was addressed by case law under the OHCPR, Ohio's approach seemed to be consistent with this commentary. See Akron Bar Ass'n v. Naumoff, 62 Ohio St.3d 72, 578 N.E.2d 452 (1991) (finding that alleged fee-contract modification was unenforceable when attorney admittedly failed to offer client choice between contingent-fee arrangement and flat fee and did not reduce contingent-fee arrangement to writing). But Ohio Rule 1.5 cmt. [3] notes only that "[a]pplicable law . . . may require a lawyer to offer clients an alternative basis for the fee." Moreover, Ohio follows the current version of the Model Rules in not including the sentence that stated a lawyer "should" offer alternative bases if there is any doubt about a contingent fee being in the client's best interest. This language, formerly in MR 1.7 cmt. [3], was deleted by the ABA in 2002.

1.5:610 Special Requirements Concerning Contingent Fees

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.143-2.144 (1996).

Writing requirement: To be enforceable, ORC 4705.15(B) requires contingent-fee contracts in tort cases to be reduced to writing and signed by the client and the attorney, a copy of which "shall" be provided to the client by the lawyer. Tort actions are defined by the statute as a subset of civil actions, namely those actions for damages due to injury, death, or loss to person or property. ORC 4705.15(A)(2). Actions for breach of contract are not included in this definition. If the attorney fails to reduce the contingent-fee agreement to writing, the client may not be bound by it.  In re Betts, 62 Ohio Misc.2d 30, 587 N.E.2d 997 (C.P. Ross 1991). But cf. Goldauskas v. Elyria Foundry Co., 145 Ohio App.3d 490, 763 N.E.2d 645 (Lorain) (2001), where the court took the contingent-fee contract into consideration in determining whether the fee awarded by the trial court was excessive, even though the appellate court expressly noted that questions as to its validity were raised below and "no copy signed by any attorney at the . . . firm was produced as is mandated by R.C. 4705.15."  Id. at 497, 763 N.E.2d at 651. In addition to reducing the contract to writing, an attorney, if entitled to compensation under the contract, must prepare a closing statement to be given to the client prior to or at the time the attorney receives the compensation. ORC 4705.15(C).

Rule 1.5(c)(1) makes a written fee agreement signed by the client and the lawyer obligatory in all (not just tort matters covered by ORC 4705.15(B)) matters in which contingent fees are permitted. This subdivision also sets forth the terms to be included in the written contract. They are:

the method by which the fee is to be determined, including the percent or percentages that shall accrue to the lawyer in the event of settlement, trial, or appeal;

litigation or other expenses to be deducted from the recovery; and

whether such expenses are to be deducted before or after the contingent fee is calculated.

Rule 1.5(c)(1). The agreement must further "clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party." Id. (This provision should be read in conjunction with Rule 1.8(e)(1), pursuant to which the client's responsibility for litigation expenses can be made contingent on the outcome of the case. See section 1.8:610.) Cf., under the OHCPR, Medina County Bar Ass'n v. Grieselhuber, 78 Ohio St.3d 373, 678 N.E.2d 535 (1997) (lawyer disciplined for failure to disclose in contingent-fee advertisement that client could be liable for costs and expenses). See also Charles W. Wolfram, Modern Legal Ethics §§ 9.4.1-9.4.2 (1986), recommending the inclusion of two additional points -- a description of the task undertaken by the attorney upon which the fee is contingent and whether the lawyer agrees to handle the case on appeal.

Closing statement requirements: As in ORC 4705.15(C), Rule 1.5(c)(2) imposes the following duties:

If the lawyer becomes entitled to compensation under the contingent fee agreement and the lawyer will be disbursing funds, the lawyer shall prepare a closing statement and shall provide the client with that statement at the time of or prior to the receipt of compensation under the agreement.

After delineating what must be included in the statement (specifying the manner in which the compensation was determined under the agreement, costs and expenses deducted by the lawyer, and, if applicable, the actual division of fees with a lawyer not in the same firm), Rule 1.5(c)(2) mandates that the "closing statement shall be signed by the client and lawyer."  Although not expressly so stated in the Rule (in contrast to MR 1.5(c)), it is obvious that the closing statement ("signed by the client and lawyer") must be in writing.

Court approval of contingency-fee agreements: In certain circumstances involving fiduciaries, contingent-fee agreements must be pre-approved by the court. See OH Sup R 71(I). Failure to obtain court pre-approval could render the contract unenforceable. For example, in In re Guardianship of Patrick, 66 Ohio App.3d 415, 584 N.E.2d 86 (Huron 1991), an attorney who assisted a guardian for a child in a personal injury suit was denied recovery on a contingency-fee contract because the contract had not been approved by the court prior to being entered into as then required by the Rules of Superintendence for Courts of Common Pleas (now OH Sup R 71(I)). The court instead awarded the attorney the reasonable value for the services rendered. In seeking approval, the attorney also must follow applicable local court rules. See, e.g., Cuyahoga County CP Probate R 71.1(D); Franklin County CP Probate R 71.8; Hamilton County CP Probate R 71.2.

An exception to the general rule of unenforceability where required pre-approval has not been obtained may lie if the fiduciary agreed to the contingent-fee arrangement, the court actively participated in the negotiation and settlement of the matter governed by the arrangement, and the attorney's representation did not prejudice the estate. See In re Estate of Hamrick, 126 Ohio App.3d 624, 710 N.E.2d 1213 (Summit 1998) (recognizing that at least one court has found an exception under these circumstances, but finding that the circumstances were not met here).

Even if the contingent-fee contract is pre-approved by the court, the court retains the authority to review any final fee for reasonableness and to alter the fee accordingly. OH Sup R 71(I); In re Estate of York, 133 Ohio App.3d 234, 727 N.E.2d 607 (Warren 1999) (applying former OH DR 2-106(B)).

