Have you ever walked away from a business transaction and thought to yourself, “Wow, I just got taken advantage of”? Or maybe, “That ended up being a lot more expensive than he told me it was going to be.” Or perhaps, “I didn’t get everything I thought I was paying for.” If so, I hope that the person with whom you were conducting business was a lawyer, because unlike just about every other service provider in the world, the rules governing what attorneys can charge for their clients for their services, and the options that their clients have to ensure that they got what they paid for, are some of the most consumer-friendly rules in existence.
Lawyers are explicitly forbidden from charging their clients unreasonable fees, fees for work that they didn’t do, or fees that are non-refundable. Even if the client willingly, or maybe even happily, paid those fees. Rule 1.5 of the the code that governs the professional conduct of Colorado attorneys states as follows:
A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses.
And this is just the beginning of a very long list of restrictions and flat out prohibitions on what a lawyer can charge his clients.
So how do we decide what’s reasonable? To be sure, “reasonable” is not to be confused with “cheap.” The rule lists 8 factors for consideration, designed to get at whether the lawyer is doing something difficult, time consuming, and risky. But perhaps what is most remarkable about this list isn’t what’s on it, but what isn’t: the amount that the client is willing to pay is not a factor in determining whether a lawyer’s fee is reasonable. Just because a client would be willing to pay her lawyer $10,000 for a task that the client assumes will be difficult but which the lawyer knows will probably only take an hour or two doesn’t mean that the lawyer is allowed to charge that much.
And the rule gets more restrictive than that. Much more. Not only is a lawyer forbidden from charging his clients an unreasonable fee after doing work for them, but he can’t even enter into an agreement with them that would result in unreasonable fees. Lawyers are also forbidden from charging their clients non-refundable fees. Until he has completed the work that his client has paid him to complete, a lawyer cannot tell his client that his fees are “non-refundable” (unless he can show that, despite the lack of work, he is doing something valuable for his client, like turning down other work to keep himself available).
Finally, lawyers are forbidden from accepting referral fees from other lawyers. If a client walks into my office with a criminal case, which I don’t handle, I can refer that case to an attorney who does specialize in that area. But that attorney can’t pay me for the referral, even if he goes on to bill that client tens of thousands of dollars for the work that I brought to him.
Is agreeing not to collect “unreasonable fees” really that much of a sacrifice?
Perhaps this all sounds unremarkable. Of course you shouldn’t charge fees that are unreasonable. And who would pay them anyway? But if there is another profession in which the practitioners have voluntarily forbidden themselves from charging their customers whatever their customers are willing to pay them, I’m not aware of it. For comparison’s sake, the New York Times recently ran a story about people being surprised to receive six figure bills from their medical providers for procedures that were relatively routine, quick, and not even clearly necessary. A lawyer who sprung a bill like that on a client after having already completed the work and without getting the client’s written permission first would be at serious risk of disciplinary action by the state ethics board, maybe even disbarment.
So the next time you hear a joke about greedy lawyers — and there will be a next time you hear a joke about greedy lawyers — keep in mind the limits lawyers have voluntarily put on their ability to collect a fee. You might find yourself wishing the rest of the world could be so greedy.
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