Rule 1.5. Fees

RULE 1.5: FEES

(a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an

unreasonable amount for expenses. The factors to be considered in determining the reasonableness

of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and

the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment

will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;

and

(8) whether the fee is fixed, contingent, or some type of retainer.

(b) The scope of the representation and the basis or rate of the fee and expenses for which the

client will be responsible shall be communicated to the client, preferably in writing, before or

within a reasonable time after commencing the representation, except when the lawyer will charge

a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee

or expenses shall also be communicated to the client.

(c) Nonrefundable fees and nonrefundable retainers are prohibited. 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.

ient on the same basis or rate. Any changes in the basis or rate of the fee

or expenses shall also be communicated to the client.

(c) Nonrefundable fees and nonrefundable retainers are prohibited. 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.

(d) Common Types of Fee Agreements

(1) Fixed Fees: A fixed fee, also described as a “flat” or “lump-sum” fee, is a sum of

money paid by a client to the lawyer to provide a specific service for a fixed amount. The

fixed amount constitutes complete payment for the performance of the described services and

may be paid in whole or in part in advance of the lawyer providing those services. A fixed

fee may not be deposited in the lawyer’s client trust account.

(2) Contingent Fees: A fee may be contingent on the outcome of the matter for which the

service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (c)

or other law. A contingent fee agreement shall be in a writing signed by the client and shall

state the method by which the fee is to be determined, including the percentage or percentages

that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other

expenses to be deducted from the recovery; and whether such expenses are to be deducted

before or after the contingent fee is calculated. The agreement must clearly notify the client of

any expenses for which the client will be liable whether or not the client is the prevailing party.

Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written

statement stating the outcome of the matter and, if there is a recovery, showing the remittance

to the client and the method of its determination.

alculated. The agreement must clearly notify the client of

any expenses for which the client will be liable whether or not the client is the prevailing party.

Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written

statement stating the outcome of the matter and, if there is a recovery, showing the remittance

to the client and the method of its determination.

(3) Engagement Retainers: An engagement retainer, also described as a “general,”

“classic,” or “true” retainer, is a fixed sum of money paid by a client to the lawyer to ensure a

lawyer’s availability during a specified period of time or for a specified matter. Funds

received as an engagement retainer are earned when paid and immediately become property

of the lawyer, regardless of whether the lawyer ever actually performs any services for the

client. A lawyer is compensated separately for any legal services actually rendered by the

lawyer. Funds received as an engagement retainer may not be deposited into a client trust

account.

(4) Security Retainers: A security retainer, also referred to as a “security payment

retainer,” describes funds paid to the lawyer intended to secure payment of fees and expenses

for future services and costs the lawyer is expected to perform or incur. Funds received as a

security retainer remain the property of the client and, therefore, must be deposited in a client

trust account and kept separate from the lawyer’s own property until the lawyer applies the

retainer to charges for services that are actually rendered. The term “security retainer” should

be used in any written agreement describing the retainer.

er is expected to perform or incur. Funds received as a

security retainer remain the property of the client and, therefore, must be deposited in a client

trust account and kept separate from the lawyer’s own property until the lawyer applies the

retainer to charges for services that are actually rendered. The term “security retainer” should

be used in any written agreement describing the retainer.

(5) Special Purpose Retainers: A special purpose retainer, also referred to as an “advance

payment retainer,” describes funds paid to the lawyer intended by the client to be 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. Ownership of a special purpose retainer passes

to the lawyer immediately upon payment and is generally the lawyer’s property and,

therefore, may not be deposited in the lawyer’s client trust account. An agreement for a

special purpose retainer shall be in a writing signed by the client that uses the term “special

purpose retainer” to describe the retainer, and states the following:

(i) the special purpose for the special purpose retainer and an explanation as to why it

is advantageous to the client;

(ii) that the retainer will not be held in a client trust account, that it will become the

property of the lawyer upon payment, and that it will be deposited in the lawyer’s general

account;

(iii) the manner in which the retainer will be applied for services rendered and

expenses incurred;

(iv) that any portion of the retainer that is not earned or required for expenses will be

refunded to the client; and

(v) that the client has the option to employ a security retainer, provided, however, that

if the lawyer is unwilling to represent the client without receiving a special purpose

retainer, the agreement must so state and provide the lawyer’s reasons for that condition.

nses incurred;

(iv) that any portion of the retainer that is not earned or required for expenses will be

refunded to the client; and

(v) that the client has the option to employ a security retainer, provided, however, that

if the lawyer is unwilling to represent the client without receiving a special purpose

retainer, the agreement must so state and provide the lawyer’s reasons for that condition.

