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Rhode Island Legal Ethics
1.5:100 Comparative Analysis of Rhode Island Rule
RI Rule 1.5
requires, as a result of a 1998 amendment, that the fee to be charged in all
cases be in writing (a) where the lawyer has not regularly represented the client
and (b) in all cases of a contingency fee. Comment to the Rule is revised accordingly.
The obligation to provide written fee information to the client does not apply
to lawyers representing clients who are not paying the fees, such as in an insurance
defense practice. Bills for fees, costs and expenses must be submitted on a
quarterly basis unless otherwise agreed. Contingent fees are allowed in domestic
relations matters, except in cases securing a divorce, or involving the initial
application for alimony or support, or a property settlement in lieu thereof.
The Comment to MR 1.5
Rhode Island has not adopted a Model Code comparison. See MR 1.5 and other jurisdictions.
1.5:200 A Lawyer's Claim to Compensation
RI Eth. Op. 92-42 (1992) states that RI Rule 1.5(b) provides that the fee arrangements should be communicated to the client and should be in writing. The Comment to RI Rule 1.5 points out that an understanding with and consent of the client regarding the fee should be promptly established. The opinion further states that a written statement regarding the fee reduces the possibility of a misunderstanding and miscommunication between attorney and client. (This Opinion predates the Amendment to RI Rule 1.5 which now requires written fee agreements in certain instances.)
When a client has retained an attorney on a contingent fee basis and thereafter discharges the attorney prior to reaching an agreement as to settlement, the discharged attorney is only entitled to payment for services on a quantum meruit basis. See RI Eth. Op. 89-21 (1989); RI Eth. Op. 92-52 (1992); RI Eth. Op. 92-61; RI Eth. Op. 93-37; and RI Eth. Op. 2001-03 (2001).
An attorney may be assist a client in obtaining a loan which will enable the client to pay the legal fees, but can not co-sign a note for that purpose. RI Eth. Op. 92-2 (1992). An attorney may charge interest on unpaid legal bills in the absence of a prior agreement with the client. RI Eth. Op. 98-06 (1998).
Lawyers are encouraged to submit to the fee arbitration program of the Rhode Island Bar Association in order to resolve a fee dispute. RI Eth. Op. 92-34 (1992); and RI Eth. Op. 92-85 (1992).
A suspended attorney may be paid a fee based on quantum meruit for the fair value of services rendered before the suspension. RI Eth. Op. 92-58 (1992); and RI Eth. Op. 92-87 (1992).
1.5:300 Attorney-Fee Award (Fee Shifting)
An attorney retained by insurance company to represent insured can not agree to abide by "litigation management guidelines" established by the insurance company, delineating the financial relationship between insured and law firm, and setting parameters and approval prerequisites for legal services provided, noncompliance with which would result in non-payment. RI Eth. Op./ 99-18 (1999). Such guidelines violate the Comment to RI Rule 1.5, which provides that "an agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in a way contrary to the client's interest."
Rhode Island follows the "American rule," which requires adverse parties in litigation to pay their own attorney's fees. The trial justice has authority to make award of costs to prevailing party, but such award should not include attorney fees unless authorized by separate statute, rule, or other law. R.I. Gen. Laws, § 9-22-5 (1956); Super. Ct. R. Civ. P. Rule 54(d). See also DiRaimo v. Providence, 714 A.2d 554 (R.I. 1998). This rule is subject to few exceptions. See 1.5:330.
Attorney fees may not be awarded absent contractual or statutory authorization. See, e.g., DiRaimo v. Providence, 714 A.2d 554 (R.I. 1998); Eleazer v. Ted Reed Thermal, Inc., 576 A.2d 1217 (R.I. 1990); Farrell v. Garden City Builders, 477 A.2d 81 (R.I. 1984).
This principle has been applied to worker's compensation cases, where a provision in the Act authorizing an award of attorneys' fees to an injured employee who successfully prosecutes a petition does not authorize the award of attorney's fees to any person other than the employee. Orthopedic Specialists, Inc. v. Great Atlantic and Pacific Tea Co., 388 A.2d 352 (R.I. 1978).
