EVER SINCE the Colorado Supreme Court’s decision in Sather and its subsequent codification in Colo. RPC 1.5(f),
attorneys have come to grips with the reality that the fattest retainer is, in
fact, no more than a security deposit for the last month’s legal “rent.” So long as clients have an absolute right to
discharge counsel, a retainer in a lawyer’s trust account cannot be booked as
the equivalent of fees to come.
Whatever
misgivings lawyers may have about the treatment of general retainers and flat
fees in Rule 1.5(f), it is difficult to condone the court’s denouncement of
“nonrefundable retainers.” See In re Sather, 3 P.3d 403 (Colo. 2000). The Rules of Professional Conduct are by
design client-centric, and few things are more central to a client’s interest
than not having to pay for legal work never performed.
Against this backdrop, In re Marriage of Rubio, 313 P.3d 623 (Colo.
App. 2011) (cert. denied), appears a curious anomaly, if not a cruel joke,
applying Sather to allow a
judgment creditor husband to garnish his wife’s retainer in a divorce
case. The result, while demonstrating
some judicial myopia regarding the policy of client protection underlying Sather, is, for
the most part, legally correct.
Nonetheless, the unfortunate result for the lawyer and Louise Rubio was
entirely avoidable.
In finding no legal impediment to Frank
Rubio garnishing the retainer his wife had given the Marrison Law Firm, Rubio’s
analysis is straight forward: “Because unearned retainers belong to the client,
not the lawyer, . . ., they fall within the broad category of property
that is subject to garnishment.” Rubio at 625.
The court took comfort that several other
jurisdictions had reached a similar result, and speculated that “a contrary
rule would invite unethical practice.” See
id. The court dismissed the firm’s
argument that allowing the garnishment of retainers would allow parties to gain
an unfair advantage in litigation by depriving their opponents of legal
representation, noting that “in a dissolution of marriage case, a trial court
may level the playing field by requiring one spouse to pay the other spouse's
attorney fees.” Id.
The irony of hoisting Louise Rubio with
the petard of Sather is delicious. Sather protects clients against the
use of “nonrefundable retainers” by establishing that a retainer remains property of the client until a lawyer provides legal services, thereby
preserving a client’s right to discharge counsel without penalty. Ms. Rubio clearly did not seek, need, or want
any such protection.
On the contrary, she wanted legal
representation against her husband who had fortuitously secured a judgment
against her. Deprived of its retainer,
the Marrison firm would have good cause to withdraw. Yet the Rubio court condoned Frank
Rubio’s tactic—patently designed to deprive his wife of legal
representation—saying only, “This argument is difficult to credit generally
because it rests on questionable premises. (Is it always true that the debtor
has greater need than the creditor?),” while speculating that a divorce court might
require Mr. Rubio to pay his wife’s legal fees – perhaps with the retainer
the court gave him leave to garnish. Id.
at 625.
Rubio’s discussion of the Marrison firm’s attorney’s
lien argument is muddled. The opinion
begins by noting that the firm “argued [below] that it had a possessory attorneys' lien against the
unearned portion of the retainer.” Id.
at 624 (emphasis added). It
concludes by holding the firm had no charging lien, observing the
obvious – that the retainer was received directly from Louise Rubio, and not as
a result of the firm's efforts.
The painful reminder of Rubio is that a retainer offers no
security for a lawyer, and sometimes none for a client. The harshness of its lesson could have been
avoided had the Marrison firm perfected a security interest in the retainer as
permitted by the Uniform Commercial Code, and the Rules of Professional
Conduct. See Colo. Bar Ass’n Ethics Op.110, Assertion of Attorney’s Charging Lien/Security Interest in
Property (2002).
[Ed. Note: This blog was first published in the 20 October 2014 edition of Law Week Colorado]