Illinois Supreme Court Announces Rule Changes for Illinois Attorney Fees

Illinois attorney feesIllinois Supreme Court Chief Justice Mary Jane Theis recently announced amendments to Illinois Rules of Professional Conduct 1.5, titled “Fees,” and 1.15, titled “General Duties Regarding Safekeeping Property.”

The amendments to the rule officially recognize the common types of fee agreements, with the notable additions of:

  1. The engagement (or classic) retainer
  2. The security retainer
  3. The special purpose (or advance payment) retainer

The amendments were made on March 1, 2023, and become effective July 1, 2023.

The amendments explicitly note that nonrefundable fees and nonrefundable retainers are prohibited, and “any agreement that purports to restrict a client’s right to terminate the representation or that unreasonably restricts a client’s right to obtain a refund of unearned or unreasonable fees is prohibited.”

The amendments also include detailed directions for record-keeping and communication with clients regarding fees.

The amendments to the Rules are intended to address existing issues between the legal needs of the public and the lawyers who could serve them, according to a press release from the Court.

“These amendments provide additional guidance for attorneys in a clear, straightforward way,” Chief Justice Theis said in the press release. “They also highlight the importance of providing affordable representation for clients and minimize the potential for fee disputes.”

Background of Illinois attorney fees

The case law that precedes these amendments goes back to Dowling v. Chicago Options Associates, in which the Illinois Supreme Court ruled that preemptive retainers used by attorneys were acceptable under specific circumstances.

The current iteration of the rules regarding fees incorporates clearer language and modern technology.

A work group of the Illinois Attorney Registration and Disciplinary Commission (ARDC) and Lawyers Trust Fund (LTF) proposed the amendments. They were then reviewed by the Supreme Court’s Committee on Professional Responsibility and approved by the Court.

Types of Illinois attorney fees explained

An engagement retainer is a fixed amount paid by a client to a lawyer to ensure a lawyer’s availability during a specified period of time or for a specified matter. This type of fee immediately becomes the property of the lawyer, regardless of whether the lawyer ever actually performs any services for the client.

The lawyer may receive separate compensation for the legal services actually rendered.

A security retainer, in contrast, is deposited in a client trust account and used for services actually rendered. The amount of money covers future services and costs the lawyer is expected to perform or incur. This type of fee must be noted as “security retainer” in written agreements.

Finally, a special purpose retainer is “present payment to the lawyer in exchange for the commitment to provide legal services in the future and may be used only when necessary to accomplish some purpose for the client that cannot be accomplished by using a security retainer.”

This type of payment requires a written agreement that notes that it is a special purpose retainer, its reasons for being used, and acknowledgment that the fee immediately becomes the property of the lawyer.

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