My client discontinued the case and wants the retainer back. The agreement didn't say the retainer was non-refundable but I assumed it was. Can I keep it under Rule 1.5?

Plain-English summary

The inquiring attorney was retained by a retired attorney to recover a referral fee and requested a retainer from the client. After the inquiring attorney sent a demand letter, the client decided to discontinue the action and requested a refund of the retainer. The retainer agreement did not state that the retainer was "non-refundable," but the attorney believed non-refundability was "implicit." The attorney asked whether he or she could keep the full retainer, and if not, how a refund should be calculated and whether the attorney could ask for a non-refundable fee in the future.

The Panel set out Rule 1.5 ("Fees") and its Comment, which supports the position that a retainer must be refundable: a lawyer may require advance payment of a fee but is obligated to return any unearned portion, referencing Rule 1.16(d). The Panel also cited the Rhode Island Disciplinary Board's Policy on Non-Refundable Retainer Agreements, which distinguishes a true retainer from a fee advance and states that "the term 'retainer' as used by attorneys of this Bar is a fee advance and therefore refundable, minus a reasonable 'quantum meruit' amount."

Applying Rule 1.5, its Comment, and the Disciplinary Board's policy, the Panel opined that the attorney is obligated to return the non-earned portion of the retainer fee, and is entitled to the reasonable value of the services rendered under the quantum meruit theory.

Currency note

This opinion was issued in 1994 (Opinion 94-63, issued September 28, 1994), after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 1.5 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which amended Rule 1.5, and Disciplinary Board policies may also have changed. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule mentioned here.

Common questions

Q: If my fee agreement doesn't say the retainer is non-refundable, can I keep the whole thing when the client stops the case?

A: The Panel concluded no. It opined that a retainer is a refundable fee advance and the attorney must return the unearned portion.

Q: How much can the lawyer keep?

A: The Panel opined the attorney is entitled to the reasonable value of the services actually rendered under a quantum meruit theory, and must refund the rest.

Q: On what did the Panel rely?

A: Rule 1.5 and its Comment (referencing Rule 1.16(d)) and the Rhode Island Disciplinary Board's policy treating a "retainer" as a refundable fee advance.

Background and rules framework

The opinion interprets Rhode Island Rule of Professional Conduct 1.5 (fees) and references Rule 1.16(d) (return of unearned fees on termination), the analogs of Model Rules 1.5 and 1.16. The Comment to Rule 1.5 requires return of any unearned advance payment, and the Disciplinary Board's policy characterizes the term "retainer" as used by the Bar as a refundable fee advance. The Panel combined both to require refund of the unearned portion.

Citations and references

Rules of Professional Conduct:

• MR 1.5 / RI RPC 1.5 (fees; advance payment must return unearned portion)
• MR 1.16 / RI RPC 1.16(d) (return of unearned fee on termination)

See also

• RI EAP Opinion 94-51: dividing a fee with a lawyer outside the firm under Rule 1.5(e)
• RI EAP Opinion 94-33: lawyer may waive costs against a client's recovery under Rule 1.8(e)

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2094-63.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

ETHICS ADVISORY PANEL
OPINION #94-63 REQUEST #534
Issued September 28, 1994

The inquiring attorney was retained by a retired attorney to recover a referral fee. The inquiring attorney requested a retainer from the client. After the inquiring attorney sent a demand letter on behalf of the client regarding the lawsuit the client decided to discontinue the action and requested a refund of the retainer. Although the retainer agreement did not state that the retainer was "non-refundable" it was believed by the attorney that the "non-refundability of the retainer was implicit." The inquiring attorney asks whether he/she may keep the full retainer amount and if not, how should a refund be calculated and whether he/she may, in the future, ask for a non-refundable fee.

Rule 1.5 entitled "Fees" sets forth the criteria for fees. The comments to Rule 1.5 regarding fees support the position that a retainer must be refundable. The comments state "[a] lawyer may require advance payment of a fee, but is obligated to return any unearned portion. See, Rule 1.16(d)."

The Rhode Island Disciplinary Board's Policy on Non-Refundable Retainer Agreements discusses the difference of opinion regarding the refundability of retainers in the absence of a clear and unambiguous written agreement. This issue differentiates between the definition of a true retainer and a fee advance. However, it is the Disciplinary Board's policy "that the term 'retainer' as used by attorneys of this Bar is a fee advance and therefore refundable, minus a reasonable 'quantum meruit' amount." The Panel believes that pursuant to Rule 1.5 and the comments thereof, as well as the Disciplinary Board's Policy, the attorney is obligated to return the non-earned portion of the retainer fee. The attorney is entitled to the reasonable value of the services rendered under the quantum meruit theory.