The Attorney's Office Tools
Perfecting Your Retainer Agreement
Stacey A. Moffet & Al Frederick
and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing…” Moreover, when the fee is contingent on the outcome of the matter, the contingency fee agreement “shall be in writing, signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of a settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated.” MRPC 1.5(c). Te fee agreement for a contingency fee also “must clearly notify the client of any expenses for which the client will be responsible whether or not the client is the prevailing party.” Id. At a minimum, your fee agreement for contingency fee
cases must comply with the requirements of MRPC 1.5(c). Of course, a contingency fee agreement cannot be utilized in a domestic or criminal case. Certainly, a non-contingency fee agreement is not required to be in writing, although specific information must be conveyed to the client. As discussed below, however, it is almost always prudent to confirm the terms of the retention in a written agreement, even when not specifically required by the Rules. Moreover, when a retainer is paid by the client those
O
ne of the most commonly ignored, and, yet, oftentimes required and virtually always suggested, aspects of a lawyer’s practice is the retainer or
engagement letter. Many of us use a form letter that was last updated during the Reagan Administration. Others send new clients an engagement letter on an inconsistent basis and, then, only fill in blank spaces with little, if any, thought given to the substance of the letter. Not only is a retainer letter required in many instances, but it is one of the most effective means of outlining the obligations of the lawyer and the client in the business relationship.
When is a retainer letter required and what are the current requirements?
Maryland Rules of Professional Conduct (MRPC) 1.5(b) states that “the scope of the [lawyer’s] representation
funds must be held in the lawyer’s escrow account, unless a different arrangement is agreed upon, with the client’s informed consent, and confirmed in writing. MRPC 1.15(c) provides that “Unless the client gives informed consent, confirmed in writing, to a different arrangement, a lawyer shall deposit legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the lawyer’s own benefit only as fees are earned or expenses incurred.” Tus, if confirmed in the retainer agreement, a lawyer may deposit advances towards unearned fees and expenses in his operating account. However, this situation must be carefully addressed
in the retainer agreement. Not only must the terms of the arrangement be laid out in detail, including when unearned fees may be withdrawn and whether notice must be first provided to the client, but the client’s consent, which must be informed, must be confirmed in writing as well. In order to ensure that the client has provided full, informed consent, it is wise to explain the risks inherent to the situation in the agreement, such as the fact that should unearned fees be withdrawn by the lawyer, they may not be available should the relationship terminate. Only upon such written, informed consent, can the lawyer properly withdraw unearned fees and expenses from his/her escrow account. Pragmatically, one ought never use Rule 1.15(c) or only use it in truly unique
Trial Reporter / Spring 2010 21
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