Unfairly Shackling Client On Key Decisions And Unconscionable Arrangements Likely Will Be Under Scrutiny.
Although it has not yet been adopted and remains open for public comment, the California State Bar’s Standing Committee on Professional Responsibility and Conduct has issued Formal Opinion Interim No. 20-0005. The proposed opinion addresses when “conversion clauses” in California contingency fee agreements are ethically permissible. These clauses convert a contingency arrangement to an hourly-rate, lodestar, or percentage-of-settlement arrangement. In short, a conversion clause may raise ethical concerns if it interferes with a client’s absolute right to discharge an attorney, the client’s right to control the objectives of the representation, or requires the client to accept an unconscionable alternative fee arrangement. The opinion also emphasizes the client’s sophistication and suggests that the attorney seeking conversion advise the client to consult independent counsel before agreeing to the new arrangement.