1.5:700 Unlawful Fees

  • Primary Ohio References: Ohio Rule 1.5(d)
  • Background References: ABA Model Rule 1.5(d)
  • Ohio Commentary: Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.114, 2.138, 2.140-2.141
  • Commentary: ABA/BNA §§ 41:914, 41:926; ALI-LGL § 36; Wofram §§ 9.3.2, 9.4

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.138 (1996).

Illegal or restricted fees are dealt with in Ohio Rule 1.5(d). Rule 1.5(d)(1) severely restricts the use of contingent fees in domestic relations cases. See section 1.5:720. Ohio Rule 1.5(d)(2) prohibits contingent-fee arrangements in criminal cases. See section 1.5:710. Rule 1.5(d)(3) regulates the use of "nonrefundable" and similar fee arrangements. See section 1.5:430. Other fees that are illegal regardless of the nature of the fee arrangement are discussed in section 1.5:730.

1.5:710 Contingent Fees in Criminal Cases

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.140 (1996).

Ohio Rule 1.5(d)(2) prohibits a lawyer from entering into an arrangement for, charging, or collecting a contingent fee for representing a defendant in a criminal case. The rationale underlying this prohibition is twofold. First, the contingency-fee arrangement usually is used in a situation where a successful suit will generate a res out of which the fee can be paid. Criminal defense representation provides no res out of which to pay the attorney if successful. See former OH EC 2-19 (identifying this as the primary reason public policy "condemns" contingency-fee arrangements in criminal cases). A second rationale concerns the special context involved. Ultimately, criminal defense representation is concerned with important issues of individual liberty. With the possibility of prison or even death involved, public policy demands that we avoid creating incentives for a lawyer to act contrary to the client's best interest. If the fee in a particular case is contingent on the defendant's exoneration from criminal charges, for example, an attorney might be less motivated to engage in plea bargaining on the client's behalf. See Charles W. Wolfram, Modern Legal Ethics § 9.4.3, at 538 (1986).

1.5:720 Contingent Fees in Domestic-Relations Matters

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.141 (1996).

Ohio Rule 1.5(d)(1) precludes the use of contingent fees in a domestic-relations matter, if the payment or amount of the fee "is contingent upon the securing of a divorce or upon the amount of spousal or child support, or property settlement in lieu thereof." The primary rationale underlying this rule is to prevent lawyers from having an incentive to stand in the way of reconciliation, which, in turn, is grounded in the strong public policy favoring family and marriage. See Charles W. Wolfram, Modern Legal Ethics § 9.4.4, at 539 (1986).

Unlike the former OHCPR, where the limitation was raised only in an ethical consideration, the prohibition against making fees contingent upon securing divorce or on the amount of spousal or child support in domestic relations matters is absolute. Thus, a case like Gross v. Lamb, 1 Ohio App.3d 1, 437 N.E.2d 309 (Franklin 1980), in which an Ohio court of appeals found a contingent-fee arrangement justified in a domestic-relations/divorce case when the client was unable to pay a reasonable fixed fee, is probably no longer good law. The OHCPR admonition against contingency-fee arrangements in domestic relations cases did not extend to actions to collect arrearages in post-divorce decree awards involving court-ordered child support, alimony, or property division. Cincinnati Bar Ass'n Op. 96-97-03 (Sept. 16, 1997); see also Ohio State Bar Ass'n Informal Op. 78-7 (Sept. 25, 1978) (approving contingency fee to collect child support). See, to the same effect under the Rules, Ohio Rule 1.5 cmt. [6]: Division (d) "does not preclude a contract for a contingent fee for legal representation in connection with recovery of post-judgment balances due under support or other financial orders because such contracts do not implicate the same policy concerns."

1.5:730 Other Illegal Fees in Ohio

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility § 2.114 (1996).

Under Rule 1.5(a), a fee that is "illegal" is prohibited, as it was under former OH DR 2-106(A). Case law under the former provision indicated that a fee (whether contingent or not) might be illegal and therefore prohibited on grounds other than those now listed in Rule 1.5(d)(1)-(3). First, the fee charged must comply with all applicable state and federal laws. See Office of Disciplinary Counsel v. Mbakpuo, 73 Ohio St.3d 292, 652 N.E.2d 976 (1995) (lawyer sanctioned for, inter alia, applying contingency-fee percentage to the personal income protection portion of settlement proceeds in contravention of applicable state law). See also Ethics Opinion, Cincinnati Bar Ass'n Report, Oct. 1985, at 8 (suggesting that fee agreements must be enforceable under law of contracts as well). The nature of the compensation of the fee is a second concern. Accepting illicit drugs in exchange for legal services, for example, constituted collecting an illegal fee.  Columbus Bar Ass'n v. Cockrum, 21 Ohio St.3d 51, 487 N.E.2d 314 (1986) (accepting cocaine and marijuana as payment for legal services warranted a one-year suspension from practice of law). Third, charging a fee that otherwise violates the Rules of Professional Conduct also might fall into this category. This certainly seems to be the course taken by the Court in Columbus Bar Ass'n v. Winkfield, 107 Ohio St.3d 360, 2006 Ohio 6, 839 N.E.2d 924, where a suspended lawyer charging "clients for legal services that he was not authorized to provide and usually did not perform," id. at para. 33, was found to have violated DR 2-106(A), with specific reference by the Court to the disciplinary rule's prohibition against charging an "otherwise illegal fee."  Id. at para. 34.

Another case that could be viewed as an "illegal" fee case is Disciplinary Counsel v. Johnson, 113 Ohio St.3d 344, 2007 Ohio 2074, 865 N.E.2d 873, where the respondent, in violation of Gov Bar R VIII 6(B), attempted to collect for time spent in obtaining an award from the Client Security Fund.  The Court, however, analyzed the resulting 2-106(A) violation in terms of charging an "excessive," rather than illegal, fee.

An opinion of the BCGD advised that a lawyer's securing of his legal fees with a mortgage on the client's home was not an improper fee agreement under former OH DR 2-106(A), "[a]ssuming that the underlying fee is not excessive or illegal." Bd. of Comm'rs on Grievances & Discipline Op. 2004-8, 2004 Ohio Griev. Discip. LEXIS 12, at *10 (Oct. 8, 2004).

