Swango v. Virginia State Bar: The Supreme Court of Virginia Prohibits Non-Refundable Consultation Fees and Clarifies “Retainer” vs. “Advanced Legal Fee”

1. Introduction

Swango v. Virginia State Bar, decided on 31 July 2025 by the Supreme Court of Virginia, addresses the ethical propriety of attorneys advertising and collecting “non-refundable” consultation fees. Jason Eugene Swango, a domestic-relations lawyer operating The Firm for Men in Virginia Beach, charged two prospective clients a “non-refundable $300 consultation fee.” Neither client received the consultation. Swango refused refunds, deposited the money directly into his operating account, and posted disparaging comments on Facebook. The Virginia State Bar (VSB) charged him with violating Rule of Professional Conduct (RPC) 1.5(a) (unreasonable fees) and RPC 1.15(a)(1) (safekeeping client property). A three-judge circuit court found violations and issued a public reprimand with refund terms. Swango appealed. The Supreme Court affirmed, producing a detailed opinion that now stands as the leading Virginia authority on:

• The absolute prohibition of “non-refundable” advanced legal fees (including consultation fees).
• The bright-line distinction between a true “retainer” and an “advanced legal fee.”
• The lack of any scienter/intent requirement for RPC 1.5(a) and 1.15(a)(1) violations.
• The limited role of expert testimony on questions of legal ethics.

2. Summary of the Judgment

The Court (Russell, J.) unanimously affirmed the circuit court. Key holdings:

1. The $300 “consultation fee” was an advanced legal fee, not a true retainer, because it bought discrete legal services (research, advice, the meeting) regarding a known matter.
2. Under Legal Ethics Opinion 1606 (LEO 1606) and RPC 1.15, advanced fees remain the client’s property until earned; therefore they must be deposited in a trust account and must be refunded (in whole or part) if the contemplated work is not performed.
3. Characterizing or labeling the fee as “non-refundable” cannot override these ethical duties; an unearned fee is per se unreasonable and violates RPC 1.5(a).
4. No specific intent (“scienter”) is required; Swango’s deliberate conduct—taking, depositing, and keeping the money—was enough, even if he subjectively misinterpreted the rules.
5. The circuit court properly excluded Swango’s proposed expert whose testimony consisted of legal conclusions about the meaning of RPCs—impermissible under Code § 8.01-401.3(B).
6. Proposed 2025 amendments to RPC 1.5 did not alter existing law; therefore they were not grounds for reconsideration.
7. The disciplinary sanction (public reprimand and mandatory refunds) was affirmed.

3. Analysis

3.1 Precedents and Authorities Cited

• Legal Ethics Opinion 1606 (1994; adopted 2016) – Central authority delineating “retainer” vs. “advanced legal fee” and banning non-refundable advanced fees. The Court treated LEO 1606 as binding interpretive guidance.
• Pilli v. Virginia State Bar
• Green v. Virginia State Bar
• Roberts v. Virginia State Bar
• Zaug v. Virginia State Bar
• Haley v. Virginia State Bar
• Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A.
• Virginia Rule of Evidence 2:702 & Code § 8.01-401.3 (expert testimony limits)
• Proposed 2025 amendment to RPC 1.5 (now Comment 10 & 11 and new sub-section (g))

These precedents collectively underscore that attorney discipline cases receive independent appellate review, that ignorance of law is no defense, and that experts may not testify to legal conclusions.

