Nonrefundable Retainers
Adopted: January 13, 1989
Opinion rules that a lawyer may charge nonrefundable retainers that are reasonable in amount.
Inquiry:
May a law firm draft and use a standard fee agreement to be signed by all clients which includes a clause requiring the client to pay a nonrefundable retainer in an amount to be determined in each case by the supervising attorney? Is it necessary to distinguish between a retainer and an advance payment or deposit of legal fees?
Opinion:
A lawyer may charge and collect a nonrefundable retainer as consideration for the exclusive use of the lawyer's services in regard to a particular matter or matters. Rule 10.3, comment. Like all legal fees, a retainer must be reasonable in amount. Rule 2.6(a). Because it is an unusual fee arrangement and one likely to be misunderstood, the lawyer should be careful to offer the client an adequate explanation of the agreement prior to its execution.
Retainers and advance payments should be carefully distinguished. In its truest sense, a retainer is money to which an attorney is immediately entitled and should not be placed in the attorney's trust account. A "retainer" which is actually a deposit by the client of an advance payment of a fee to be billed on an hourly basis is not a payment to which the attorney is immediately entitled. It is really a security deposit and should be placed in the trust account. As the attorney earns the fee, the funds should be withdrawn from the account.