Proposed Formal Opinion Interim No. 20-0005 (Conversion Clauses in Contingent Fee Agreements)

The State Bar seeks public comment on Proposed Formal Opinion Interim No. 20-0005 (Conversion Clauses in Contingent Fee Agreements).

Deadline: December 21, 2026, 11:59 p.m. (90 days)

Direct comments to

Comments should be submitted using the online Public Comment Form. The online form allows you to input your comments directly and can also be used to upload your comment letter and/or other attachments.

If you have any problems viewing information regarding public comment opportunities (e.g., links to documents are broken) or submitting a public comment via the online form, please let us know by sending an email to coprac@calbar.ca.gov. In addition to accepting comments via the online form, the State Bar accepts public comments via email; you may email your public comment to coprac@calbar.ca.gov.

Background

The State Bar Standing Committee on Professional Responsibility and Conduct (COPRAC) is charged with the task of issuing advisory opinions on the ethical propriety of hypothetical attorney conduct. In accordance with applicable State Bar policy and procedure, the committee shall publish proposed formal opinions for public comment (See, State Bar Board of Trustee Resolutions July 1979 and December 2004. See also, Board of Trustee Resolution November 2016).

Discussion/proposal

Proposed Formal Opinion Interim No. 20-0005 considers:

Under what circumstances, if any, are “conversion clauses” in contingency fee agreements ethically permissible?

The opinion interprets rules 1.2, 1.5, and 1.16 of the Rules of Professional Conduct of the State Bar of California.

The opinion digest states: “A conversion clause—a provision in a contingent fee agreement that, upon a specified triggering event, converts the contingent fee to an alternate fee, such as an hourly rate, a lodestar amount, or a percentage of a settlement offer—is not prohibited per se under the Rules of Professional Conduct. However, such clauses warrant careful consideration, because they carry a heightened risk of resulting in an unconscionable fee or impairing rights the rules reserve to the client. A conversion clause is ethically impermissible where it burdens the client’s absolute right to discharge counsel, where it interferes with the client’s rights to control the objectives of the representation, or where the alternate fee is unconscionable. Whether a particular conversion clause crosses these lines depends on the facts and circumstances, including the sophistication of the client, the client’s informed written consent, the nature and timing of the triggering event and alternate fee, and whether the alternate fee is unconscionable.”

At its September 11, 2026, meeting, and in accordance with their procedures, COPRAC tentatively approved Proposed Formal Opinion Interim No. 20-0005 for a 90-day public comment distribution. This is the third public comment period for this opinion. A prior version of the opinion was issued for public comment with a September 3, 2024, comment deadline. This prior version advised that conversion clauses are never ethically permitted.

The revised version of the opinion, as issued for this 90-day public comment period, advises that conversion clauses warrant heightened caution and cannot interfere with a client’s right to discharge counsel or result in an unconscionable fee, but it does not conclude that conversion clauses are always ethically impermissible.

Fiscal/personnel impact

None

Background materials

Proposed Formal Opinion Interim No. 20-0005

Source

State Bar Standing Committee on Professional Responsibility and Conduct

Deadline

December 21, 2026, 11:59 p.m.

Additional Searches