While state ethics rules prohibit lawyers from making payment agreements with clients for a “nonrefundable retainer fee,” an opinion from the New York City Bar Association says an arrangement for a flat, nonrefundable monthly fee is permissible if certain conditions are met.
The city bar’s Opinion 2015-2 cautions lawyers, however, that if they do charge a “reasonable minimum fee” to clients, they may only do so under Rule 1.5(d) of the New York Rules of Professional Conduct if the retainer agreement clearly defines, among other details, how the fees will be calculated and when a lawyer’s work reaches the point where the fee is nonrefundable.
The group said the opinion applies to periodic payments, whether monthly or for some other set period of time.
The city bar advised that lawyers must be diligent under Rule 1.5(d) that their flat, nonrefundable fee is not excessive, that it has been fully earned, that the fee arrangement does not block a client from exercising his right to terminate the agreement and that it is explained fully and in “plain language” to the client.
The opinion was released by the city bar’s Committee on Professional Ethics, which is chaired by Nicole Hyland, partner at Frankfurt Kurnit Klein & Selz.