As of July 1, 2011, Minnesota lawyers are on notice that non-refundable practices may violate Minnesota’s rules of professional conduct for lawyers.
Generally, the proposed rules as adopted by the Minnesota Supreme Court make the following changes.
Rule 1.5(b) deleted the words on advanced non-refundable retainers
And instead wrote:
Except as provided below, fee payments received by a lawyer before legal services have been rendered are presumed to be unearned and shall be held in a trust account pursuant to Rule 1.15.
Also Rule 1.5 delineated the exceptions:
(1) A lawyer may charge a flat fee for specified legal services, which constitutes complete payment for those services and may be paid in whole or in part in advance of the lawyer providing the services. If agreed to in advance in a written fee agreement signed by the client, a flat fee shall be considered to be the lawyer’s property upon payment of the fee, subject to refund as described in Rule 1.5(b)(3).
(2) A lawyer may charge a fee to ensure the lawyer’s availability to the client during a specified period or on a specified matter in addition to and apart from any compensation for legal services performed. Such an availability fee shall be reasonable in amount and communicated in a writing signed by the client. The writing shall clearly state that the fee is for availability only and that fees for legal services will be charged separately. An availability fee may be considered to be the lawyer’s property upon payment of the fee, subject to refund in whole or in part should the lawyer not be available as promised.
(3) Fee agreements may not describe any fee as nonrefundable or earned upon receipt but may describe the advance fee payment as the lawyer’s property subject to refund. Whenever a client has paid a flat fee or an availability fee pursuant to Rule 1.5(b)(1) or (2) and the lawyer-client relationship is terminated before the fee is fully earned, the lawyer shall refund to the client the unearned portion of the fee. If a client disputes the amount of the fee that has been earned, the lawyer shall take reasonable and prompt action to resolve the dispute.
For more reading, feel free to see the amendments that are set to be effective July 1, 2011: here. Also note that the amendment rules also change the safekeeping of property rule.