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Florida Bar Ethics Opinion 93-3 states that fees designated as “non-refundable” may be excessive and prohibited under certain circumstances

Hello and welcome to this Ethics Alert blog which will discuss Florida Bar Ethics Opinion 93-2, which discusses, inter alia, the propriety and effect of the designation of a fee as “non-refundable”.  As I reported in a recent Ethics Alert, the Rules Committee of the Florida Bar’s Board of Governors voted not to move forward with a proposed Bar rule amendment which would have prohibited lawyers from charging non-refundable fees.  The proposed rule amendment was opposed by, among others, the Florida Association of Criminal Defense Lawyers (FACDL).  If it had been pursued, the proposed revision would have reversed the very long standing practice of permitting non-refundable fees and Florida Bar Ethics Opinion 93-2, which opines that non-refundable fees are arguably permitted, with certain caveats.

Florida Bar Ethics Opinion 93-2 was finalized on October 1, 1993, addressed 6 questions related to attorney’s fees, including non-refundable fees.  Question 5 is below:

“If a substantial nonrefundable fee is paid to the attorney and, before any services are performed by the attorney, the client dies, or discharges the attorney, or the services called for by the attorney-client employment agreement are no longer needed for some other reason, could the attorney be subject to discipline for charging a clearly excessive fee in violation of Rule 4-1.5(a) in the event of a refusal to refund any of the ‘nonrefundable fee?'”

The Professional Ethics Committee’s response and opinion is below:

“As we stated in Opinion 76-27 [since withdrawn], the lawyer might but would not necessarily be guilty of charging an excessive fee. Again, we get into definitions of terms. We interpret the question as referring to a payment by a client to a lawyer of a sum of money designated as “nonrefundable fee,” part of which is intended to compensate the lawyer for being available but not for specific services, and part of which is intended as a present payment for legal services to be performed in the future. If the lawyer performs no legal services, obtains no benefits for the client, and has not lost other employment opportunities as a result of agreeing to represent the client, we believe the lawyer might well be guilty of charging an excessive fee if no part of it was refunded.  Dealing with an abstract situation, we cannot be more precise.

On the other hand, an attorney of towering reputation just by agreeing to represent a client may cause a threatened lawsuit to vanish and thereby obtain a substantial benefit for the client and be entitled to keep the entire amount paid, particularly if other employment had been lost or declined in order to represent that particular client.

The Committee does not believe that, by designating a retainer as nonrefundable, a lawyer is automatically insulated from a claim that the fee is excessive. Whether or not the fee is excessive under the circumstances is governed by Rule 4-1.5 rather than use of the description ‘nonrefundable.'”

Bottom line:  Lawyers in Florida must be aware that the designation of a fee as “non-refundable” does not necessarily make it so.  According to Ethics Opinions 93-3, which is not binding or precedential, but may be persuasive, a lawyer who “performs no legal services, obtains no benefits for the client, and has not lost other employment opportunities as a result of agreeing to represent the client…might well be guilty of charging an excessive fee if no part of it was refunded.”

Be careful out there!

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer: this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax (727) 799-1670

[email protected]


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