CHICAGO, May 3, 2023 — The American Bar Association Standing Committee on Ethics and Professional Responsibility released a formal opinion today that examines a lawyer’s ethical obligations for fees paid for legal work to be performed by the lawyer in the future.
Formal Opinion 505 points to the ABA Model Rules of Professional Conduct — and particularly applications of model rules related to fees and safekeeping of others property — to explain how lawyers should handle advance fees paid by individual clients, usually for a single legal matter that will not recur on a regular basis. These matters could include divorce, defense of criminal charges or civil matters not handled on a contingent fee basis.
The opinion notes that a retainer is often conflated with an advance fee, and it says in a footnote the former should not be construed as a “payment for the performance of services, but rather is compensation for the lawyer’s promise of availability … (and) is not an advance deposit against future legal services.”
“Given the rarity and unusual nature of a general retainer, and the fact that very few clients would actually need or benefit from one, the nature of the fee and lawyer’s obligations and client’s benefits under such an agreement must be explained clearly and in detail,” the opinion said.