Can Lawyers Add Surcharges to Their Bills?

//Can Lawyers Add Surcharges to Their Bills?

Can Lawyers Add Surcharges to Their Bills?

Two quick stories. Years ago, I had a plumbing emergency. The short version is I discovered a broken water line in my kitchen on a Thanksgiving eve. That line needed to be repaired immediately or Thanksgiving was going to be a bust. Trust me, that service call cost me.  My second story is about packages. Now that all of our kids are grown and living throughout the US, my wife sends more packages than she used to. I’m often tasked with the responsibility of boxing things 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 to wherever they’re going on time. Heaven forbid something arrives a day or so late.

These two stories describe common situations where we all know going in that we’re going to have to pay a little more than we would under normal circumstances. A plumber’s rates are higher for holiday emergencies and shipping rates are higher for expedited service. That’s just the way it is. Given this reality, I’m led to ask this question. Is it ethically permissible for a lawyer to add a surcharge to a client bill 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, this rule states a lawyer’s fee is to be reasonable and the basis or rate of the fee and expenses are to be communicated to the client. So, if you tell your clients in advance that your practice is to add a 10% surcharge to your fee for work you have to do on weekends, is that reasonable? Perhaps; but here’s the problem. Where’s the line? If 10% is reasonable, is 50%? How about 200%?

Rule 1.5 also sets forth factors a lawyer is to consider when trying to determine whether a particular fee is reasonable. 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 the factors set forth. Given this language it would appear that a surcharge might be appropriate in certain circumstances, as long as the other seven factors listed aren’t overlooked, which leads me to another story.

From time to time I still come across situations where lawyers have played fast and loose with Rule 1.5. One memorable story concerns a lawyer who apparently found the idea of surcharges as an opportunity not to be missed. Unfortunately for her, she took it the extreme. She decided to let all her clients know she surcharged for time spent working evenings and on weekends and then she made sure the evenings and weekends were the only time she worked!

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, a surcharge for an emergency that was of your own making is an unreasonable surcharge. Long days come with a decision to practice law. This too is just the way it is.

Of course, 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 matter entirely. 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 is reasonable. 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 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 already has 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.

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, only they will name names. You really don’t want to be known as that lawyer who always tries to take his clients to the cleaners. 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. Seems like a no brainer if you ask me.

By |2018-06-06T11:17:50-06:00June 6th, 2018|Managing Your Practice|0 Comments

Since 1998, Mark Bassingthwaighte, Esq. has been a Risk Manager with ALPS, an attorney’s professional liability insurance carrier. In his tenure with the company, Mr. Bassingthwaighte has conducted over 1200 law firm risk management assessment visits, presented over 400 continuing legal education seminars throughout the United States, and written extensively on risk management, ethics, and technology. Mr. Bassingthwaighte is a member of the State Bar of Montana as well as the American Bar Association where he currently sits on the ABA Center for Professional Responsibility’s Conference Planning Committee. He received his J.D. from Drake University Law School.