95-4.

• Case Date: March 17, 1995
• Court: Alaska

Alaska Ethics Opinion 1995. 95-4. Ethics Opinion No. 95-4 Standards Governing Charges to Clients for Disbursements and Other Expenses.In a 1993 opinion, the American Bar Association noted that the Rules of Professional Conduct "provide no specific guidance on the issue of how much a lawyer may charge a client for costs incurred over and above her fee." Formal Ethics Opinion 93-379 at 8. In the Committee's judgment, such guidance is necessary. Lawyers commonly bill clients for items labeled as disbursements, and there is a clear potential for honest misunderstandings concerning such charges, as well as the possibility of overreaching by attorneys practicing in an increasingly competitive and demanding business environment. Though this issue is among those addressed in Opinion 93-379, the Committee views the ABA's treatment of the issue as incomplete. We are, therefore, issuing an opinion setting forth the standards to be applied to these charges in Alaska. It is permissible for a lawyer to require clients to pay for actual out-of-pocket costs. In addition, clients may be charged a reasonable amount for in-house services, such as photocopying. Charges for certain overhead items are also permitted. With regard to all of these charges, the lawyer is obligated to make explicit disclosures to the client of (a) the client's liability for the charges; and (b) the basis on which the charges will be computed. In reaching this opinion, we have been guided by two principles. First, "all transactions between client and lawyer should be fair and reasonable to the client." Comment, Alaska Rule of Professional Conduct ("ARPC") 1.8. Second, the standards which govern reasonableness and disclosures with regard to fees for professional services should also be applied in the context of non-fee expense items. This means that such charges should not be unreasonably high in light of the nature of the service and the amount customarily charged in the community. See, ARPC 1.5(a). It also means that in a new lawyer-client relationship, the fact that the charge will be made, as well as its basis, must be communicated to the client, preferably, in writing, before, or within a reasonable time after, commencing the representation. See, ARPC 1.5(b). The statement that disclosures can be made within a reasonable time after the commencement of representation requires...