Finally, it should be noted that the Rule expressly recognizes that property may be used in payment of fees, with certain limitations. Thus, Comment [4] states:

A lawyer may accept property in payment of services, such as an ownership interest in an enterprise [e.g., stock] providing [sic] this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 1.8(i). However, a fee paid in property instead of money may be subject to the requirements of Rule 1.8(a) because such fees often have the essential qualities of a business transaction with the client.

Rule 1.5 cmt. [4] (bracketed material added).

1.5:800 Fee Splitting (Referral Fees)

  • Primary Ohio References: Ohio Rule 1.5(e), (f)
  • Background References: ABA Model Rule 1.5(e)
  • Ohio Commentary: Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.150-2.162
  • Commentary: ABA/BNA § 41:701, ALI-LGL § 47, Wolfram § 9.24

The material in this section is, in part, excerpted and adapted from Arthur F. Greenbaum, Lawyer's Guide to the Ohio Code of Professional Responsibility §§ 2.150-2.162 (1996).

Fee splitting among lawyers - In general: Ohio Rule 1.5(e), which for the most part restates the provisions of former OH DR 2-107, regulates fee splitting among lawyers not in the same firm. The rule attempts to accommodate competing concerns. On the one hand, allowing fee splitting simply for making a referral seems wasteful, since the referring lawyer provides no service to the client beyond making the referral itself. Allowing compensation for the referral may increase client costs without affording the client any additional benefit. Bd. of Comm'rs on Grievances & Discipline Op. 92-1, 1992 Ohio Griev. Discip. LEXIS 20 (Feb. 14, 1992). The practice also appears to some to demean clients by treating them as objects for barter. On the other hand, referrals are to be encouraged if they result in the representation being carried out by lawyers better able to provide the necessary services to the client than could the original lawyer working alone. Bd. of Comm'rs on Grievances & Discipline Op. 91-5, 1991 Ohio Griev. Discip. LEXIS 25 (Feb. 8, 1991). See generally Charles W. Wolfram, Modern Legal Ethics §  9.2.4, at 510-11 (1986) (summarizing these policies).

Ohio Rule 1.5(e) protects clients from the dangers of improper attorney referrals and prohibits fee payments to lawyers who have performed no services and accepted no responsibility for a matter. The Rule places four requirements on agreements for the division of fees between lawyers who are "not in the same firm." Such a division of fees is acceptable only when all of the following have been satisfied: (1) the fees are divided in proportion to the services performed, or each lawyer assumes joint responsibility for the representation and agrees to be available for consultation with the client; (2) the client has given written consent, after full disclosure of the identity of each lawyer, that fees will be divided, and that the division will be in proportion to the services to be performed or that each lawyer will assume joint responsibility for the representation; (3) except where court approval of the fee division is obtained, the written closing statement in a contingent-fee case must be signed by the client and each lawyer and shall comply with subdivision (c)(2) of Rule 1.5; and (4) the total fee is reasonable.

(Fee splitting should be distinguished from the situation in which one lawyer withdraws or is discharged from the representation, which is then undertaken by another attorney, and the first lawyer seeks compensation for the work performed. Absent collusion by the attorneys involved, this issue is better thought of as a separate transaction involving lawyer and client than as a fee-splitting arrangement among the lawyers. Cf. Goldauskas v. Elyria Foundry Co., 145 Ohio App.3d 490, 763 N.E.2d 645 (Lorain) (2001) (discharged firm sought portion of settlement pursuant to contingent fee agreement; court determined reasonable quantum meruit fee to which discharged firm entitled; former OH DR 2-107(A) not mentioned). Compare Toledo Bar Ass’n v. Mason, 118 Ohio St.3d 412, 2008 Ohio 2704, 889 N.E.2d 539 (lawyer A withdrew; lawyer B retained; settlement obtained by B; B found guilty of, inter alia, fee-splitting in violation of DR 2-107(A)(1)-(3) when, instead of deducting A’s percentage from B’s ⅓ contingent fee as had been agreed, B deducted A’s amount from client’s share of settlement proceeds.)

Cases dealing with violations of the fee-splitting rule typically arise in two contexts: attorney disciplinary cases and contract enforcement actions between attorneys over employment contracts that divide fees. Occasionally, violation of the rule has been used to justify attorney disqualification. See, Baker v. Bridgestone/Firestone, Inc., 893 F. Supp. 1349 (N.D. Ohio 1995) (applying the OHCPR).

Fee splitting among lawyers - Division of fees - In general: Ohio Rule 1.5(e)(1) allows fee division either in proportion to the services performed by each lawyer or, without regard to proportionality, where each lawyer assumes "joint responsibility" for the representation and agrees to be available for client consultation.

Case law under the former OHCPR made clear that fee sharing without performing any service or assuming any responsibility violated OH DR 2-107(A) and was subject to sanction.  Office of Disciplinary Counsel v. Linick, 84 Ohio St. 30 489, 705 N.E.2d 667 (1999) (no client consent; division not in proportion to work done (none); no assumption of responsibility). For further insight into this case, see Ohio State Bar Ass'n v. Zuckerman, 83 Ohio St.3d 148, 699 N.E.2d 40 (1998), where in a disciplinary proceeding against the donor of one-half of his fees to Linick, who as in-house corporate counsel had referred a number of the corporation's cases to Zuckerman, the Supreme Court stated that "Linick was required by DR 2-107 to actually have done some work or at least have assumed responsibility for the handling of the matters." 83 Ohio St.3d at 149, 699 N.E.2d at 41. Zuckerman (the donor) also was held to have violated OH DR 2-107(A), "because he should have known" that Linick failed to comply with the 2-107(A) requisites. Id. Accord Ohio State Bar Ass'n v. Kanter, 86 Ohio St.3d 554, 715 N.E.2d 1140 (1999) (disciplinary proceeding against another outside counsel involved in kickback scheme with Linick). If a lawyer refers a case to another lawyer to avoid conflict-of-interest problems, the conflict prevents the referring lawyer from providing services or assuming responsibility for the representation. Thus, a fee division would not be proper. Toledo Bar Ass'n Op. 91-20 (n.d.).

