DAVID L. HUDSON JR., ABA Journal; New ABA ethics opinion warns about handling retainer and other fees
"“When a client pays an advance to a lawyer, the lawyer takes possession—but not ownership—of the funds to secure payment for the services the lawyer will render to the client in the future,” according to Formal Opinion 505.
The opinion acknowledges that there is a type of fee called a general retainer, whereby a client pays the lawyer a fee to “reserve the lawyer’s availability.” However, the opinion notes that general retainers are quite rare and not consistent with the modern practice of law. The opinion also cautions that a general retainer “may be determined to be an unreasonable fee or even unearned if the lawyer does not make himself or herself available.”
Rather, the term “retainer” should normally be labeled as an advance."
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