My low hourly rate is charged to you, the hiring attorney. 

For attorneys who bill their clients by the hour, you may in turn bill your client for my legal services in one of two ways:

(1) Method One:   Bill the client directly for my hourly rate, then charge the client your normal rate for the time you spend reviewing or otherwise supervising my work, or

(2) Method Two:   Add a reasonable surcharge to my hourly rate, and bill the client for that amount.

Under Method One, you recoup all of your costs for using my services, you save time, and the client saves money.

Under Method Two, all of the advantages of Method One apply, plus your profit is higher.  

Because the provision of legal services is a legitimate profit center for any private law practice, the addition of a reasonable surcharge does not run afoul of the Rules of Professional Conduct.  

Questions concerning surcharges, disclosure, and billing are addressed below.


Q. Can I add a surcharge for the hourly rate billed to me by a contract attorney?

Yes, provided that the fee follows the overarching requirement of Rule of Professional Conduct 1.5 (SCR 3.130(1.5)) that all attorney's fees be reasonable.  

SCR 3.130(1.5)(e), in relevant part, allows lawyers to divide fees where

  • (1) The division is in proportion to the services performed by each lawyer [...], and
  • (2) The client is advised of and does not object to the participation of all the lawyers involved; and
  • (3) The total fee is reasonable

SCR 3.130(1.5)(e)(1)-(3).

Thus, using a client disclosure form of the type that can be found here, you may bill your client for the use of my services at a reasonable rate, using the ordinary factors of SCR 3.130(1.5)(a). For example, you may bill for my work at the rate of a junior associate, senior associate, or at your own rate, depending on the amount of work you perform in relation to the legal services rendered.    

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Q. Do I have to disclose to my client how the legal fee will be divided between the attorneys?

No.   Comment 4 to SCR 3.130(1.5) states that the rule "does not require disclosure to the client of the share that each lawyer is to receive."  SCR 3.130(1.5), Cmt. 4 [emphasis supplied].
The client should, however, give informed consent to (1) the working arrangement and (2) the overall fee.   Both can be easily explained using a straightfoward disclosure form like the one found here.


Q. Is the contract attorney's work properly billed as a "legal service" or as an "expense"?

If a surcharge is added, the contract attorney's work should be billed as a "legal service" rather than an expense.  While neither the Kentucky Supreme Court nor the KBA has issued a formal opinion on precisely this matter, the American Bar Association has advised that

a lawyer may, under the Model Rules, add a surcharge on amounts paid to a contract lawyer when services provided by the contract lawyer are billed as legal services. This is true whether the use and role of the contract lawyer are or are not disclosed to the client. The addition of a surcharge above cost does not require disclosure to the client in this circumstance, even when communication about fees is required under Rule 1.5(b). If the costs associated with contracting counsel's services are billed as an expense, they should not be greater than the actual cost incurred, plus those costs that are associated directly with the provision of services, unless there has been a specific agreement with the client otherwise.

ABA Formal Opinion 00-420 at 5 [emphasis supplied].


George Schuhmann, Attorney-at-Law -- 3107 Lowell Avenue, Louisville, KY  40205 -- (502) 439-3766

Disclaimer: Nothing on this website should be construed as legal advice or as creating an attorney-client relationship.

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