In Wilson v. Lynch & Lynch Co., L.P.A., 99 Ohio App.3d 760, 651 N.E.2d 1328 (Geauga 1994), Judge Ford, concurring and dissenting in part, expressed his belief that the work a lawyer performs to justify a portion of the fee-sharing arrangement could be based on work undertaken before the agreement was entered into, as well as post-agreement work performed.

Fee splitting among lawyers - Division of fees - Division in proportion to services performed: As noted, one of the two approved methods of fee splitting under Ohio Rule 1.5(e)(1) is division "in proportion to the services performed." Under the former OHCPR, the "services performed" standard required a case-by-case analysis, and in all probability that will continue under Rule 1.5(e)(1). An agreement that gave a lawyer a fee substantially out of proportion to the services the lawyer actually performed was not enforceable. See, e.g., Dragelevich v. Kohn, Milstein, Cohen & Hausfeld, 755 F. Supp. 189 (N.D. Ohio 1990) (finding invalid under Ohio law fee division that gave 20% of the fee to an attorney who billed less than 4% of the total hours). Although exact proportionality was not required, some relationship had to be shown. As long as the quality or value of the work merited the division, however, the agreement was valid.  Waterman v. Kitrick, 60 Ohio App.3d 7, 572 N.E.2d 250 (Franklin 1990). As the Waterman court stated, the "[r]elative value of services does not necessarily depend upon time spent but instead is based upon all factors that are appropriate in setting fees for legal services, including expertise, experience, benefit to the client, responsibility, expenses, et cetera."  Id. at 11, 572 N.E. 2d at 255. Even if the lawyer was not entitled to the agreed-upon division, a reasonable fee for the services rendered remained appropriate.  Id., 572 N.E.2d at 254.

An interesting, if somewhat confusing, decision involving this prong of former OH DR 2-107(A) is In re Foster, 247 B.R. 735 (Bankr. S.D. Ohio 2000). In Foster, attorney Vivyan represented the debtor in a claim against Medical Mutual. After finding that he could not manage the case by himself, he persuaded another firm, CPRS, to become co-counsel. In the words of the court:

Both Vivyan and CRPS assumed responsibility for the representation and their identity and the fact of their agreement to share fees was made known to the client in writing. Although the exact terms of the sharing were not specified in the initial written agreement with the debtor, the oral agreement to divide the fees evenly was premised upon an understanding that an equal division would be approximately proportionate to the services performed by each. Under the facts of this matter, the Court finds that the agreement to share fees, as executed on April 1, 1998, is enforceable under Waterman v. Kitrick, 60 Ohio App.3d 7, 572 N.E.2d 250 (1990) . . . .

247 B.R. at 738. The court then proceeded to evaluate the proportionate contribution by Vivyan and by CPRS and awarded fees accordingly -- 25% to Vivyan and 75% to CPRS, based on the fact that CPRS took the leading role in the case against Medical Mutual and ultimately obtained a very substantial settlement on behalf of the debtor.

Alternatively, and somewhat inconsistently, the court reached the same result by finding

that whatever understanding Vivyan and CPRS had for the division between them of fees, work and expense advancements, that agreement was repudiated by each of them. Therefore, the appropriate division must be made by the Court based on the Disciplinary Rule's requirement of proportionality for services performed.

247 B.R. at 738.

See also the related case, In re Foster, 247 B.R. 731 (Bankr. S.D. Ohio 2000), in which another lawyer sought to share fees with Vivyan. The court there found the purported oral agreement unenforceable because the alleged one-third division was not proportionate to services performed and because the debtor was not informed in writing of the alleged fee-sharing agreement, as required by former OH DR 2-107(A)(2).

Fee splitting among lawyers - Division of fees - Division based on assumption of responsibility: The other approved method for fee splitting under Rule 1.5(e)(1) is division of fees based on assumption of responsibility pursuant to which each lawyer assumes joint responsibility for the representation and agrees to be available for consultation with the client. In accordance with Comment [7], "[j]oint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership." Ohio Rule 1.5 cmt. [7].

The most recent Board pronouncement under the former OHCPR on this aspect of fee splitting, Bd. of Comm'rs on Grievances & Discipline Op. 2003-3, 2003 Ohio Griev. Discip. LEXIS 3 (June 6, 2003), is consistent with the Rule and states as follows:

Because "assume responsibility" under DR 2-107(A) is undefined in the Ohio Code of Professional Responsibility, the Board takes the opportunity to address the meaning in this opinion. In advising upon the meaning of "responsibility" under the ABA Model Rule 1.5(e), the Standing Committee on Ethics and Professional Responsibility of the American Bar Association expressed the view that "responsibility" has the same meaning in the Code as in the Model Rules.

The [ABA] Committee is of the opinion that assumption of responsibility does not require substantial services to be performed by the lawyer since assumption of responsibility is the alternative to a division of fees in proportion to services performed. The Committee is also of the opinion that assumption of "joint responsibility for the representation" includes assumption of responsibility comparable to that of a partner in a law firm under similar circumstances, including financial responsibility, ethical responsibility to the extent a partner would have ethical responsibility for the actions of other partners in a law firm in accordance with Rule 5.1 [Responsibilities of Partners, Managers, and Supervisory Lawyers], and the same responsibility to assure adequacy of representation and adequate client communication that a partner would have for a matter handled by another partner in the firm under similar circumstances.

ABA, Informal Op. 85-1514 (1985).

This Board agrees that "assume responsibility" under DR 2-107(A) includes financial responsibility as well as ethical responsibility to assure adequate representation and adequate client communication. A lawyer who assumes responsibility should be available to both the client and the other fee-sharing lawyer as needed throughout the representation and should remain knowledgeable about the progress of the legal matter. "It is the ongoing protection of the client's interests by the referring lawyer that justifies the referring lawyer receiving a fee that is beyond the proportion of the services actually provided by that lawyer." Wisconsin Bar, Formal Op. E-00-01.

