Nonrefundable No More

Miami criminal defense lawyer Brian Tannebaum has had enough of dissatisfied clients demanding a refund of their legal fee.

I have decided, today, that I will no longer simply include the word “nonrefundable” in my retainer agreements with a detailed explanation of the word “nonrefundable and how it affects the retainer agreement, i.e. you’re not getting your money back if you choose to hire another lawyer, have a dispute with this lawyer, or otherwise wish to cancel the agreement.

What I am going to do from now on is provide the client with a separate document solely discussing the word “nonrefundable.”

I am doing this because I am tired of explaining it to clients, having them nod in agreement, some acting like they are listening to me re-state the obvious, and then at some point, asking for money back.

Ah, the good old days of nonrefundable retainers.  Not since Edward Cooperman got beaten up by Cardozo Lawprof Lester Brickman before the New York Court of Appeals have New York lawyers been permitted to use nonrefundable retainers.  Brickman, who’s never met a practicing lawyer he didn’t hate, championed the notion that nonrefundable retainers were amongst the most despicable things lawyers could do. 

It wasn’t his problem that criminal defendants either paid up front or didn’t pay at all, leaving the lawyer dangling in the wind, stuck on a case where he won’t be relieved, without a fee.  Fees are dirty, Lester pronounced, and make people hate lawyers.  People must be free to discharge their lawyers at will, and a nonrefundable retainer prevents them from doing so.  So sayeth the court in Matter of Cooperman :

Because the attorney-client relationship is recognized as so special and so sensitive in our society, its effectiveness, actually and perceptually, may be irreparably impaired by conduct which undermines the confidence of the particular client or the public in general. In recognition of this indispensable desideratum and as a precaution against the corrosive potentiality from failing to foster trust, public policy recognizes a client’s right to terminate the attorney-client relationship at any time with or without cause.

Lawyers, because of our special relationship of trust, are the only group whose freedom of contract is so limited.  In fairness, Brickman had a point.  When a substantial retainer was paid up front as nonrefundable, and the defendant figured out a little later that he had made a bad choice (perhaps his second in a row), his ability to discharge the lawyer and obtain new counsel was seriously impaired.  First, he likely lacked the funds to retain a new lawyer without a refund of the monies previously paid, and second, even if he had more money available, was reluctant to walk away from the first legal fee.  Hey, it’s money.

This created quite a problem for criminal defense lawyers, particularly those who did state court, street crime work.  While they may love their clients dearly, the time to collect a legal fee was at the inception of representation.  Once the attorney is in the case, or once the case is over, the likelihood of payment diminished greatly.  There is something about the lack of pressure of prison that reduces a defendant’s desire to make his lawyer happy.  Go figure.

Unlike Florida, New York lawyers had to learn to adjust.  And so we did.  Certainly, there were the defendants who were dissatisfied because they didn’t receive the outcome they desired, or it didn’t happen quickly enough to satisfy them.  That can’t be helped, since every case doesn’t result in acquittal or dismissal.  But through communication, effort and attention, lawyers learned to keep their legal fees another way; by keeping their clients.

There are still lawyers who try to hold onto unearned legal fees as if the old nonrefundable retainer was available to them, and defendants who will try to get back fees fully earned through false complaint of incompetence or worse.  Some criminal defendants turn out to be unsavory characters, and are not entirely trustworthy.  Then again, some criminal defense lawyers are unsavory characters too.

Brian has decided to take a firm stand on this subject:

As a young criminal defense lawyer I used to shudder when a client requested a “refund” of fees. Now, I just get annoyed, but write no checks, ever.

See, the reason we criminal defense lawyers are known for “getting the fee up front” is because we sometimes don’t get the entire fee if things don’t go well. The definition of “things not going well” vary, but usually entail anything less than what the client expected.

Because we cannot be in the “satisfaction” business, we have to protect ourselves, like other professionals and businesses. We have to protect ourselves from those clients who believe they can agree to something, and then break that agreement and think that the lawyer will cower or not pursue payment because we are afraid of our state bar association.

I’m not afraid.

Unsavory defendants, or their family’s, think that lawyers will succumb to threats of grievances, and return fees to avoid the threat.   Some will.  Most won’t.  None should.  Giving in to a threat encourages this sort of conduct, and when a lawyer collapses in the face of an unwarranted threat, word spreads on the street like wildfire.  Even when the client loves and appreciates his lawyer, babymama may appreciate cash in her purse more, should the defendant be a guest of the state for any significant period of time. 

