Retainer Agreements and Rule 1.5(b)

The most important aspect of the attorney-client relationship is the contract between the parties. If you have not recently taken the time to review your firm’s retainer agreement, now is a great time to make sure you are in compliance with the ethical rules.  Rule 1.5(b) of the Maryland Lawyers’ Rules of Professional Conduct (hereinafter “the Rules”) sets forth the ethical requirements for retainer agreements and states, “[t]he scope of the representation 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, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate.  Any changes in the basis or rate of the fee or expenses shall also be communicated to the client.”  Although the Rules do not require that a standard (non-contingent) retainer agreement be in writing, it is a good practice for an attorney to memorialize such an agreement so that in the event that a dispute arises, the parties can review the document.

There are two requirements under Rule 1.5(b). First, the retainer agreement must clearly state, “the basis or the rate of fee,” or in other words, how the attorney will be compensated for their legal services.    Therefore, whether the fee is contingent[1] on the outcome of a recovery or settlement, an advanced fee for legal work to be performed in the future,[2] a flat fee, an hourly fee that will be billed to the client as work is performed, a statutory fee, or a combination of these fees (also known as “hybrid retainers”), it is important for the attorney to set forth and explain to the client how they expect to be compensated regardless of the type of retainer agreement.

Second, the retainer agreement should clearly state, “the scope of the representation,” or stated another way, the legal services that the attorney has agreed to perform.  When describing what the scope of the representation is, an attorney should provide as much detail as possible and, in some instances, it may be appropriate to include the services that the attorney will not provide under the retainer agreement. An attorney may want to include language that should further legal services be required, the parties, can either modify the current retainer agreement or enter into another retainer agreement altogether at an additional cost to the client.  For example, if an attorney is retained in a criminal matter and represents a client at trial, the attorney should state in the retainer agreement that the representation does not include any appellate work, should the matter present such a necessity. Having such detail in the retainer agreement will help eliminate any confusion in the event that the client is convicted and desires an appeal.

Lastly, Rule 1.5(b) requires that the attorney inform the client of any expenses related to the representation for which the client will be responsible.  By doing so eliminates any undue surprise on the part of the client once his or her matter is resolved.

Having a good iron-clad written retainer agreement serves as source of protection not only for the client but the attorney as well, especially in the event that the client files either a grievance with Bar Counsel’s office, or a fee dispute.

For more information on this topic and more on starting a solo practice, listen to this Podcast by Anthony I. Butler, Esquire. http://www.yls.org/sec_comm/sections/yls/podcasts.asp

Also check out the new MSBA App for iPhone, Android and Blackberry, which keeps theMaryland Professional Code of Conduct right at your fingertips!


[1] Contingency fee agreements in Maryland must be in writing. (emphasis added).  Rule 1.5(c) states, “[a] fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law.  A contingent fee agreement shall be in a 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 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.  The agreement must clearly notify the client of any expenses for which the client will be responsible whether or not the client is the prevailing party.  Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter, and, if there is a recovery, showing the remittance to the client and the method of its determination.”

[2]  Maryland takes the default position that advanced fees are considered unearned upon receipt and are property of the client unless the client agrees to a different arrangement.  Rule 1.15(c) states, “[u]nless 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.”

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