Id. at *5-7 (bracketed material added by the Board).

Fee splitting among lawyers - Client consent: The second requirement for fee-division arrangements permitted under Ohio Rule 1.5(e) is the prior written consent of the client after full disclosure. Rule 1.5(e)(2).

The requirement of client consent before another lawyer is associated on a case serves several interests. It reaffirms the client's right to counsel of choice, protects the client's interests in confidentiality, see section 1.6:310, and affords the client the opportunity to veto fee divisions that the client feels are not in his or her best interest. Bd. of Comm'rs on Grievances & Discipline Op. 92-1, 1992 Ohio Griev. Discip. LEXIS 20 (Feb. 14, 1992). For consent to be meaningful, however, certain disclosures must be made.

Fee splitting among lawyers - Full disclosure: The client's consent to a lawyer's fee division with another attorney from outside his or her firm must be preceded by full disclosure (1) of the identity of each lawyer, (2) that the fees will be divided, and (3) that the division will be in proportion to the services to be performed by each lawyer or that each lawyer assumes joint responsibility for the representation. Rule 1.5(e)(2).

Under the old rule (and presumably under the new), the burden of disclosure was on the attorney originally hired by the client. Office of Disciplinary Counsel v. Zingarelli, 89 Ohio St.3d 210, 729 N.E.2d 1167 (2000); King v. Housel, 52 Ohio St.3d 228, 556 N.E.2d 501 (1990). Failure to make the required disclosure or to obtain client consent based on the disclosure is a disciplinary offense. Dayton Bar Ass'n v. Susco, 89 Ohio St.3d 79, 728 N.E.2d 1053 (2000) (lawyer who did not notify clients of fee agreement with another firm, who did not obtain written agreement from clients concerning division of fees, and who failed to notify clients of identity of lawyers who would be sharing in the fee, violated OH DR 2-107(A)); Columbus Bar Ass'n v. Benis, 5 Ohio St.3d 199, 449 N.E.2d 1305 (1983) (indefinite suspension justified when, among other violations, attorney failed to inform client that he had hired attorney from another firm to help prepare clemency report and that part of fees would be divided with new attorney).

Failure to make the requisite disclosure, while a disciplinary offense, does not (or at least did not, under the OHCPR) undercut the validity of the contract between the lawyers themselves. Failure to disclose the full terms of a fee-splitting agreement to the client served as no defense for the noncomplying attorney in an action by the other attorney involved to enforce their agreement.King v. Housel, 52 Ohio St.3d 228, 556 N.E.2d 501 (1990).

Fee splitting among lawyers - Division of fees - Writing requirement: The Ohio Code Comparison to Rule 1.5, sends conflicting messages with respect to subdivision (e)(2). According to the Comparison, 1.5(e)(2) "clarifies" former DR 2-107(A)(2) and BCGD Opinion 2003-3, 2003 Ohio Griev. Discip. LEXIS 3 (June 6, 2003), "regarding the matters that must be disclosed in writing to the client." With all respect, it does no such thing. Subdivision (e)(2) requires the client's consent to be in writing, but does not require that the lawyer's disclosure be in writing, even though former 2-107(A)(2) did. See, e.g., Office of Disciplinary Counsel v. Zingarelli, 89 Ohio St.3d 210, 729 N.E.2d 1167 (2000) (violation found for failure to disclose in writing). Nor does it include the requirement of Opinion 2003-3 that the written disclosure must be signed by each lawyer and the client. Are these requirements intended to be carried forward in the new Rule? If so, subdivision(e)(2) (as well as Comment [7]) confuses, rather than "clarifies," matters.

The same ambiguity is present regarding the joint responsibility aspect of Rule 1.5(e)(1). The former rule required that such an approach to fee sharing be by written agreement; there is no such requirement in 1.5(e)(1). Thus subdivision (e)(1) does not, as the Ohio Code Comparison says it does, "restate[] the provisions of DR 2-107(A)(1) . . . ."

Fee splitting among lawyers - Written closing statement: Subdivision (e)(3), setting forth a requirement not found in former OH DR 2-107, provides that except where a court approves the fee division, if the fee being split by lawyers not in the same firm is contingent, then a written closing statement in compliance with the terms of subdivision (c)(2) "shall be signed by the client and each lawyer."

Fee splitting among lawyers - Reasonable total fee: The fourth requirement is that "the total fee is reasonable." Ohio Rule 1.5(e)(4). This requirement received little attention under the prior rule from either the Board or the courts in the context of fee division. Rule 1.5(a) provides a set of factors to be considered when deciding the reasonableness of a fee in general (see section 1.5:410); these factors should be used as a guide for interpreting this final requirement of Ohio Rule 1.5(e). Applying this standard, the fee charged to the client should be reasonable in light of the work done or responsibility assumed. Any increase in the fee charged to the client because multiple lawyers were involved, rather than one, must be predicated on an increased value in the service the client is provided.

The one Code fee-splitting case that does find a violation of the 2-107(A)(3) reasonable total fee requirement is Toledo Bar Ass’n v. Mason, 118 Ohio St.3d 412, 2008 Ohio 2704, 889 N.E.2d 539. Mason clearly violated the principle that increased fees involving multiple lawyers must involve increase of value, in that respondent, instead of deducting the first lawyer’s 45% share of respondent’s 1/3 cut of a personal injury settlement, deducted it from the client’s share. As a result, the lawyers ended up with almost half of the total settlement proceeds. (In addition to DR 2-107(A)(3), Mason also involved violation of the written disclosure and proportionate services provision of 2-107(A)(1) & (2).)

