Bench & Bar March/April 2025

ETHICS CORNER

Finally, you ask if it would be permissible for you to charge for the increased premium cost for your malpractice insurance. At present your policy provides maximum coverage of $5 million. The estate/ trust contain assets substantially above that figure and the cost for higher coverage is more expensive. From an ethics point of view, you should consider ABA Formal Opinion 93-379 (December 6, 1993) regarding: “Billing for Professional Fees, Disbursements and Other Expenses.” While Kentucky’s Ethics Committee has not issued an opinion on this subject, I believe the principles enunciated in ABA 93-379 would be applicable to Kentucky lawyers. The ABA’s Ethics Committee stated: When a client has engaged a lawyer to provide professional services for a fee (whether calculated on the basis of the number of hours expended, a flat fee, a contingent percent age of the amount recovered or otherwise) the client would be justifiably disturbed if the lawyer submitted a bill to the client which included, beyond the professional fee, addi tional charges for general office overhead. In the absence of disclosure to the client in advance of the engagement to the contrary, the client should reasonably expect that the lawyer’s cost in maintaining a library, securing malpractice insurance, renting of office space, purchasing utilities and the like would be subsumed within the charges the lawyer is making for professional services. [emphasis added.] Based on the above, you should not expect the beneficia ries to assume the cost of your personal overhead such as malpractice insurance. However, the additional risks that you have assumed by serving in a dual capacity may be considered as an item in determining the amount of your hourly rate, but not as a part of your overhead expense. CONCLUSION

complexity of the work and the risks that will exist at that time. Your engagement agreement should give your client dollar examples of both approaches and make it clear that you may choose an approach that results in the higher fee. Your choice should be made at the beginning of your dual representation and should be communicated to the beneficiaries. If a probate proceeding is appropriate, then you should disclose the arrangement to the court. After discussing all of this with your client, I suggest you also consider adding a provision in your client’s Will explaining the circumstances of your proposed dual role and your ability to charge for your services. I trust this advice has been of assistance and if you have any ques tions, you will contact me. The author would like to extend his thanks and appreciation to Kendra Foster who reviewed and assisted with the preparation of this opinion. He thanks her for her good guidance.

ABOUT THE AUTHOR SHELDON G. GILMAN recently retired from the active practice of law but remains involved in various law related matters. Gilman received his undergraduate degree from Ohio Univer sity and his law degree from Case Western Reserve University. After graduation from

ENDNOTES 1 ACTEC Commentaries on the Rules of Professional Conduct (March 2023) at page 110. 2 Id. 3 SCR 3.130(1.5a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the follow ing: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers per forming the services; and (8) whether the fee is fixed or contingent. law school Gilman served four years as a member of the U.S. Army’s Judge Advocate General’s Corps with duty assignments at The Office of the Judge Advocate General and The Office of the Secretary of Defense. With regards to lawyer professional responsibility matters, Gilman continues to serve as a member of the Ethics Committee and has been a member of the Ethics Hotline for 30 years and has written more than 800 Hotline Infor mal Opinions and answered more than 500 telephone inquiries. Shelly served as a member of KBA Ethics 2000 Committee which recommended the current revised edition of our Rules in 2009.

Post Calvert , if your client asks you to serve in both capacities you should consider the attendant risks and duties you will be undertaking, and then proceed to counsel your client about other available services; possibly a corporate fiduciary. It would also be wise for you to suggest that your client have separate counsel before giving his written consent for you to perform such services. If your client persists and you decide to acquiesce to your client’s request then you should proceed to explain the method you will use in determining the basis of your fee; that is, if it will be based on an hourly rate as provided by the application of the Rule 1.5(a)’s factors, or instead be based on what is considered a standard fiduciary fee as permit ted by Kentucky law. If you intend to charge the higher of an hourly rate fee or a fiduciary fee then your written explanation should explain both methods for calculating your fee, and explain that at the time of your

client’s death you will choose the spe cific method based on the contemplated

38 march/april 2025