Rhode Island has enacted various statutes to shift fees in particular circumstances. For example, Rule 64 of the Rhode Island Rules of Procedure for Domestic Relations Matters provides, inter alia, that a party may seek temporary support or counsel fees in a domestic relations matter. Section 9-1-45 of R.I. Gen. Laws (1956, as amended) provides that the court may award a reasonable attorney's fee to the prevailing party in any civil action arising from a breach of contract where the court finds (i) there was a complete absence of a justiciable issue of either law or fact raised by the losing party; or (ii) the court renders a default judgment against the losing party.
Similarly, a prevailing plaintiff may recover reasonable costs of litigation and attorney's fees as determined by the court under the Rhode Island Consumer Enforcement of Motor Vehicle Warranties law ("Lemon Law"), R.I. Gen. Laws § 31-5.2-12 (1956); the Rhode Island Truth in Lending and Retail Selling law, R.I. Gen. Laws § 6.26-27-7 (1956); the Rhode Island Antitrust law, R.I. Gen. Laws § 6-36-11 (1956); the Rhode Island Deceptive Trade Practices law, R.I. Gen. Laws § 13.1-25 (1956); the Rhode Island Environmental Marketing Act, R.I. Gen. Laws § 6-13.3-3 (1956); the law on Limits on Strategic Litigation Against Public Participation (SLAPP suits), R.I. Gen. Laws § 9-33-2(2)(d) (1956) (costs and reasonable attorney's fees available for prevailing party who asserts immunity under the law).
There is no authority in Rhode Island on this topic.
1.5:400 Reasonableness of Fee Agreement
In a litigation setting, it has been held that the determination of whether an attorney's fee is reasonable requires particular facts in the form of affidavits and testimony upon which a court may premise a decision. St. Jean Place Condominium v. Decelles, 656 A.2d 628 (R.I. 1995). A lawyer's fee was held to be unreasonable when the lawyer charged the clients one-third of the savings on a reduced real estate lien that never existed. Lisi v. Pearlman, 641 A.2d 81 (R.I. 1994). Expert testimony based solely on time spent on the matter by an attorney was rejected since the expert did not consider any of the other factors contained in RI Rule 1.5 in determining the reasonableness of a fee. Laverty v. Pearlman, 654 A.2d 696 (R.I. 1995). Results achieved were properly considered in determining the reasonableness of the fee.
In a contingent fee case where the attorney was discharged, payment of a fee to the discharged attorney on more than a quantum meruit basis would not be reasonable. RI Eth. Op. 89-21. In determining the ethical propriety of billing an estate based upon a percentage fee for work performed on an estate as set forth in a written fee agreement, it was stated in RI Eth. Op. 92-73 that the eight categories listed in RI Rule 1.5(a) govern the inquiry and the attorney should assess a fee which is reasonable under the circumstances and commensurate with the time and labor required and the value of services rendered to the client. This was held to be true even if a client agreed to a percentage fee. The Opinion went on to state that a fee might not be set based upon the size of a matter.
An attorney's failure to provide any substantive services, despite receiving $2700 in fees, rendered the fee charged unreasonable in violation of RI Rule 1.5. See In re Grochowski, 701 A.2d 1013 (R.I. 1997).
In RI Eth. Op. 94-63 (1994) the question arose regarding a refund of a retainer. The retainer agreement did not state that the retainer was "non-refundable". It was opined: "The Rhode Island Disciplinary Board's Policy on Non-Refundable Retainer Agreements discusses the difference of opinion regarding the refunding of retainers in the absence of a clear and unambiguous written agreement. This issue differentiates between the definition of a true retainer and a fee advance. However, it is the Disciplinary Board's Policy 'that the term 'retainer' as used by attorneys of this Bar is a fee advance and therefore refundable, minus a reasonable 'quantum meruit' amount'. The Panel believes that pursuant to RI Rule 1.5 and the comments thereto, as well as the Disciplinary Board's Policy, the attorney is obligated to return the non-earned portion of the retainer fee."
See 1.4:101 Model Rule Comparison above.
A new paragraph (a) has been added to RI Rule 1.4 to provide that when a lawyer has not regularly represented a client and has reason to believe that the client does not fully understand the nature of the attorney-client relationship, the lawyer shall take steps to inform the client of the nature of that relationship before the representation is undertaken. Appendix 2 referred to in the Rule includes a copy of the Statement of Client's Rights and Responsibilities, which if given to a client will satisfy the requirements of the Rule. Such a statement has been printed by and will be available through the Rhode Island Bar Association. The requirements of the Rule may also be satisfied in any other matter that will be the reasonable equivalent of the statement, including incorporating the required notices in the engagement letter.
