What New York rules say about lawyers’ fees

The rule against excessive fees

A lawyer shall not make an agreement for, charge, or collect an excessive or illegal fee or expense. A fee is excessive when, after a review of the facts, a reasonable lawyer would be left with a definite and firm conviction that the fee is excessive.Rule 1.5(a), Rules of Professional Conduct, 22 NYCRR 1200

The rule lists the factors to weigh: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent or made known to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent.

It also forbids (Rule 1.5(d)):

• a contingent fee for representing a defendant in a criminal matter;
• a nonrefundable retainer fee, although a retainer may set a reasonable minimum fee it defines in plain language;
• any fee in a domestic relations matter if: (i) the payment or amount of the fee is contingent upon the securing of a divorce or of obtaining child custody or visitation …

The letter of engagement

An attorney who undertakes to represent a client and enters into an arrangement for, charges or collects any fee from a client shall provide to the client a written letter of engagement before commencing the representation …22 NYCRR 1215.1(a), as published by the Legal Information Institute, Cornell Law School

(b) The letter of engagement shall address the following matters: (1) explanation of the scope of the legal services to be provided; (2) explanation of attorney's fees to be charged, expenses and billing practices; and (3) where applicable, shall provide that the client may have a right to arbitrate fee disputes under Part 137 of this Title.22 NYCRR 1215.1(b)

No letter is required for (1215.2):

• representation of a client where the fee to be charged is expected to be less than $3,000
• representation where the attorney’s services are of the same general kind as previously rendered to and paid for by the client
• representation in domestic relations matters subject to Part 1400 of this Title
• representation where the attorney is admitted to practice in another jurisdiction and maintains no office in the State of New York, or where no material portion of the services are to be rendered in New York

Arbitrating a fee dispute

The program covers civil matters: “This Part shall apply where representation has commenced on or after January 1, 2002, to all attorneys admitted to the bar of the State of New York who undertake to represent a client in any civil matter” (22 NYCRR 137.1(a)). It does not cover criminal matters, or “amounts in dispute involving a sum of less than $1,000 or more than $50,000” unless both sides agree (137.1(b)(2)).

Before suing a client over a fee, the lawyer generally must write first (the rule has exceptions): “… where the attorney and client cannot agree as to the attorney's fee or where the attorney seeks to commence an action against the client for attorney's fees, the attorney shall forward a written notice to the client, entitled Notice of Client's Right to Arbitrate” (137.6(a)(1)). The notice “shall advise that the client has 30 days from receipt of the notice in which to elect to resolve the dispute under this Part” (137.6(a)(1)(iii)).

Under the program’s procedure, a client starts with a Request for Fee Arbitration filed with the local program for the county where most of the work was done. The court system lists each local program and its forms on its Fee Dispute Resolution Program resources page, with the rules in full.

Personal injury: the same schedule in every department

In any claim or action for personal injury or wrongful death, or loss of services resulting from personal injury or for property or money damages resulting from negligence or any type of malpractice, other than one alleging medical, dental or podiatric malpractice …22 NYCRR 691.20(e)(1), as published by the Legal Information Institute, Cornell Law School

Each of the four judicial departments has adopted the same two schedules for personal injury and wrongful death claims; the Second Department’s rule, quoted here, also covers property and money damages from negligence. A contingent fee within one of the schedules is deemed reasonable; a larger fee needs a court’s written order.

Schedule B: a fee of up to 33⅓% of the sum recovered, if the first agreement between client and attorney says so.

How the percentage is taken differs. The Second Department’s rule takes it from the net sum recovered, after expert, investigation and similar costs. The First, Third and Fourth Departments let the client choose in the retainer: the net sum, or, where the lawyer agrees to pay the costs of the case (Judiciary Law § 488(2)(d)), the gross sum before expenses.

The malpractice fee schedule

In a medical, dental or podiatric malpractice case, the contingent fee may not exceed the following share of each part of the net sum recovered:

On a $600,000 recovery the cap is $157,500: 30% of the first $250,000, 25% of the next $250,000 and 20% of the last $100,000.