(e) A lawyer shall not enter into an arrangement for, charge, or collect:

(1) any fee in a domestic relations matter, the payment or amount of which is contingent

upon the securing of a divorce or upon the amount of alimony or support, or property settlement

in lieu thereof; or

(2) a contingent fee for representing a defendant in a criminal case.

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(f) A division of a fee between lawyers who are not in the same firm may be made only if:

(1) the division is in proportion to the services performed by each lawyer, or if the primary

service performed by one lawyer is the referral of the client to another lawyer and each lawyer

assumes joint financial responsibility for the representation;

(2) the client agrees to the arrangement, including the share each lawyer will receive, and

the agreement is confirmed in writing; and

(3) the total fee is reasonable.

Adopted July 1, 2009, effective January 1, 2010; amended Mar. 1, 2023, eff. July 1, 2023.

Comment

Reasonableness of Fee and Expenses

[1] Paragraph (a) requires that lawyers charge fees that are reasonable under the circumstances.

The factors specified in (1) through (8) are not exclusive. Nor will each factor be relevant in each

instance. Paragraph (a) also requires that expenses for which the client will be charged must be

reasonable. A lawyer may seek reimbursement for the cost of services performed in-house, such

as copying, or for other expenses incurred in-house, such as telephone charges, either by charging

a reasonable amount to which the client has agreed in advance or by charging an amount that

reasonably reflects the cost incurred by the lawyer

ires that expenses for which the client will be charged must be

reasonable. A lawyer may seek reimbursement for the cost of services performed in-house, such

as copying, or for other expenses incurred in-house, such as telephone charges, either by charging

a reasonable amount to which the client has agreed in advance or by charging an amount that

reasonably reflects the cost incurred by the lawyer.

Basis or Rate of Fee

[2] When the lawyer has regularly represented a client, they ordinarily will have evolved an

understanding concerning the basis or rate of the fee and the expenses for which the client will be

responsible. In a new client-lawyer relationship, however, an understanding as to fees and

expenses must be promptly established. Generally, it is desirable to furnish the client with at least

a simple memorandum or copy of the lawyer’s customary fee arrangements that states the general

nature of the legal services to be provided, the basis, rate or total amount of the fee and whether

and to what extent the client will be responsible for any costs, expenses or disbursements in the

course of the representation. A written statement concerning the terms of the engagement reduces

the possibility of misunderstanding.

[3] Fixed fees are generally not subject to the obligation to refund any portion to the client if

the lawyer completes the agreed-upon services; however, fixed fees are subject, like any other

fees, to the reasonableness standard of paragraph (a) of this Rule, and when circumstances so

warrant, the attorney is obligated to return the portion that is not earned pursuant to Rule 1.16(d).

[4] Contingent fees, like any other fees, are subject to the reasonableness standard of paragraph

e client if

the lawyer completes the agreed-upon services; however, fixed fees are subject, like any other

fees, to the reasonableness standard of paragraph (a) of this Rule, and when circumstances so

warrant, the attorney is obligated to return the portion that is not earned pursuant to Rule 1.16(d).

[4] Contingent fees, like any other fees, are subject to the reasonableness standard of paragraph

(a) of this Rule. In determining whether a particular contingent fee is reasonable, or whether it is

reasonable to charge any form of contingent fee, a lawyer must consider the factors that are

relevant under the circumstances. Applicable law may impose limitations on contingent fees, such

as a ceiling on the percentage allowable, or may require a lawyer to offer clients an alternative

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basis for the fee. Applicable law also may apply to situations other than a contingent fee, for

example, government regulations regarding fees in certain tax matters.

