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2004 Formal Ethics Opinion 8

October 21, 2004

Advertising Contingent Fees

Opinion rules that unless the lawyer invariably makes the repayment of costs advanced contingent upon the outcome of each matter, an advertisement for legal services that states that there is no fee unless there is a recovery must also state that costs advanced must be repaid at the conclusion of the matter.

Inquiry #1:

Lawyers who advertise that they will represent clients in personal injury matters on a contingent fee basis frequently include statements such as the following in their legal advertisements:

No fee unless you collect.
No fee unless we recover money for you.
No recovery-no fee.
No fee unless we win.

Are advertisements containing statements of this nature false or misleading, in violation of Rule 7.1 of the Rules of Professional Conduct, because the advertisements do not also state that a client may have to repay court costs and expenses of litigation advanced on the client's behalf by the lawyer even if there is no recovery on the client's claim?

Opinion #1:

Yes, these statements are misleading if the lawyer who is advertising his or her services does not make the repayment of court costs and expenses of litigation contingent upon the outcome of the matter in every contingent fee representation that he or she undertakes.

Consumers of legal services may be mislead by the statements such as those set forth above because they do not distinguish between payment of legal fees and the repayment of costs advanced by the lawyer on the client's behalf. Although Rule 1.8(e) permits a lawyer to "advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter," the lawyer has the option of requiring the client to reimburse the lawyer for costs advanced even if there is no recovery. Therefore, unless the lawyer always waives the costs that he or she advances for clients in contingent fee matters, it is misleading to state in an advertisement that there is "no fee unless you recover." If the lawyer does not invariably waive the costs advanced, the advertisement must state that the client may be required to repay the costs advanced regardless of success of the matter.

Inquiry #2:

May a lawyer advertise "no attorney's fee unless we win" in lieu of including a statement in the advertisement that specifies that costs may be subject to repayment?

Opinion #2:

Yes, the statement is not misleading because it is limited to the obligation to pay the lawyer's fee which is contingent upon the outcome of a matter.

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