May I Charge a “Nonrefundable” Retainer or Minimum Fee?

No-RefundsYes, but no. The North Dakota Supreme Court recently disciplined a lawyer for refusing to return a $30,000 “nonrefundable” minimum fee in a criminal case after working 26 hours prior to being discharged by the client. See Disciplinary Bd. v. Hoffman (S.D. Jul. 23, 2013). The court did so using a rule that requires North Dakota lawyers to “refund[] any advance payment of fee or expense that has not been earned or incurred.”

While this precise language does not appear in Louisiana’s rules, the same principles do. It is permissible for a Louisiana lawyer to charge a general retainer, fixed fee or minimum fee and to place that fee in the lawyer’s operating account. However, the lawyer must return such a fee if its continued retention becomes “unreasonable” under the circumstances. See Louisiana Rule 1.5. This would be the case if, for example, the lawyer fails to represent a client diligently and competently, or if a client discharges the lawyer before substantial completion of the work. So, a Louisiana lawyer can charge a “nonrefundable” retainer or minimum fee. But sometimes it must be refunded.