The disciplinary rules are unambiguous: both ABA Model Rule of Professional Conduct and New York Rule 1.5(d) flatly prohibit a lawyer from charging a contingency fee in a criminal case. Yet a contingent fee is perfectly acceptable in a tort case; a class action lawsuit; a real estate squabble; defense of a civil suit; a hostile takeover; and just about everything else (except a matrimonial action).
So those of us who labor in the vineyard of criminal law are forced to ask: “Why?” And since the prohibition is based on legal ethics, we might further ask: “Are we less ethical than our partners in trying to obtain a bigger paycheck at day’s end by making our fee contingent on the outcome?” Compared to the civil practitioner down the hall, would we be ethically deficient because our client’s freedom may be at stake, whereas their civil client has only their financial future at stake? More to the point, if I charge a defendant a flat fee of $50,000 plus an additional $50,000 if he is acquitted (or not sentenced to jail), are the ethics rules suggesting that I’m going to suborn perjury from witnesses to get the extra $50K?
Maybe. The prohibition against contingency fees in criminal cases rests on several rationales, all discussed in Professor Roy Simon’s invaluable treatise, Simon’s New York Rules of Professional Conduct (Thomson Reuters). First, criminal clients are simply more vulnerable because so much is on the line. Second, the prohibition “removes the [lawyer’s] temptation” to win at any cost, “even if that means using false evidence, perjured testimony, or other improper means to obtain a fee contingent on an acquittal.” This disturbing premise can also be found in the commentary to the ABA Criminal Justice Standards for the Defense Function, at 4-3.3—in a criminal case the “stakes are high, and thus the danger of abuse resulting from a contingent fee is especially great.”
Judges have joined the chorus. In Garguilio v. Heath, 293 F.R.D. 146 (E.D.N.Y. 2013) aff’d, 586 Fed. Appx. 764 (2d Cir. 2014), which considered whether a “bonus” to be paid to a criminal defense lawyer upon an acquittal led to ineffective assistance of counsel, Judge Jack Weinstein observed that bonuses for acquittal “violate public policy since they may induce counsel to cross the line of propriety in matters such as inducing perjury or tampering with evidence.” Third, according to Simon, a contingent fee agreement incentivizes the defense lawyer to persuade the client to go to trial, even in the face of an objectively lenient plea deal, because a guilty plea could leave the defense lawyer with no fee at all.
Finally, former EC 2-20, states that public policy condemns contingency fee agreements in criminal cases because a favorable result will not yield a fund from which the lawyer can be paid—that is, if the defendant wins at trial he won’t receive money, whereas a plaintiff in a personal injury case will receive a pot of money out of which to pay her lawyer.
As Simon politely puts it, “[a]ll of these arguments … are open to debate.” Taking them one by one, he explains, first, that those criminal defendants who can afford private lawyers already pay enormous fees to counsel—but because the rules prohibit “excessive” fees (Rule 1.5), there is already in place a sufficient control of contingency fees. As to the second argument, Simon asks, “if contingent fees would cause lawyers to use illegal methods in criminal cases, wouldn’t they also have that effect in civil cases?” On the third, Simon reminds us that contingency fees need not be all or nothing, meaning a fee could be X if a defendant is sentenced to 10 years or less, X+ if the sentence is five years of less, and so on. And as to the fourth, it is no different than civil cases where, for example, a lawyer can be paid on a contingent basis if she obtains an injunction, i.e., a non-monetary result.
Assistance of Counsel
The Second Circuit has been unequivocal: “Without doubt, trial counsel’s acceptance of the contingency fee agreement for representing a criminal defendant is highly unethical and deserves the strongest condemnation.” Winkler v. Keane, 7 F.3d 304, 308 (2d Cir. 1993), cert. den., 514 U.S. 1024 (1995). Thus, contingency fees create a conflict bearing on a defendant’s Sixth Amendment right to effective assistance of counsel. The New York Court of Appeals summed it up thusly:
The conflict between a client’s interest in effective assistance of counsel and an attorney’s financial inducements to satisfy the contingent fee qualifying terms creates an atmosphere for risky compromise of the client’s best interests on the gamble that the contingency fee might produce a bonus to the attorney rather than justice to the client.
People v. Winkler, 71 N.Y.2d 592 (1988).
