## Facts

- Kin Cheung Wong retained Michael Kennedy, P.C. and Michael Kennedy to represent him in a federal criminal prosecution.
- The parties executed a written retainer agreement for a fixed $225,000 fee for legal services in the specific criminal matter through ten weeks of trial, with additional weekly trial fees if trial exceeded ten weeks.
- The agreement required Wong to pay $75,000 immediately and $150,000 shortly before trial.
- The agreement treated any fee actually paid as earned and nonrefundable if Wong terminated the representation.
- Wong paid the initial $75,000 and soon thereafter discharged Kennedy.
- Wong filed a diversity action challenging the fee arrangement, seeking return of the $75,000 and an accounting of client funds placed in escrow with defendants.
- Wong moved for partial summary judgment under Rule 56 for (1) a $75,000 money judgment and (2) an order compelling a complete accounting of escrowed funds.

## Issues

1. Whether a criminal-defense fee agreement that is an advance payment for specified future services may be enforced as “earned and nonrefundable” upon the client’s termination, consistent with New York professional responsibility rules and public policy.
2. Whether attorneys holding a client’s funds in escrow must provide a detailed accounting, and whether summary judgment relief compelling such an accounting was appropriate.
3. Whether the record on summary judgment permitted an immediate $75,000 refund judgment, or instead required later determination of any fee entitlement based on services actually rendered.

## Decision

- The court granted the motion in part and denied it in part.
- The court declared the retainer agreement unenforceable as written because it was not a true general (availability) retainer and its “nonrefundable” feature conflicted with New York ethics rules and public policy.
- The court ordered defendants to provide a more detailed accounting of certain escrowed funds.
- The court declined to enter an immediate $75,000 money judgment, leaving the ultimate allocation of fees and any refund to later proceedings.

## Legal Principles

- Attorney fee contracts are subject to close judicial scrutiny and must be fair, reasonable, and fully known and understood by the client.
- A “nonrefundable” retainer is enforceable only when it is a genuine general retainer paid solely for the attorney’s availability, not when it is an advance payment for identified future legal services in a particular matter.
- An advance fee for services to be performed cannot be insulated from review or refund solely by labeling it “earned” or “nonrefundable”; the lawyer’s compensation remains subject to reasonableness limits and refund to the extent unearned.
- When a fee agreement is unenforceable, counsel may seek compensation for the reasonable value of services actually rendered, but the amount generally requires factual development.
- Attorneys who hold client funds must maintain and provide a sufficiently specific accounting of those funds.

## Conclusion

The court held that a fixed-fee criminal-defense retainer tied to future services could not be enforced as entirely “earned and nonrefundable” upon discharge, ordered a detailed escrow accounting, and reserved any final determination of fees or refund (including the $75,000 payment) for later proceedings based on the value of services actually performed.


Wong v. Michael Kennedy, P.C., 853 F. Supp. 73 (E.D.N.Y. 1994)