Case expenses must be reasonable

 In Georgia State Bar Grievances, Legal Malpractice

Rule 1.5 of the Georgia Rules of Professional Conduct mandates that the fees collected by a lawyer must be “reasonable.” The reasoning for this seems obvious. However, Rule 1.5 also mandates that case expenses must be reasonable.

a. A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. (emphasis added)

What does this mean for clients?

Your lawyer should clear big expenses in advance

Often—though not always—representation contracts allow for the lawyer to advance expenses in contingency cases. In the personal injury context, most plaintiffs can’t afford to pay expenses. This is one of the justifications of the contingency fee system, in fact. It’s also in Rule 1.5, see (a)(8). But those case expenses must still be reasonable, under the rules.

It’s probably reasonable for your lawyer to charge you for copies or mileage so long as those expenses are related the case, and also reasonable. But is it reasonable for a lawyer to, say, take a helicopter flight to a deposition? (One would wonder why they couldn’t just drive.) You might only find out about the expense after a recovery, at the time of distribution of funds. As a general rule, it is a good idea if you ask your lawyer to clear any large case expenses with you in advance, and also have that requirement clearly outlined in the fee agreement. It could vary, but a general rule of thumb might be anything over $500, or $1,000. Keep in mind, some case expenses, like expert witnesses, could grow very large over time. In the same token, you do not want to unnecessarily restrict your lawyer from making out the case best case possible for you, so you should keep in mind that you hired the lawyer to be an advocate and represent to the best of his ability.  The requirement to clear large expenses up front is really meant to create a healthy discussion between the client and the lawyer as to what expenses are necessary and whether there are any alternatives of a particular expense.

As a lawyer, be careful while incurring expenses

As a lawyer, you owe fiduciary duties to your client. As a fiduciary, you ought not to waste your client’s money. That’s what it means to place your client’s interests above your own, and everyone else’s. So, be careful about incurring significant expenses with only marginal value. What is “reasonable” will obviously depend on the size and complexity of the case. Medical malpractice cases—and all malpractice cases, generally speaking—are expensive because expert witnesses are expensive and the complexity of the issues in the case. And that’s fine. But you should be careful about flying first class—or using private planes—to out of town depositions, and the like. Incurring large, “cadillac” style expenses without getting client approval first will only invite them to complain about the charges later. Usually complaints about excessive expenses accompanies a complaint about the level of service and the outcome of the case making the possibility of a Bar complaint or malpractice claim more likely.

In the end, make sure that expectations and terms about the incurring of and payment of expenses are realistic and clear. Similarly, make sure the language of your fee contracts and retainer letters is crystal clear, and make sure the agreement is reviewed and questions answered. Documenting the engagement agreement review and question answering process is also a best practice.



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