Federal courts have held that a contingency fee arrangement constitutes an “actual conflict,” and that “[s]uch an agreement is a paradigmatic example of a conflict of interest.” Garguilio, 586 Fed. Appx. 765. As articulated by the Second Circuit in Winkler v. Keane:
Winkler argues that the contingency fee created an actual conflict of interest because Winkler’s interests in effective representation were pitted against trial counsel’s monetary interest. We agree … trial counsel had a disincentive to seek a plea agreement, or to put forth mitigating defenses that would result in conviction of a lesser included offense.
Although the conflict is created by a contingency fee arrangement, the agreement is not a per se violation of a defendant’s Sixth Amendment right to counsel, and a defendant seeking to set aside his conviction must also show that he was adversely and prejudicially affected by the arrangement. Keane.
Real World Questions
So we have the Rules, the ABA Defense Function Standards, and the courts’ condemnation of contingency fee arrangements. But let’s be pragmatic and consider real world scenarios. You represent a client on an hourly basis. Or even a flat fee. As such, flat fees in criminal cases are fine—a defendant’s agreement to pay one amount if there is no trial, and an additional amount if there is a trial, is “not a contingent fee but merely an attempt to relate the fee to the time and services involved.” Commentary to Standards for the Defense Function, at 4-3.3.
What if your client runs out of money mid-case, and a loan from a relative won’t be forthcoming if your client looks like he is headed to jail? Or what if your client’s money is all tied up—possibly subject to forfeiture—so there’s an implied, unstated, never articulated, de facto understanding that you basically won’t be paid unless you keep your client out of jail. Have you created a contingency fee arrangement that violates the Rules? (A contingent fee for a return of forfeited monies, by the way, is not a problem as it is a civil action. Nassau County Ethics Opinion 90-12.)
Or what if your implicit understanding is a little different? Maybe it is that you will get “something extra” if you are successful. If a bonus is contingent upon an outcome, it is treated no differently than a contingency fee and is verboten. Garguilio. Is it different, however, if the bonus comes without having been the subject of a contractual understanding between attorney and client? What if the bonus comes in the form of a mink coat for your wife, a block of stock, or a brand new Mercedes? Must you give it back? One could well argue that all of the concerns raised by a contingency fee or bonus arrangement simply don’t apply if it is not part of a firm agreement with the client. Or even consider a client who says, when his money runs out, that “I’m in a position to send you a stream of well-heeled referrals who will definitely seek your legal services. Remember, I pay my debts!” Should this be a problem?
I don’t have answers to all these questions. The thinking behind the Rules presupposes that a criminal defense lawyer will not serve his client with propriety if there is a contingency fee arrangement, i.e., the lawyer will possibly advise against a plea which might be his client’s objectively best option if his fee depends upon a complete acquittal. And even if one were to consider the courts’ holdings that such an arrangement constitutes an actual conflict, it does not mean that a defendant received ineffective assistance of counsel. Bear in mind, the bar against contingency fees in criminal cases is an ethics rule, not a criminal “ineffective assistance” rule. Edward Bennett Williams, probably the greatest criminal lawyer of his day, theoretically could have given his client the absolutely best trial defense possible, having first advised his client against a guilty plea in the case (as would have 100 of the 100 best defense lawyers), but he still would have violated the ethics rules if his fee was dependent on his client’s total exoneration.
Should the Rules assume that a criminal defense lawyer will act less honorably than her civil counterparts merely because her fee is contingent upon an outcome, or because her client is more vulnerable? Clearly, the criminal client is more vulnerable than the typical client, as is the divorce client. But perhaps there’s a way to deal with it. Maybe contingency fees should be permitted—which may, indeed, help a client who might benefit from the ability to receive contingency fee representation—conditioned upon the client consulting with an independent attorney who can counsel the “vulnerable” client on the benefits or disadvantages of being represented by a lawyer who agrees to, or even proposes, a contingency or partial contingency representation. Somewhat like an independent attorney appointed by the court for a Curcio hearing, to assure the court that the defendant has been properly advised concerning the danger of his lawyer representing him, despite a (waivable) conflict. U.S. v Curcio, 680 F. 2d 882 (2d Cir. 1982).
We live in a time where legal fees have skyrocketed. Worthwhile, and ethical, alternatives to mandatory hourly or flat fee structures deserve deeper consideration.
Joel Cohen, a former prosecutor, is of counsel at Stroock & Stroock & Lavan. He is an adjunct professor at Fordham Law School. Dale J. Degenshein, special counsel at Stroock, assisted in the preparation of this article.