Opinion 1838

I have been instructed by the Rules of Professional Conduct Committee to respond to your ethical inquiry #1838 concerning the proper handling of nonrefundable flat fee payments.

It is the opinion of the committee that if a flat fee is an advance fee deposit, the fee must be placed in a trust account. If the flat fee is a retainer paid to secure the availability of the lawyer, the fee is considered earned at the time of receipt and is not deposited into the trust account. A nonrefundable fee paid pursuant to a fee agreement is a retainer and that nature is negated by the circumstances described in your inquiry [in which the firm would refund the fee if the client requested a refund to change lawyers after only a small amount of work was done on the client's behalf.] No portion of the nonrefundable fee should be placed in the trust account. The committee directed me to refer you to Formal Opinion 186.

Advisory Opinions are provided for the education of the Bar and reflect the opinion of the Committee on Professional Ethics (CPE) or its predecessors. Advisory Opinions are provided pursuant to the authorization granted by the Board of Governors, but are not individually approved by the Board and do not reflect the official position of the Bar association. Laws other than the Washington State Rules of Professional Conduct may apply to the inquiry. The Committee's answer does not include or opine about any other applicable law other than the meaning of the Rules of Professional Conduct.