3.2 Legal Reasoning

1. Nature of the Payment – The Court began with LEO 1606’s definitions. A fee paid merely to ensure future availability (without buying specific work) is a retainer and is earned when paid. A fee paid for particular services not yet performed is an advanced legal fee and remains client property until earned. The confirmation emails, questionnaires, and Facebook posts made clear that the $300 bought a specific consultation, ergo an advanced fee.
2. Mandatory Trust Accounting – Because advanced fees are client property, RPC 1.15(a)(1) requires deposit into a trust account. Swango converted client property by placing it in his operating account from day one.
3. Reasonableness of Fees – RPC 1.5(a) bars unreasonable fees. Charging—and retaining—money for work never performed is per se unreasonable under LEO 1606.
4. Label Does Not Control – An attorney cannot “contract around” ethical duties. Calling a fee “non-refundable” or “retainer” does not change its substantive character.
5. No Scienter Requirement – Even if RPC 1.5 and 1.15 contain an intent element, the Court said, it is satisfied because Swango intentionally did the acts (collect, deposit, refuse refund). His mistaken belief in legality is irrelevant (Jerman principle).
6. Expert Testimony Excluded – Interpretation of ethical rules is a pure question of law for the court. Expert opinion on ultimate legal issues is inadmissible.
7. Proposed Rule Amendments – The 2025 revisions merely codify existing obligations; they do not create ambiguity or exonerate past misconduct.

3.3 Impact of the Decision

The judgment has immediate and far-reaching implications:

• Fee Structures State-Wide – Virginia lawyers must immediately abandon any “non-refundable” consultation or flat-fee arrangements unless they are true classic retainers (rare). Failure to maintain a trust account for advanced fees risks discipline.
• Marketing & Intake Practices – Confirmation emails, websites, and social-media postings must avoid “non-refundable” language and accurately explain when fees become earned.
• Bar Counsel Enforcement – The opinion supplies a clear template for future prosecutions—intent is irrelevant, and LEO 1606 applies even when not expressly cited in an engagement letter.
• Education & CLE Programs – Continuing Legal Education providers likely will update ethics curricula to emphasize trust accounting and the advanced-fee/retainer dichotomy.
• National Persuasive Authority – Although limited to Virginia, the decision joins a growing line of state cases condemning non-refundable advanced fees (e.g., Colorado, Florida, New York) and may persuade courts in jurisdictions without clear guidance.
• Client Autonomy – The ruling safeguards clients’ unconditional right to terminate counsel without financial penalty for services not received.

4. Complex Concepts Simplified

4.1 Retainer vs. Advanced Legal Fee

• Retainer: A payment to reserve a lawyer’s future availability, independent of specific work. Earned immediately; may go to operating account.
• Advanced Legal Fee: Pre-payment for identified legal services in an existing matter (consultation, drafting, court appearance). Not earned until work is done; must sit in a trust account.

4.2 Trust Account vs. Operating Account

• Trust Account (IOLTA): Holds client money; lawyer is fiduciary; withdrawals only as fees become earned or expenses incurred.
• Operating Account: Law firm’s money; used for salaries, rent, overhead.

4.3 RPC 1.5(a) – Reasonable Fees

An attorney must charge only fees that are fair for services actually provided; keeping money for work not performed is automatically unreasonable.

4.4 RPC 1.15(a)(1) – Safekeeping Property

Client funds must be segregated and protected; commingling or premature transfer to the lawyer’s own account constitutes conversion.

4.5 Scienter

In disciplinary proceedings, “intent” focuses on whether the lawyer deliberately performed the prohibited act, not whether the lawyer knew it was wrong.

4.6 Expert Testimony on Law

Experts can explain specialized factual matters, but cannot tell the court what a rule means or whether conduct violates it—that is a judicial function.

5. Conclusion

Swango v. Virginia State Bar cements a bright-line rule in Virginia: non-refundable consultation fees are unethical when they represent payment for specific legal services yet to be performed. The decision reinforces that attorneys cannot contract away fiduciary duties, must safeguard client funds, and cannot rely on subjective misunderstanding as a defense. By tethering its analysis to LEO 1606, the Court ensures continuity with longstanding ethics guidance while providing unmistakable clarity for the future. Lawyers practicing in the Commonwealth—and, by analogy, elsewhere—should revise fee agreements, deposit advanced payments in trust accounts, and treat the concept of “non-refundable” with extreme caution. Failure to do so may invite public reprimand or harsher sanctions, as this precedent now makes abundantly clear.