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By: Greg Fayard
Joe wants to hire Bill, a California lawyer, to defend a breach of contract case. Bill agrees to defend Joe but will only take a $10,000 non-refundable retainer. Is this legal? No.
Under Rule 1.5(d) of the Rules of Professional Conduct that govern California lawyers, non-refundable retainers are now permitted in a very limited circumstance—the rare “true retainer” situation. The “true retainer” is from an earlier time when there were fewer lawyers and a client needed to secure a lawyer’s services for a specified time in a specific matter.
True retainers are most often used by some lawyers who contract as general counsel for their clients. For example, in exchange for being on call 24/7 to handle accident emergencies for a trucking company, a true retainer arrangement is permissible where the trucking company would pay the lawyer, say $5,000, at the first of the month to secure the lawyer’s availability for the upcoming month. This “true retainer” ensures the lawyer’s immediate availability for that month.
In this situation, non-refundable legal fees are permitted so long as disclosed and agreed to in writing by the client. Otherwise, in our example, Bill cannot accept a non-refundable retainer to defend Joe’s breach of contract case.
If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.