Surcharge to Client for Use of a Contract Lawyer, issued on November 9, 2000, addresses the manner in which attorneys bill clients for the use of outsourced work:
Obtaining temporary legal services using a lawyer placement agency to obtain temporary lawyer services where the agency’s fee is a proportion of the lawyer’s compensation does not violate the Model Rules or predecessor Model Code, as long as the professional independence of the lawyer is maintained without interference by the agency, the total fee paid by each client to the law firm is reasonable, and the arrangement otherwise is in accord with the guidelines in this opinion.
If the lead attorney bills the hearing coverage as an expense, and without any other understanding to the contrary, the client may be charged only the cost directly associated with the services, including expenses incurred by the billing lawyer to obtain and provide the benefit of the contract lawyer’s services.
According to the committee, a law firm that pays to a temporary lawyer compensation in a fixed dollar amount or at an hourly rate and pays a placement agency a fee based upon a percentage of the lawyer’s compensation, does not involve the sharing of legal fees by a lawyer with a non-lawyer in violation of Rule 5.4 or DR 3-102(A) of the Code."
When costs associated with legal services of a contract lawyer are billed to the client as fees for legal services, the amount that may be charged for such services is governed by the requirement of Model Rule 1.5(a) that a lawyer’s fee shall be reasonable. A surcharge of the costs may be added by the billing lawyer if the total charge represents a reasonable fee for services provided to the client.
Every jurisdiction may handle this matter differently, so it is imperative that you are familiar which the local rules of professional conduct in the relevant jurisdiction. For example, according to the Illinois Rules of Professional Responsibility, this fee issue is treated as follows:
RULE 1.5 FEES: (a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following: (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 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 the 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. (b) The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.