UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 93-12
A client, who operates his own business and is educated, retains an attorney in a domestic relations case and pays a $1,000 retainer fee. The attorney and client sign a contract which provides, among other things, that the retainer fee is non-refundable and sets forth the billing rate of the attorney which is to be charged against the retainer until it is exhausted at which time subsequent bills would be sent to the client at periodic intervals with payment due upon receipt. The attorney confers with client and prepares pleadings on behalf of the client. In this particular case it was appropriate for the attorney to verify the pleadings prior to filing; however, the attorney was unable to contact the client and the pleadings were never verified or filed. Several weeks later the client advised the attorney that he did not wish to pursue the matter and demanded a refund. The client was willing for the attorney to retain a pro-rata fee based upon the actual time expended. This fee amounted to a small fraction of the total retainer fee based upon the hourly rate.
Issue:
Is the attorney ethically obligated to return the unused portion of the non-refundable retainer fee?
Summary:
If the non-refundable retainer fee is reasonable, then the attorney may retain any unused portion of the non-refundable retainer after the termination of representation.
Opinion:
A critical fact is that the parties agreed that the money paid to the lawyer was a non-refundable retainer. Rule 1.16(d) expressly permits an attorney to retain a reasonable non- refundable retainer after the termination of a representation. Therefore, provided the $1,000 is a reasonable amount, the attorney may retain the unused portion of the nonrefundable retainer.
The comment to S.C. Rule 1.5 states that a non-refundable retainer may be retained if it is reasonable under the factors set forth in Rule 1.5(a). These factors are:
1. The time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal services 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 performing the services; 8. Whether the fee is fixed or contingent.
The factors set out herein above are not necessarily inclusive. Other factors may be relevant in determining the reasonableness of an attorney's fees. A determination of the reasonableness of attorney fees is, by necessity, a very fact specific inquiry. In addition, many of the above factors are subjective in nature and do not lend themselves to a definite answer. Every attorney is under an ethical obligation to charge reasonable fees. Thus, every attorney must make his or her own analysis of the reasonableness of every fee charged.