Ind. Prof. Cond. Rule 1.5

Effective January 1, 2005

(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.

(c) A fee may be contingent on the outcome of the matter for which the service is rendered,

except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by

which the fee is to be determined, including the percentage or percentages that shall accrue

to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be

deducted from the recovery; and whether such expenses are to be deducted before or after

the contingent fee is calculated. The agreement must clearly notify the client of any expenses

for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement

stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.

(d) A lawyer shall not enter into an arrangement for, charge, or collect:

(1) any fee in a domestic relations matter, the payment or amount of which is contingent

upon the securing of a dissolution or upon the amount of maintenance, support, or property settlement, or obtaining custody of a child; or

(2) a contingent fee for representing a defendant in a criminal case.

This provision does not preclude a contract for a contingent fee for legal representation in

a domestic relations post-judgment collection action, provided the attorney clearly advises

his or her client in writing of the alternative measures available for the collection of such

debt and, in all other particulars, complies with Prof.Cond.R. 1.5(c).

(e) A division of a fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer or each lawyer

assumes joint responsibility for the representation;

(2) the client agrees to the arrangement, including the share each lawyer will receive, and

the agreement is confirmed in writing; and

(3) the total fee is reasonable.

Comment

Reasonableness of Fee and Expenses

[1] Paragraph (a) requires that lawyers charge fees that are reasonable under the circumstances. The factors specified in (1) through (8) are not exclusive. Nor will each factor

be relevant in each instance. Paragraph (a) also requires that expenses for which the client will be charged must be reasonable. A lawyer may seek reimbursement for the cost of

services performed in-house, such as copying, or for other expenses incurred in-house,

such as telephone charges, either by charging a reasonable amount to which the client

has agreed in advance or by charging an amount that reasonably reflects the cost

incurred by the lawyer.

Basis or Rate of Fee

[2] When the lawyer has regularly represented a client, they ordinarily will have evolved

an understanding concerning the basis or rate of the fee and the expenses for which the

client will be responsible. In a new client-lawyer relationship, however, an understanding

as to fees and expenses must be promptly established. Generally, it is desirable to furnish

the client with at least a simple memorandum or copy of the lawyer's customary fee

arrangements that states the general nature of the legal services to be provided, the

basis, rate or total amount of the fee and whether and to what extent the client will be

responsible for any costs, expenses or disbursements in the course of the representation.

A written statement concerning the terms of the engagement reduces the possibility of

misunderstanding.

[3] Contingent fees, like any other fees, are subject to the reasonableness standard of

paragraph (a) of this Rule. In determining whether a particular contingent fee is reasonable, or whether it is reasonable to charge any form of contingent fee, a lawyer must

consider the factors that are relevant under the circumstances. Applicable law may

impose limitations on contingent fees, such as a ceiling on the percentage allowable, or

may require a lawyer to offer clients an alternative basis for the fee. Applicable law also

may apply to situations other than a contingent fee, for example, government regulations

regarding fees in certain tax matters.

Terms of Payment

[4] A lawyer may require advance payment of a fee, but is obliged to return any unearned

portion. See Rule 1.16(d). A lawyer may accept property in payment for services, such as

an ownership interest in an enterprise, providing this does not involve acquisition of a pro-

prietary interest in the cause of action or subject matter of the litigation contrary to Rule

1.8(i). However, a fee paid in property instead of money may be subject to the requirements of Rule 1.8(a) because such fees often have the essential qualities of a business

transaction with the client.

[5] 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. For

example, a lawyer should not enter into an agreement whereby services are to be

provided only up to a stated amount when it is foreseeable that more extensive services

probably will be required, unless the situation is adequately explained to the client. Otherwise, the client might have to bargain for further assistance in the midst of a proceeding or

transaction. However, it is proper to define the extent of services in light of the client's ability to pay. A lawyer should not exploit a fee arrangement based primarily on hourly

charges by using wasteful procedures.

Prohibited Contingent Fees

[6] Paragraph (d) prohibits a lawyer from charging a contingent fee in a domestic relations

matter when payment is contingent upon the securing of a dissolution or obtaining custody of a child or upon the amount of maintenance or support or property settlement to be

obtained.

Division of Fee

[7] A division of fee is a single billing to a client covering the fee of two or more lawyers

who are not in the same firm. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is

used when the fee is contingent and the division is between a referring lawyer and a trial

specialist. Paragraph (e) permits the lawyers to divide a fee either on the basis of the proportion of services they render or if each lawyer assumes responsibility for the representation as a whole. In addition, the client must agree to the arrangement, including

the share that each lawyer is to receive, and the agreement must be confirmed in writing.

Contingent fee agreements must be in a writing signed by the client and must otherwise

comply with paragraph (c) of this Rule. Joint responsibility for the representation entails

financial and ethical responsibility for the representation as if the lawyers were associated

in a partnership. A lawyer should only refer a matter to a lawyer whom the referring lawyer

reasonably believes is competent to handle the matter. See Rule 1.1.

[8] Paragraph (e) does not prohibit or regulate division of fees to be received in the future

for work done when lawyers were previously associated in a law firm.

Disputes over Fees

[9] If a procedure has been established for resolution of fee disputes, such as an arbit-

ration or mediation procedure established by the bar, the lawyer must comply with the

procedure when it is mandatory, and, even when it is voluntary, the lawyer should con-

scientiously consider submitting to it. Law may prescribe a procedure for determining a

lawyer's fee, for example, in representation of an executor or administrator, a class or a

person entitled to a reasonable fee as part of the measure of damages. The lawyer

entitled to such a fee and a lawyer representing another party concerned with the fee

should comply with the prescribed procedure.