Sorted by Commenter - Ethics - State of California

RRC – Rule 1.5 [4-200]
E-mails, etc. – Revised (6/1/2010)
nonrefundable in the parties' agreement. In other words, the actual treatment of the funds
trumps the language of the retainer agreement.
In an earlier case (Matthew v. State Bar, 49 Cal. 3d 784 (1989)), an attorney was retained
to handle a real estate fraud matter. The attorney required his client to provide a
nonrefundable retainer "to ensure that his client would 'work with him on the case.' " The
fee agreement required $5,000 up front, with a $10,000 ceiling on fees, and stated that the
attorney would "bill for his time at the rate of $70 per hour until the bill reached $5,000." (49
Cal. 3d at 787.) The attorney represented the client for seven months, and the client paid
more than $6,000 in attorneys fees during that time. The attorney kept no time records and
provided no billing statements, but he estimated he spent 32 to 40 hours on the case. After
unsuccessfully seeking a refund, the client took the attorney to arbitration to recover
unearned fees. The arbitration panel found in the client's favor, but the attorney still did not
refund the money.
In another fee agreement, the same attorney provided for a $1,000 nonrefundable retainer.
After the client terminated that representation, a dispute arose as to unearned fees. The
attorney failed to perform needed work, provided no billing statements, was unavailable,
and "admitted that he was not diligent in this matter and that he was unable to work on the
matter in a timely fashion due to his caseload." (49 Cal. 3d at 789.)
The California Supreme Court emphasized the seriousness of the attorney's misconduct,
identifying failure to refund "unearned fees as serious misconduct warranting periods of
actual suspension, and in cases of habitual misconduct, disbarment." (49 Cal. 3d at 791.) In
addition to being disciplined, the attorney was required to return all unearned fees,
notwithstanding the nonrefundable language in the retainer agreements (49 Cal. 3d at 792).
Proper Language
To be valid, an agreement calling for a true retainer should show that the client is
purchasing something valuable. For example, the agreement may refer to specific blocks of
time when a specific attorney will be available, or state that the payment guarantees the
attorney will refrain from taking adverse clients. The agreement might also state that the
payment secures the attorney's availability for a future engagement.
In addition to having a proper written agreement, the attorney also should be prepared to
demonstrate that he or she has provided real value. For the average attorney, a true
retainer is unlikely to be appropriate unless the lawyer is setting aside specific blocks of
time for the client. A highly experienced or specialized attorney may justify a true retainer
more easily, as long as the attorney arranges to be available and the retainer agreement
reflects that. It may be appropriate to outline the attorney's specialized reputation or
experience in the agreement to demonstrate the value purchased by the client.
In drafting an effective true retainer, attorneys should state as specifically as possible the
time that the client is buying and what the attorney will do with that time. The attorney may
agree to sit in the office and wait for the client's weekly phone calls between 10 a.m. and
noon on Tuesdays. In this situation, office records should demonstrate that the attorney
was available (perhaps by entering data in a time log).
True retainer funds should be placed in an attorney's general account and not in a trust
account. If the attorney places funds in a trust account and bills against them, the
RRC - 4-200 [1-5] - E-mails, etc. - REV (06-01-10).doc -128-
Printed: June 2, 2010