Fee splitting among lawyers - Comment 7 and the "single billing" rule: Rule 1.5 cmt. [7], which defines "division of fee" as "a single billing to a client covering the fee of two or more lawyers who are not in the same firm," played a significant role in Cleveland Bar Ass'n v. Mishler, 118 Ohio St.3d 109, 2008 Ohio 1810, 886 N.E.2d 818, where the Court, contrary to the Board's determination, held that DR 2-107(A) was not violated. Respondent in that case engaged an unaffiliated lawyer at an hourly rate to appear at the client's deposition and at a mediation conference, all without the client's consent.  In what is perhaps the most extensive discussion of the fee-splitting issue to date, id. at paras. 29-38, the Court reviewed its prior holdings in King v. Housel, 52 Ohio St.3d 228, 556 N.E.2d 501 (1990), and Disciplinary Counsel v. Zingarelli, 89 Ohio St.3d 210, 729 N.E.2d 1167 (2000), but found them not controlling, because

this case differs fundamentally from King and Zingarelli. In neither of those cases did the lawyers deny that they had charged the client in a single billing for another unaffiliated lawyer's work. In contrast, respondent insists that he did not charge Walton for the work of the "per diem" attorney or share with that lawyer part of his contingent fee, and this record contains no proof to contradict his claim. We therefore have no clear and convincing evidence upon which we can rely to find a "single billing" to Walton covering the "fee of two or more lawyers who are not in the same firm" in accordance with the definition in paragraph seven of the Comment to Prof.Cond.R. 1.5. Accordingly, we do not find a violation of DR 2-107.

In sustaining respondent's objection, however, we also admonish that his enlistment of, reliance on, and payment to a second lawyer to represent his client are not without ethical difficulty. Notwithstanding issues of improper fee-splitting, lawyers are cautioned against engaging unaffiliated counsel without the client's consent. Such improprieties at least implicate a violation of an attorney's duty to preserve client secrets and confidences and may also impinge on standards demanding an attorney's undivided loyalty to the client.

Mishler, at paras. 37-38.

Defining "lawyers" and "same firm": Ohio Rule 1.5(e) restricts fee sharing between "[l]awyers who are not in the same firm."

The first issue in applying this aspect of the Rule is what is meant by the term "lawyer." At a minimum, it was opined under the identical language in former DR 2-107(A) that it includes individuals licensed to practice law who are on active status, including lawyers licensed in states other than Ohio. Bd. of Comm'rs on Grievances & Discipline Op. 91-4, 1991 Ohio Griev. Discip. LEXIS 26 (Feb. 8, 1991). Attorneys who have been suspended may collect fees for services rendered prior to suspension pursuant to agreements formed prior to the suspension period. Bd. of Comm'rs on Grievances & Discipline Op. 89-002, 1989 Ohio Griev. Discip. LEXIS 9 (Feb. 17, 1989). After suspension, however, the lawyer should be treated as a layperson and therefore, is ineligible for fee divisions of any kind. Ohio State Bar Ass'n Informal Op. 81-9 (Nov. 4, 1981). See section 5.4:200. If a lawyer has been suspended, taken inactive or retired status, or failed to register, the lawyer is not eligible to practice law. The individual can no longer perform services or assume responsibility necessary to support a fee division for work performed after leaving active status. See generally Gov Bar R VI 2 (lawyer on inactive status cannot practice law in Ohio); Gov Bar R VI 3(A) (lawyer 65 years or older who applies for and is granted retired status cannot practice law in Ohio); Gov Bar R VI 6(B) (lawyer summarily suspended for failure to register cannot practice law in Ohio). See also section 5.5:210.

The second problem is determining what relationship among attorneys is required for them to be treated as "in the same firm." Under Ohio Rule 1.0(c), "firm" or "law firm"

denotes a lawyer or lawyers in a law partnership, professional corporation, sole proprietorship, or other association authorized to practice law; or lawyers employed in a private or public legal aid or public defender organization, a legal services organization or the legal department of a corporation, or other organization.

See Rule 1.0 cmts. [2]-[4A]. After noting that whether two or more lawyers constitute a firm for purposes of 1.0(c) "can depend on the specific facts," Comment [2] provides examples: a lawyer who is of counsel to a law firm will be treated as part of that firm; on the other hand, lawyers sharing office space with an occasional consultation would not ordinarily be regarded as constituting a firm for purposes of Rule 1.5(e) fee division. Other factors to be considered are the terms of any agreement between the lawyers or whether they have mutual access to client information. Finally, it is relevant to consider the underlying purpose of the rule involved. Rule 1.0 cmt. [2].

If Ohio attorneys were in a legal partnership operating in multiple states, the BCGD concluded that they still were considered to be "in the same firm" for purposes of the comparable definitions provision in the OHCPR. Bd. of Comm'rs on Grievances & Discipline Op. 91-4, 1991 Ohio Griev. Discip. LEXIS 26 (Feb. 8, 1991). Splitting of fees with an "of counsel" likewise did not implicate former OH DR 2-107(A), Bd. of Comm'rs on Grievances & Discipline Op. 2004-11, 2004 Ohio Griev. Discip. LEXIS 9 (Oct. 8, 2004), and would not violate Ohio Rule 1.5(e) either, since "of counsel" lawyers are to be treated as part of the "firm.") See Rule 1.0 cmt. [2]. The Board so opined as to Rule 1.5(e) in Bd. of Comm’rs on Grievances & Discipline Op. 2008-1, 2008 Ohio Griev. Discip. LEXIS 1 (Feb. 8, 2008), at *13.

In contrast, attorneys who practiced in association with each other, such as by assisting each other in litigation or sharing office space or support staff, but who were not in a legal partnership with one another, were not considered "in the same firm," and thus any fee-sharing arrangements made by such attorneys had to comply with OH DR 2-107(A).  Duff v. Gary, 87 Ohio App.3d 558, 622 N.E.2d 727 (Lorain 1993); Bd. of Comm'rs on Grievances & Discipline Op. 2003-3, 2003 Ohio Griev. Discip. LEXIS 3 (June 6, 2003); Bd. of Comm'rs on Grievances & Discipline Op. 91-9, 1991 Ohio Griev. Discip. LEXIS 21 (Apr. 12, 1991). Resolution of the "same-firm" issue in these situations will now be guided by Comment [2], which indicates that, for purposes of fee division under Rule 1.5(e), such relationships generally do not constitute a "firm" and that resolution in other cases will depend upon circumstances such as the terms of any agreement between the lawyers, whether they have mutual access to client information, and, in doubtful cases, the underlying purpose of the Rule involved.  Ohio Rule 1.0 cmt. [2].

