The Lawletter Vol. 50 No. 2
Amy Gore—Senior Attorney (agore@nlrg.com)
Calling a fee payment “non-refundable” is no protection from an ethical violation. The Virginia Supreme Court’s recent decision in Swango v. Virginia State Bar ex rel. Second District, No. 241016, 2025 Va. LEXIS 43, at *1 (July 31, 2025), clarified the differences between a refundable retainer and a non-refundable consultation fees. The attorney in question accepted two engagements from clients for $300 each and received what he characterized as a non-refundable consultation fee. Both fees were deposited into the attorney’s operating account, rather than an attorney trust account. One client cancelled the representation the day of the contract because the attorney’s services were no longer needed. The second client failed to show for a scheduled meeting with the attorney. In both cases, no consultation ever occurred. Nevertheless, the attorney was not willing to refund the fees after requested to do so by the clients. After ethical charges were filed, the attorney asserted the argument that Rule of Professional Conduct (RPC) 1.5 and Legal Ethics Opinion (LEO) 1606, addressing retainer fees and consultation fees, contained a scienter element that the Bar had not satisfied. The attorney maintained that because the clients did not retain his services for a specific matter, the fees did not constitute advanced legal fees. The court disagreed.
The court reasoned that RPC 1.5 requirement that a fee be “reasonable” along with the obligation to safeguard client property required that an advanced legal fee be deposited in a trust account upon receipt. The funds may only be transferred into an operating account after services are rendered. The ethical limitations on fee agreements is further explained under LEO 1606, which mandates that “any fee charged for work that never is performed is per se unreasonable. Va. Legal Ethics Op. 1606.” 2025 Va. LEXIS 43, at *15. LEO 1606 provided further clarification of advanced legal fees: “Advanced legal fees represent prepayment for services to be rendered in a known matter or for identifiable services that are contemplated by the lawyer and client at the time of the payment.” 2025 Va. LEXIS 43, at *16. If the attorney performs no work before the attorney-client relation has terminated, the fees received cannot constitute advanced legal fees and must be refunded to the client.
The facts established that the fees received represented payment for future legal services and had not been earned.
As noted above, the parties, based on the communications from Swango's firm, contemplated that the fees were paid to secure discrete and known legal services and advice for a known set of legal circumstances—the strife attendant in each of the clients' marriages. Based on the firm's communications to the clients, it was contemplated that, at the end of the consultation, Swango would provide advice and "direction on navigating [the client's] particular matter[.]" (Emphasis added.)
2025 Va. LEXIS 43, at *22.
Also of significance for future ethical disputes is the Virginia Supreme Court’s affirmance of the Circuit Court’s decision to bar an expert in legal ethics. An opinion testimony would be either inadmissible legal conclusions or irrelevant opinion that would not benefit the court’s determination. The court differentiated the role of an expert witness in a legal malpractice action and one in a legal ethics dispute. Simply put, the fact that other attorneys would violate the RPC did not insulate any attorney from ethical evaluation by the Bar or the court.