Unlike Brian, however, I will happily refund any unearned portion of the legal fee to any client who requests it.  I agree with Brickman that any client who is dissatisfied with my representation should be free to change lawyers, find someone with whom he’s more comfortable.  I take no umbrage.  It’s the defendant’s life, and he is absolutely entitled to sit next to his lawyer of choice. 

Does this present a burden?  Sure.  In taking a case, lawyers will set aside time and reject other cases (or other clients within the same case to avoid conflicts).  Opportunity costs are real, and don’t quantify well in an hourly bill.  But the Court of Appeals tells us that this is the price of being a lawyer in the State of New York, and so we live with it.

Fortunately, the secret to avoiding the angst inherent in Brian’s rant has blunted the impact of the Cooperman decision.  Serve your client exceptionally well, and most will prefer to pay the fee and have you beside them rather than play the switcheroo game and seek a refund.  I’ve returned a couple of fees over the years.  I’ve kept almost all of them, with my clients’ blessing. 

I’ve even been the recipient of post-representation gifts, reflecting my clients’ appreciation.  They aren’t required to do this, which makes such a gesture very special.  It’s much nicer than arguing about nonrefundable retainers.

Problem solved.

7 thoughts on “Nonrefundable No More


    You raise an interesting and qidely discussed issue, that of “unearned fees.” I believe the future will find all of us explaining what part of the “up front fee” is earned and at what time.

    While I would never be paid a large fee, then terminated soon thereafter, and claim I am entitled to the entire fee, I did have two instances occur this week that define my concern.

    Client 1 hires me to modify his probation. Prosecutor and I negotiate an out-of-court modification, client doesn’t like it and decides not to seek a hearing, and requests a refund.

    Client 2’s family ran in to my office 6 months ago after a federal arrest for manslaughter. Fee quoted for detention hearing. Detention hearing held. Court indicates intention to grant bond, but “next week” after we provide more information. Client’s family hires another lawyer. Now over 6 months later, client wants money back.

    Nope, and Nope.

  2. SHG

    While I would never be paid a large fee

    Give it time, Brian.  It will come if you work very hard.    The first step is to stop typing in your name in all caps.

  3. Mark Bennett

    Agreed. It is axiomatic that clients always have to be able to fire their lawyers.

    Lawyers should always expect to give back all but fair portions (which could be anything from “none” to “most”) of the fees if their clients decide to fire them.

  4. David Nieporent

    As a practicing lawyer (who has also never met a practicing lawyer I didn’t hate), I don’t see the problem here. Up-front retainers (absolutely essential) are being conflated with nonrefundable ones. Of course one is entitled to keep the money if one does the work, regardless of outcome (indeed, as we know, contingency fees are unethical in criminal cases); that’s entirely different than keeping tens of thousands of dollars of a retainer when the client calls back a week after retaining you and wants to discharge you. Of course, we’re entitled to keep _some_ of the money for the opportunity costs in those cases, but not the entire thing. (I think we all agree on the above, so I’m not sure what the problem is.)

    In response to Brian’s comment

    “We have to protect ourselves from those clients who believe they can agree to something, and then break that agreement and think that the lawyer will cower or not pursue payment because we are afraid of our state bar association. I’m not afraid.”

    I wholeheartedly agree. Along those lines, apparently some attorney career advisors have been going around telling new attorneys never to sue a client for nonpayment of a bill because the client will just file a grievance or sue for malpractice. If you’re scared of your clients, what kind of lawyer are you going to be?

  5. SHG

    I know that I didn’t conflate nonrefundable retainers with anything else.  I’m quite certain that Brian didn’t.  So what would make you assume that you, not a criminal lawyer, would know what we were thinking better than we did?  My guess is that you’ve confused your practice experience with that of criminal defense lawyers.  It’s a common mistake that leads people to make glaringly erroneous assumptions on subject with which they are inexperienced.  

    And the problem Brian was referring to in the quote was being grieved by the client, not suing the client for payment.  I realize that he used the words “pursuing payment,” but his inartfulness doesn’t change his clear meaning.  I realize these are all relatively subtle things and why you would find yourself so easily confused.

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