Finally, under the former OHCPR (and presumably the new Rules as well), qualified lawyer referral services were considered neither "lawyers" nor a "firm." Bd. of Comm'rs on Grievances & Discipline Op. 92-1, 1992 Ohio Griev. Discip. LEXIS 20 (Feb. 14, 1992). In accordance with this view, fees paid to such referral services would not need to comply with Rule 1.5(e). These practices would be governed instead by Ohio Rule 7.2(b)(3). See section 7.2:400.

An opinion of the Eight District Court of Appeals, Hohman, Boukis & Curtis Co., L.P.A. v. Brunn Law Firm Co., L.P.A., 138 Ohio App.3d 693, 742 N.E.2d 192 (Cuyahoga 2000), confronted the question of the applicability of former OH DR 2-107(A) to a fee dispute between lawyers who had been, but no longer were, in the same firm. The trial court had ordered arbitration of the dispute under OH DR 2-107(B). Reversing on this point, the appellate court held the former disciplinary rule inapplicable, because, first, 2-107(B) (the arbitration provision) applied only if the dispute arose under 2-107(A). Second, 2-107(A) "specifically regulates lawyers who are not in the same firm. Although the appellants and the appellees are not presently in the same firm, they were at one time and it is out of this former relationship that this dispute arises." 138 Ohio App.3d at 697-98, 742 N.E.2d at 195. In one disciplinary case, the Supreme Court appeared to ignore the "not in the same firm" language altogether.  Disciplinary Counsel v. Watson, 107 Ohio St.3d 182, 2005 Ohio 6178, 837 N.E.2d 764 (finding 2-107(A) violation with respect to client's check with payee space left blank; after check negotiated client noticed "that the name of another lawyer in respondent's office . . . had been written in as payee." Id. at ¶¶ 16-17.).

Comments [3]-[4A] deal with whether the "firm" label is applicable to the law department of an organization, Rule 1.0 cmt. [3] (ordinarily "no question" that it is); lawyers in legal aid and legal services organizations, Rule 1.0 cmt. [4] (it depends); and lawyers practicing in a governmental agency, Rule 1.0 cmt. [4A] (not included in the definition of "firm"). See section 1.0:103 for further discussion of "firm" as applicable (or inapplicable) to lawyers in these settings.

Separation and retirement agreements: Former OH DR 2-107(C), like DR 2-107(B) of the ABA Model Code, provided that the restrictions on fee divisions among lawyers not in the same firm did not prohibit payments to former partners or associates pursuant to a retirement or separation agreement. Strangely, the ABA did not carry forward this provision from the Model Code to the Model Rules; nor is it found in the Ohio Rules. There can be little doubt, however, that this safe harbor survives under the new regime. The Lawyers' Manual on Professional Conduct addresses the issue and states as follows:

Model Rule 1.5 does not contain similar language [to that in 2-107(B)] . . . but there is no indication in the rule or its accompanying comment that a fundamental departure from DR 2-107(B) was intended by the deletion.

Laws. Man. on Prof. Conduct (ABA/BNA) § 41:710 (2001). In its provision on fee splitting, the Restatement similarly concludes that "[u]nder this Section, law firm members may also share fees in making payments to former partners or associates under a separation or retirement agreement . . . ." 1 Restatement (Third) of the Law Governing Lawyers § 47 cmt. g, at 334 (2000). See as well Ohio Rules 5.4(a)(1), pursuant to which payments can be made by a firm to nonlawyer representatives of a deceased lawyer, and 5.4(a)(3), pursuant to which fee sharing with nonlawyers through a compensation or retirement plan is permitted. These provisions would seem to make the propriety of payments to a retiring or departing lawyer an a fortiori case. Finally, see Ohio Rule 1.5 cmt. [8], which provides that division (e) "does not prohibit or regulate" future division of fees for work done by a lawyer previously associated with a firm. This seems to speak to the separation issue; if division on separation is permitted, doing so on retirement surely is permitted as well.

Fee splitting with nonlawyers: See section 5.4:200.

Disputes between lawyers over fee splitting: If a dispute arises between lawyers in different firms over a fee division, Ohio Rule 1.5(f) requires the lawyers first to submit their dispute for mediation or arbitration by a local bar association. Comment [10] emphasizes that this procedure is mandatory. Rule 1.5 cmt. [10]. A case decided under the former OHCPR, Fred Siegel Co. v. Provident Mgmt., Inc., No. 72303, 1998 Ohio App. LEXIS 5461 (Cuyahoga Nov. 19, 1998), held that this DR 2-107(B) requirement applied only if DR 2-107(A) (now Rule 1.5(e)), standards were met. If there is no local bar association available or it does not have procedures to resolve such a dispute, the dispute shall be submitted for mediation or arbitration to the Ohio State Bar Association. Rule 1.5(f). Under rules promulgated by the OSBA, the matter will be submitted to mediation if either party requests it. If no request is made, or if mediation fails to resolve the matter, the dispute will be submitted to binding arbitration, which will result in a final determination subject only to limited judicial review. See ORC 2711.10 (limited court authority to vacate arbitration awards); ORC 2711.11 (limited court authority to modify arbitration awards).

The constitutionality of this binding arbitration provision has been challenged as violating the rights to trial by jury, equal protection, due process, and access to the courts, but, until recently, all of these issues remained unresolved. The Supreme Court's decision in the Shimko case, discussed below, now provides a definitive answer with respect to the jury trial issue.