[5] In Dowling v. Chicago Options Associates, Inc., 226 Ill. 2d 277 (2007), the Court

distinguished different types of retainers. It recognized advance payment retainers (referred to in

this Rule as special purpose retainers) and approved their use in limited circumstances where the

lawyer and client agree that a retainer should become the property of the lawyer upon payment.

Prior to Dowling, the Court recognized only two types of retainers. The first, a general retainer

(also described as a “true,” “engagement,” or “classic” retainer) is paid by a client to the lawyer

in order to ensure the lawyer’s availability during a specific period of time or for a specific

matter. This type of retainer is earned when paid and immediately becomes property of the

lawyer, regardless of whether the lawyer ever actually performs any services for the client. The

second, a “security” retainer, secures payment for future services and expenses, and must be

deposited in a client trust account pursuant to Rule 1.15B(b)

ability during a specific period of time or for a specific

matter. This type of retainer is earned when paid and immediately becomes property of the

lawyer, regardless of whether the lawyer ever actually performs any services for the client. The

second, a “security” retainer, secures payment for future services and expenses, and must be

deposited in a client trust account pursuant to Rule 1.15B(b). Funds in a security retainer remain

the property of the client until applied for services rendered or expenses incurred. Any unapplied

funds are refunded to the client. Any written retainer agreement should clearly define the kind of

retainer being paid. If the parties agree that the client will pay a security retainer, that term

should be used in any written agreement, which should also provide that the funds remain the

property of the client until applied for services rendered or expenses incurred and that the funds

will be deposited in a client trust account. If the parties’ intent is not evident, an agreement for a

retainer will be construed as providing for a security retainer.

[6] A special purpose retainer, identified in Dowling as an advance payment retainer, is a

present payment to the lawyer in exchange for the commitment to provide legal services in the

future. Ownership of this retainer passes to the lawyer immediately upon payment; and the

retainer may not be deposited into a client trust account because a lawyer may not commingle

property of a client with the lawyer’s own property. However, any portion of a special purpose

retainer that is not earned must be refunded to the client. A special purpose retainer should be

used sparingly, only when necessary to accomplish a purpose for the client that cannot be

accomplished by using a security retainer. A special purpose retainer agreement must be in a

written agreement signed by the client that contains the elements listed in paragraph (d)(5)

ortion of a special purpose

retainer that is not earned must be refunded to the client. A special purpose retainer should be

used sparingly, only when necessary to accomplish a purpose for the client that cannot be

accomplished by using a security retainer. A special purpose retainer agreement must be in a

written agreement signed by the client that contains the elements listed in paragraph (d)(5). A

special purpose retainer is distinguished from a fixed fee (also described as a “flat” or “lump-

sum” fee), where the lawyer agrees to provide a specific service (e.g., defense of a criminal

charge, a real estate closing, or preparation of a will or trust) for a fixed amount. Unlike a special

purpose retainer, a fixed fee is generally not subject to the obligation to refund any portion to the

client, although a fixed fee is subject, like all fees, to the requirement of Rule 1.5(a) that a lawyer

may not charge or collect an unreasonable fee.

[7] The type of retainer that is appropriate will depend on the circumstances of each case, and

any written retainer agreement should clearly define the kind of retainer being paid. The guiding

principle in the choice of the type of retainer is protection of the client’s interests. In the vast

majority of cases, this will dictate that funds paid to retain a lawyer will be considered a security

retainer and placed in a client trust account, and if the parties’ intent is not evident, an agreement

for a retainer will be construed as providing for a security retainer. Any unapplied funds of a

security retainer are refunded to the client under Rule 1.16(d).

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lient’s interests. In the vast

majority of cases, this will dictate that funds paid to retain a lawyer will be considered a security

retainer and placed in a client trust account, and if the parties’ intent is not evident, an agreement

for a retainer will be construed as providing for a security retainer. Any unapplied funds of a

security retainer are refunded to the client under Rule 1.16(d).

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Terms of Payment

[8] A lawyer may accept property in payment for services, such as an ownership interest in an

enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action

or subject matter of the litigation contrary to Rule 1.8 (i). However, a fee paid in property instead

of money may be subject to the requirements of Rule 1.8(a) because such fees often have the

essential qualities of a business transaction with the client.

