Monday, January 6, 2014
An Illinois Hearing Board has recommended a suspension of six months in a matter in which an attorney charged excessive fees and accepted loans from an elderly client.
The board rejected the suggestion that the fees were justified as a "classic retainer"
We find nothing in the circumstances of Respondent's representation of Jeanne to justify such a large retainer fee. Respondent admitted he expected Jeanne would need the same type of services in 2010 that he had provided in 2009, i.e., reviewing her will, powers of attorney and investment statements and meeting with her occasionally at Peace Village. These services would have involved minimal time, effort and expertise on Respondent's part and would not have precluded him from accepting any other employment. Respondent did not achieve any extraordinary results for Jeanne that would justify such a large retainer fee nor did his representation require any special skill or knowledge. Respondent had never charged Jeanne a retainer fee before and never explained why the retainer fee was ten times greater than the fees he charged her in 2009 for similar services. Nothing in the record indicates it was customary to charge a large retainer fee for the basic services Jeanne needed.
In defense of his collection of the retainer fee, Respondent testified he viewed it as a "classic" retainer. However, the evidence does not support his position. "Classic" or "general" retainers become the property of the attorney when paid and are not to be deposited in a client trust account. Comment [3B] to Rule of Professional Conduct 1.15(c). Security retainers, on the other hand, are payments for future services and expenses that remain the property of the client and must be deposited in a client trust account. Id. A third type of retainer, an advance payment retainer, belongs to an attorney upon payment and may not be deposited in a client trust account, but unlike a classic retainer, any unearned funds must be returned to the client. Id; See also Dowling v. Chicago Options Associates, 226 Ill. 2d 277, 286-87, 875 N.E.2d 1012 (2007).
There was no evidence of a verbal or written agreement between Respondent and Jeanne designating the retainer fee as a "classic" retainer. Respondent had never charged Jeanne a retainer fee before, so their prior dealings would not have made Jeanne aware of the nature of the fee. Respondent's statement of January 23, 2010, described the fee only as a "Retainer Fee for 2010 Legal Services," without any indication the $25,000.00 payment became Respondent's property once paid. Respondent's unilateral decision to deposit the retainer fee in his operating account is not, by itself, persuasive evidence of a "classic" retainer.
In short, there was no valid reason for Respondent to charge Jeanne a $25,000.00 retainer fee. Respondent admitted he needed money and we conclude the retainer fee was motivated entirely by his financial difficulties. We view Respondent's testimony that he intended the retainer to cover years beyond 2010 as not credible and an attempt to justify the retainer fee after the fact. Accordingly, we find Respondent charged Jeanne an unreasonable fee in violation of Rule 1.5(a).
The attorney was admitted in 1983 after a twenty-year teaching career. He has no prior discipline. (Mike Frisch)