In Shimko v. Lobe, 124 Ohio App.3d 336, 706 N.E.2d 354 (Franklin 1997), the Tenth District Court of Appeals upheld this provision from constitutional attack on due process, equal protection, and contract clause grounds. It remanded the case to the trial court for further consideration of the claim that the provision violates the state constitutional right to a jury trial. After remand, plaintiff voluntarily dismissed his case and then refiled his action in an essentially identical form. The trial court ruled that the binding arbitration provision of former OH DR 2-107 was a reasonable restriction on the practice of law and therefore not violative of the constitutional right to jury trial. The court of appeals affirmed. Shimko v. Lobe, 152 Ohio App.3d 742, 2003 Ohio 2200, 790 N.E.2d 335 (Franklin 2003). In reaching the conclusion that OH DR 2-107(B) was a reasonable restriction, the court of appeals relied heavily on the fact that, "[i]n being admitted to the practice of law in Ohio, plaintiff agreed to be bound by the Code of Professional Responsibility," including OH DR 2-107(A) & (B). By agreeing to this provision, plaintiff waived the right to jury trial in fee disputes. 152 Ohio App.3d 742, 2003 Ohio 2200, 790 N.E.2d 335, at ¶ 32. Accord id. at ¶¶ 35, 39. In support of this waiver analysis, the court cited Gov Bar R IV(1), which states in pertinent part that the Code, "as amended, shall be binding upon all persons admitted to practice law in Ohio." This line of reasoning raises an interesting question. Shimko was admitted to practice, and "agreed to be bound by the Code of Professional Responsibility," in 1976. OH DR 2-107(B) was not added to the OHCPR until 1990, and the words "as amended" were not added to Gov Bar R IV(1) until 1993. Thus, the Code to which Shimko "agreed to be bound" contained no compulsory arbitration provision for division of fees between lawyers not in the same firm. On these facts, it could be argued that the court's waiver analysis, based as it is on Shimko's "agreement" made at the time he was admitted to the bar, may not have been the best means to the result reached.

The Supreme Court affirmed the court of appeals' decision in Shimko v. Lobe, 103 Ohio St.3d 59, 2004 Ohio 4202, 813 N.E.2d 669. The Supreme Court held (1) that an OH DR 2-107(B) arbitration award "is final, binding on the parties, and unappealable," id. at ¶ 26, and (2) that the rule does not violate the right to jury trial under the Ohio Constitution. While the Court recognized that the jury trial right may be waived, id. at ¶ 29, it held there was no such right here:

In the first place, DR 2-107(B) does not implicate the right of trial by jury, because that right does not exist in cases of fee disputes between attorneys.

Id. at ¶ 47. In rejecting Shimko's second argument -- that OH DR 2-107(B) creates an unauthorized tribunal and thus is an unreasonable restriction on the right to trial by jury -- the Court agreed with the court of appeals that the authority of mediators or arbitrators to resolve fee disputes flows from "Shimko's obligation [not, in the court of appeals' words, "agreement"] as a practicing Ohio lawyer to abide by the Code of Professional Responsibility." Id. at ¶ 65. The Supreme Court's analysis, which emphasized this overriding obligation (and, in another part of the opinion, quoted Gov Bar R IV(1) and the oath of admission to abide by those rules, id. at ¶ 24), seems a more soundly grounded approach to the issue, rather than the reliance by the court of appeals on "agreement" and "waiver."

A distinction should be made between cases in which the lawyers are arguing about the amount of the fee or the percentage allocations, as opposed to whether there is an enforceable agreement at all. Under former OH DR 2-107(B), the prior questions required mediation or arbitration, but the latter question was a matter of general contract law actionable in court.  Schroeder v. DeVito, 136 Ohio App.3d 610, 737 N.E.2d 559 (Cuyahoga 2000) (DR 2-107(B) inapplicable); Schulman v. Wolske & Blue Co., L.P.A., 125 Ohio App.3d 365, 708 N.E.2d 753 (Franklin 1998) (same). See Climaco, Climaco, Seminatore, Lefkowitz & Garofoli Co., L.P.A. v. Robert E. Sweeney Co., L.P.A., 123 Ohio App.3d 289, 704 N.E.2d 47 (Cuyahoga 1997) (DR 2-107(B) does not divest trial court of jurisdiction over breach-of-contract dispute between two law firms). Nevertheless, even if OH DR 2-107 did not apply, the lawyers could still enter into a binding agreement to have the matter resolved by arbitration before a body with power to do so, such as an OSBA arbitration panel. Endicott v. Johrendt, No. 97 APE08-1122, 1998 Ohio App. LEXIS 1888 (Franklin Apr. 30, 1998). There is no reason to think that these distinctions will not be honored under the new Rules.

A nondisciplianry case in which the issue of waiver of arbitration under DR 2-107 was raised is Marks v. Swartz, 174 Ohio App.3d 450, 2007 Ohio 6009, 882 N.E.2d 924Marks was a contract dispute in which local counsel in asbestos litigation sued the lead lawyer for breach of their argeement to split fees 75/25.  After a recovery by local counsel in the trial court, defendant argued on appeal that the lower court had no jurisdiction because 2-107(B) mandated that the dispute go to arbitration.  The appellate court ruled that defendant had waived his alleged right to arbitration under the rule (even though he sought dismissal of the suit for this reason prior to filing his answer), because he had not moved for a stay under ORC 2711.02.  The reasoning seems to us suspect.  The waiver result depended on precedent holding that “in order for a potential defendant to preserve an alleged right to arbitrate a dispute, he or she must apply for a stay of the legal proceedings pending arbitration pursuant to R.C. 2711.02.”  Id. at para. 19.  But 2711.02 requires a court to stay the proceeding when the court is “satisfied that the issue involved in the action is referable to arbitration under an agreement in writing for arbitration . . . .”  So far as one can tell from the Marks opinion, there was no such “agreement in writing for arbitration”; if not, 2711.02 by its terms was inapplicable.

It should be further emphasized that Rule 1.5(f) is a mechanism for resolving fee disputes between lawyers; it has no application to attorney-client fee disputes.  Putnam v. Hogan, 122 Ohio App.3d 351, 356, 701 N.E.2d 774, 777 (Franklin 1997) (construing former DR 2-107(B)). As to arbitration of client-lawyer fee disputes, see section 1.5:250.