RI Rule 1.5(b) requires that when a lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client in writing and all contingency fee arrangements shall be in writing. Comment to the Rule as amended has been revised accordingly. The obligation to provide written fee information does not apply to lawyers representing clients who are not paying the fees, such as in an insurance defense practice.
1.5:500 Communication Regarding Fees
1.5:600 Contingent Fees
All contingency fee agreements are required to be in writing. RI Rule 1.5(c). Fees in a domestic relations matter contingent upon securing of a divorce or in the initial application for alimony or support, or a property settlement in lieu thereof, are not permitted. Therefore, it is presumed that contingent fees are allowed in domestic relations matters in all other situations. RI Rule 1.5(d). See also RI Eth. Op. 91-78 (1991) where it was opined that a contingent fee arrangement was permissible in the collection of child support arrearages but not for increased child support. Subject to the guidelines in RI Rule 1.5(a) it is permissible to have a mixed fee arrangement including both a fixed fee and a contingency fee for services provided in a litigation matter. RI Eth. Op. 92-42 (1992).
See comments under 1.5:600 Contingent Fees above.
When a client who has retained an attorney on a contingent fee basis discharges that attorney prior to reaching an agreement as to settlement, the discharged attorney is only entitled to payment for services rendered on a quantum meruit basis. RI Eth. Op. 89-21 (1989).
1.5:700 Unlawful Fees
RI Rule 1.5(d)(2) prohibits a lawyer from charging a contingent fee in a criminal case.
RI Rule 1.5(d)(1) provides that a lawyer shall not charge a fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the original amount of alimony or support or property settlement in lieu thereof. RI Eth. Op. 91-78 (1991) adopts the foregoing by opining that a contingent fee arrangement is permissible for collecting child support arrearages but is not permitted when seeking to obtain increased child support, citing RI Rule 1.5(d)(1).
There is no authority in Rhode Island on this topic.
1.5:800 Fee Splitting (Referral Fees)
RI Rule 1.5(e) provides that a fee between lawyers not in the same firm may only be made if (1) the division is in proportion to the services performed by each lawyer, or by written agreement with the client, with each lawyer assuming joint responsibility for the representation; (2) the client is advised of and does not object to the arrangement; and (3) the total fee is reasonable. Imply referring a client to another lawyer is not sufficient to make a fee-splitting arrangement ethical under the Rules. See ABA/BNA Law. Man. of Prof. Conduct at 41:709; RI Eth. Op. 97-16 (1997). In a case where client never consented to a fee division, client's prior lawyer was entitled to a fee on a quantum meruit basis for the work performed before termination. RI Eth. Op. 92-52. See also RI Eth. Op. 92-61 (1992); RI Eth. Op. 93-37 (1993). In RI Eth. Op. 95-15 (1995) it was held that if no services are to be performed by the referring attorney, the referring attorney is not jointly responsible for the representation, and no written agreement exists with respect to the division of fees with the client, there is no basis to divide the fee with the referring attorney. See also RI Eth. Op. 95-18 (1995), RI Rule 1.5(e) applies to attorneys from another state.
RI Eth. Op. 97-16 (1997) held that attorneys may divide a fee without regard to the amount of work performed provided there is a written agreement with the client by which the lawyers assume joint responsibility for the representation. In the absence of such an agreement, RI Rule 1.5(e) does not permit the sharing of attorney's fees. A 50-50 contingency fee splitting arrangement is permissible even where an attorney is suspended during the case, so long as the suspension is for a brief period relative to the overall length of time that the case has been pending. RI Eth. Op. 99-19 (1999).
An attorney representing a lender in residential real estate transactions may not share fees paid by borrower for legal services with lender. RI Eth. Op. 90-23 (1990).
An attorney may share a proportion of a fee paid by a client referred to the attorney by opposing counsel, so long as the division is proportionate to services rendered by each lawyer or by written agreement with the client, joint responsibility is assumed by each lawyer, the client is advised and does not object to the attorney's involvement and the total fee is reasonable. RI Eth. Op. 94-51 (1994).