The Closing Statement

The Closing Statement

The contingent fee rule ends with a duty that arises only after the work is done: "Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination."¹ The written fee agreement fixes the percentages, the expenses, and the order of their deduction at the start of the representation. The closing statement shows, at the end, how those terms turned into dollars. The agreement tells the client what the lawyer will do with a recovery; the statement tells the client what the lawyer did.

The sentence imposes two duties, and only the second depends on a recovery. The first applies in every contingent fee matter: the statement must state the outcome, meaning how the matter actually ended, whether by settlement, by judgment, or by a loss with nothing collected. The second applies only "if there is a recovery," and it adds two items. One is the remittance, the amount the client actually receives. The other is the method of its determination, the sequence of steps that carried the lawyer from the gross recovery down to that amount.² Taken together, the rule requires a full accounting to the client when the matter concludes.³ The conditional clause attaches to the remittance layer alone. A lawyer who reads it as excusing the whole statement whenever the client collects nothing has misread the sentence.

The outcome layer exists for the client whose matter ends without money. When nothing is recovered there is no remittance to compute and nothing to check against the agreement, so a lawyer can easily let the representation fade out without a final word. The rule closes that gap by requiring a written statement of the outcome in every contingent fee matter. The client is told in writing how the matter ended and does not have to infer it from silence.

The remittance layer protects a client who cannot verify the payout alone. What the client receives depends on which stage percentage applies to the way the matter ended, and on whether expenses were deducted before or after the fee was calculated. The lawyer holds the money and does the arithmetic. A client handed only a final number must take it on trust. The statement removes that need by exposing the calculation, so the client can set the lawyer's figures beside the written agreement and see whether the two match. That comparison completes the safeguard the agreement began, because terms fixed at the outset mean little if the client cannot see them applied at the end.⁴

Because the rule calls for a written statement, what the lawyer owes is a document. An oral explanation does not satisfy it, however thorough. Nor does a bare check, which displays the lawyer's conclusion and hides the steps behind it. The agreement had to be written for the same reason: a document persists, can be examined later, and can be compared line by line with the agreed terms, while a telephone explanation can only be remembered.

A conforming statement in that matter would have made the discrepancy impossible to hide, because it would have laid out each step.

The fourth step is where the earlier terms return. Suppose a statement applies 40 percent to a matter that settled before suit, when the agreement stated 30 percent for settlement. The lawyer may have met the formal duty to deliver a statement, yet the statement displays a fee the agreement does not support. The closing statement requirement governs what the lawyer must show; the agreement governs what the figures must be.

The requirement is not peculiar to the Model Rule. A state rule quoted in a reported opinion ends its contingent fee subdivision with the same sentence, nearly word for word: a written statement of the outcome and, if there is a recovery, a showing of the remittance and the method of its determination.⁵ The two-layer analysis above therefore carries over to a rule worded this way.