Multistate Professional Responsibility Examination (MPRE)The Client-Lawyer RelationshipEasy
A lawyer represents a client in a complex business transaction. The client is a sophisticated businesswoman who clearly understands the legal implications of the transaction. The lawyer's written fee agreement specifies an hourly rate of $500. After the transaction is successfully completed, the lawyer, impressed by the client's business acumen, decides to bill the client at a reduced rate of $300 per hour, resulting in a significantly lower total fee than initially agreed. Is the lawyer's decision to charge a lower fee ethically permissible?
- AYes, because a lawyer may always charge a fee lower than what is reasonable or agreed upon.
- BNo, because charging less than the agreed-upon rate could be seen as an impermissible inducement for future business.
- CNo, because the lawyer must adhere strictly to the terms of the written fee agreement.
- DYes, provided the client agrees to the reduced fee, as it benefits the client.
Show answer & explanationAnswer & explanation
Correct answer: A. Yes, because a lawyer may always charge a fee lower than what is reasonable or agreed upon.
While fees must be reasonable and generally adhered to, a lawyer is permitted to charge a lower fee than initially agreed or than market rate. The ethical rules primarily focus on preventing excessive fees, not on preventing lawyers from charging less.
Why the other options are wrong
- B. Reducing a fee is generally considered a benefit to the client, not an impermissible inducement unless it creates other ethical issues (e.g., conflict of interest).
- C. While strict adherence is generally good, reducing a fee to the client's benefit is not an ethical violation.
- D. Client agreement is not necessary for a fee reduction, although it would be welcome. The lawyer can unilaterally decide to charge less.
Reasonableness of Fees (Lower Than Market)
A lawyer is ethically permitted to charge a fee that is lower than the market rate or lower than an initially agreed-upon higher rate, as the ethical rules primarily prohibit excessive fees, not reduced fees.
- Fees must not be 'unreasonable' or 'excessive'.
- Charging less is generally not an ethical issue.
- Client benefits from reduced fees.
Memory trick: Fair Fee is Floor, Not Ceiling; Less is Usually Fine.