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The Cautious Client and the “Non-Refundable Fee”

A few years ago, before my practice began to focus on mediation, arbitration, and collaborative law, a potential client visited my office to ask me to consider taking on a fairly complex matter involving numerous parties, claims, and counterclaims, litigation arising in the Alabama courts which might have expanded to other states or forums. The person’s former counsel had been forced to withdraw because of a conflict which arose after the commencement of the litigation.

I explained my hourly fee, the necessity of a fee agreement, and that if retained, I would mail or email a monthly statement itemizing services rendered and costs incurred, with payment due immediately. But the potential client objected. An open-ended fee arrangement was out of the question. The client needed to know precisely the total cost of the anticipated representation.

I explained that in Alabama, attorneys are not allowed to ask for a “nonrefundable retainer” or “flat fee” when representing clients in litigation. The court cases on this issue make it clear that courts see no distinction between these terms. Both refer to a nonrefundable retainer; both run afoul of one of the Alabama Rules of Professional Conduct. See Alabama State Bar v. Hallett, 26 So. 3d 1127 (Ala. 2009) (“It is well settled that nonrefundable retainers are prohibited. See Taylor v. Alabama State BarThe Cautious Client and the “Non-Refundable Fee”, 587 So.2d 1205 (Ala.1991); Rule 1.16(d), Ala. R. Prof. Cond. (“Upon termination of representation, a lawyer shall ․ [sic] refund[ ] any advance payment of fee that has not been earned .”); J. Anthony McLain, Opinions of General Counsel, “Lawyers’ Trust Account Obligations with Regard to Retainers and Set Fees,” 70 Ala. Law. 65, 66 (January 2009) (“all retainers and fees are refundable to the extent that they have not yet been earned”).

This potential client left my office without any commitment and did not call back. I don’t know what happened with the case or whether the person retained representation. But the point here is that if you need an attorney to represent you in litigation, you should not expect that attorney to quote a “flat fee” or “nonrefundable retainer.” Do expect regular, itemized billing, reasonable expenses and billable hours, and expect to pay the attorney’s hourly rate until the litigation has concluded.

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