Not A Classic Retainer Fee

An Illinois Hearing Board has recommended a suspension of six months in a matter in which an attorney charged excessive fees and accepted loans from an elderly client.

The board rejected the suggestion that the fees were justified as a “classic retainer”

We find nothing in the circumstances of  Respondent’s representation of Jeanne to justify such a large retainer fee.  Respondent admitted he expected Jeanne would need the same type of services in  2010 that he had provided in 2009, i.e., reviewing her will, powers of attorney  and investment statements and meeting with her occasionally at Peace Village.  These services would have involved minimal time, effort and expertise on  Respondent’s part and would not have precluded him from accepting any other  employment. Respondent did not achieve any extraordinary results for Jeanne that  would justify such a large retainer fee nor did his representation require any  special skill or knowledge. Respondent had never charged Jeanne a retainer fee  before and never explained why the retainer fee was ten times greater than the  fees he charged her in 2009 for similar services. Nothing in the record  indicates it was customary to charge a large retainer fee for the basic services  Jeanne needed.

In defense of his collection of the retainer fee,  Respondent testified he viewed it as a “classic” retainer. However, the evidence  does not support his position. “Classic” or “general” retainers become the  property of the attorney when paid and are not to be deposited in a client trust  account. Comment [3B] to Rule of Professional Conduct 1.15(c). Security  retainers, on the other hand, are payments for future services and expenses that  remain the property of the client and must be deposited in a client trust  account. Id. A third type of retainer, an advance payment retainer,  belongs to an attorney upon payment and may not be deposited in a client trust  account, but unlike a classic retainer, any unearned funds must be returned to  the client. IdSee also Dowling v. Chicago Options  Associates, 226 Ill. 2d 277, 286-87, 875 N.E.2d 1012 (2007).

There was no evidence of a verbal or written  agreement between Respondent and Jeanne designating the retainer fee as a  “classic” retainer. Respondent had never charged Jeanne a retainer fee before,  so their prior dealings would not have made Jeanne aware of the nature of the fee. Respondent’s statement of January 23, 2010,  described the fee only as a “Retainer Fee for 2010 Legal Services,” without any  indication the $25,000.00 payment became Respondent’s property once paid.  Respondent’s unilateral decision to deposit the retainer fee in his operating  account is not, by itself, persuasive evidence of a “classic” retainer.

In short, there was no valid reason for Respondent  to charge Jeanne a $25,000.00 retainer fee. Respondent admitted he needed money  and we conclude the retainer fee was motivated entirely by his financial  difficulties. We view Respondent’s testimony that he intended the retainer to  cover years beyond 2010 as not credible and an attempt to justify the retainer  fee after the fact. Accordingly, we find Respondent charged Jeanne an  unreasonable fee in violation of Rule 1.5(a).

The attorney was admitted in 1983 after a twenty-year teaching career. He has no prior discipline. (Mike Frisch)