[8A] Rule 1.5 allows fee agreements that are not on an hourly rate, for example, fixed fee

arrangements, so long as the fee charged or collected is reasonable for the services performed as

allowed under Rule 1.5. Where appropriate, lawyers should consider alternative arrangements to

deliver affordable representation. In structuring any fee agreement, lawyers should strive to make

the cost of legal services transparent and predictable, with the goal of reducing misunderstandings

and avoiding fee disputes with clients.

[9] An agreement may not be made whose terms might induce the lawyer improperly to curtail

services for the client or perform them in a way contrary to the client’s interest. For example, a

lawyer should not enter into an agreement whereby services are to be provided only up to a stated

amount when it is foreseeable that more extensive services probably will be required, unless the

situation is adequately explained to the client. Otherwise, the client might have to bargain for

further assistance in the midst of a proceeding or transaction. However, it is proper to define the

extent of services in light of the client’s ability to pay

services are to be provided only up to a stated

amount when it is foreseeable that more extensive services probably will be required, unless the

situation is adequately explained to the client. Otherwise, the client might have to bargain for

further assistance in the midst of a proceeding or transaction. However, it is proper to define the

extent of services in light of the client’s ability to pay. A lawyer should not exploit a fee

arrangement based primarily on hourly charges by using wasteful procedures.

Prohibited Contingent Fees

[10] Paragraph (e) prohibits a lawyer from charging a contingent fee in a domestic relations

matter when payment is contingent upon the securing of a divorce or upon the amount of alimony

or support or property settlement to be obtained. This provision does not preclude a contract for a

contingent fee for legal representation in connection with the recovery of postjudgment balances

due under support, alimony or other financial orders because such contracts do not implicate the

same policy concerns.

Division of Fee

[11] A division of fee is a single billing to a client covering the fee of two or more lawyers

who are not in the same firm. A division of fee facilitates association of more than one lawyer in

a matter in which neither alone could serve the client as well, or referral of a matter where

appropriate, and often is used when the fee is contingent and the division is between a referring

lawyer and a trial specialist. Paragraph (e) permits the lawyers to divide a fee either on the basis

of the proportion of services they render or, where the primary service performed by one lawyer

is the referral of the client to another lawyer, if each lawyer assumes financial responsibility for

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the representation as a whole. In addition, the client must agree to the arrangement, including the

share that each lawyer is to receive, and the agreement must be confirmed in writing. Contingent

fee agreements must be in a writing signed by the client and must otherwise comply with paragraph

is the referral of the client to another lawyer, if each lawyer assumes financial responsibility for

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the representation as a whole. In addition, the client must agree to the arrangement, including the

share that each lawyer is to receive, and the agreement must be confirmed in writing. Contingent

fee agreements must be in a writing signed by the client and must otherwise comply with paragraph

(d)(2) of this Rule. Joint financial responsibility for the representation entails financial

responsibility for the representation as if the lawyers were associated in a general partnership. See

In re Storment, 203 Ill. 2d 378 (2002). A lawyer should only refer a matter to a lawyer whom the

referring lawyer reasonably believes is competent to handle the matter. See Rule 1.1.

[12] Paragraph (f) does not prohibit or regulate division of fees to be received in the future for

work done when lawyers were previously associated in a law firm, or payments made pursuant to

a separation or retirement agreement.

Disputes over Fees

[13] If a procedure has been established for resolution of fee disputes, such as an arbitration or

mediation procedure established by law or rule, the lawyer must comply with the procedure when

it is mandatory, and, even when it is voluntary, the lawyer should conscientiously consider

submitting to it. Law may prescribe a procedure for determining a lawyer’s fee, for example, in

representation of an executor or administrator, a class or a person entitled to a reasonable fee as

part of the measure of damages. The lawyer entitled to such a fee and a lawyer representing another

party concerned with the fee should comply with the prescribed procedure.

Adopted July 1, 2009, effective January 1, 2010; amended Dec. 22, 2022; amended Mar. 1, 2023, eff.

July 1, 2023.

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