Let me share two quick stories that hopefully you can relate to. Years ago, I had a plumbing emergency. The short version is I had a plumbing problem on a Thanksgiving eve that had to be repaired or Thanksgiving was going to be a bust. Trust me, that service call cost me. More recently, due to the fact that all of our kids are now grown and not one of them lives nearby, my wife sends more packages than she used to. I’m often tasked with the responsibility of doing the boxing up and getting them shipped off. Unfortunately, I’m not always as prompt with that as I should be which means I sometimes have to pay a premium to make sure those packages get there on time. Heaven forbid something arrives a day or so late.
The above stories are two common situations where we all know to expect to pay more than we normally otherwise would. A plumber’s rates are going to be higher after hours and shipping rates are higher for expedited service. Everyone knows that emergencies and expedited services routinely cost more. That’s just the way it is. Given this reality, however, can a lawyer add a surcharge for having to respond to an emergency or agreeing to provide an expedited legal service? As with so many things in life, the answer is it depends.
To understand why, we need to start by taking a look at ABA Model Rule 1.5 Fees. Most lawyers know that, in general, under this rule a lawyer’s fee is to be reasonable and that the basis or rate of the fee and expenses are to be communicated to the client. So, if you tell your clients that you will add a 20% surcharge to your fee for work you have to do on weekends, surely that must be reasonable. If it is, how about a 50% surcharge? Is that reasonable? How about a 200% surcharge? If you go down this path, where’s the line?
Rule 1.5 also sets forth factors one should consider when trying to determine whether a particular fee is reasonable, and sadly, not as many lawyers seem to take the time to see what the rule actually says. Take note that section (a)(5) under Rule 1.5 states that “the time limitations imposed by the client or by the circumstances” is one of several factors that should be considered.
Given this language it would appear that a surcharge might be appropriate in certain circumstances. Just don’t forget about the other seven factors also listed. For example, believe it or not a few lawyers have played fast and loose with this rule over the years, particularly when it came to adding a surcharge to their fees. They would make their clients aware of the situations where a surcharge would come into play and then they would do what they could to make certain the circumstances that resulted in a surcharge happened as often as they could. For example, they might say that they surcharge any time they have to work in the evening or on a weekend and then they did all they could to make sure that’s when they did most of their work.
Don’t go there. Just because you have a day that spins out of control or agreed to take on more work than you can handle between the hours of 8 and 5 doesn’t mean you get to surcharge a client whose work you couldn’t get to until the weekend. Stated another way, you can’t surcharge for emergencies that are of your own making. Long days come with a decision to practice law, and this too is just the way it is.
That said, if a current or new client comes to you with a true legal emergency that requires you to drop everything and this client understands that he is asking for expedited and prioritized service, well that’s a different situation. Here a surcharge may very well be reasonable and appropriate. Sometimes clients truly do have a need to be moved to the front of the line and they are willing to pay for the service. Does this mean the surcharge can be whatever you can get the client to agree to and the sky’s the limit? Absolutely not! Again, remember that Rule 1.5 (a) sets forth a total of eight factors to be considered in the determination of what reasonable is and none of them say anything along the lines of if some fool agrees to a ridiculously high fee that fact alone will make the fee reasonable. Think about it. If your fees are ever questioned, discipline counsel is going to review your fee practices from his or her objective belief as to what the eight factors of reasonableness means. Consider yourself forewarned.
Here’s where I come out on this topic. It would seem that it is reasonable for a lawyer to add a surcharge to a fee if the client is made aware of the circumstances that could or have given rise to the need for a surcharge and the client agrees to the surcharge in advance. Further, the circumstances giving rise to the surcharge must be something beyond the circumstances that ordinarily come into play in any type of legal matter and nothing about these circumstances can be of the lawyers own making. Finally, I have no idea where to draw the line in terms of saying a 20% surcharge is reasonable, but a 200% surcharge isn’t. All I can say is there may be a circumstance where 20% isn’t and a different circumstance where 200% is. This is where the eight factors of Rule 1.5 really come into play.
Now, one last item. If any of you happen to know a good plumber who charges a reasonable rate for after-hours work, can you let me know? I’d sure appreciate it because the guy who helped me out that Thanksgiving years ago was a real piece of work. He even left with a few of my own tools and I’m not kidding.
Hopefully you get this last takeaway. Client memories can be long and they often share their stories, just like I have here. You really don’t want to be remembered as that lawyer whose fees are unreasonable, do you? Here’s a thought. A good business practice might be to always keep the eight factors of Rule 1.5 in mind whenever you are reviewing and setting fees for any and all clients. Had that plumber done something similar all those years ago, perhaps the story I have repeatedly told might have been something quite different.
All opinions, advice, and experiences of guest bloggers/columnists are those of the author and do not necessarily reflect the opinions, practices or experiences of Solo Practice University®.