Effective January 1, 2026, the Oregon Supreme Court amended Rule of Professional Conduct 1.5(c) to change how Oregon lawyers may handle fees they collect before doing the work.[1] The familiar labels “earned on receipt” and “nonrefundable” are now off the table entirely, replaced by a new “prepaid fee” framework with a more demanding set of client disclosures.[2] If your engagement agreements still use the old language, they are out of compliance—and the new rule leaves little room for a “we substantially complied” defense.[3]
Here is what changed, why it changed, and what Oregon lawyers should do about it.
What the rule used to say
Since 2010, former RPC 1.5(c)(3) allowed a lawyer to treat an advance fee as the lawyer’s property immediately—and keep it out of the trust account—so long as the fee was denominated “earned on receipt,” “nonrefundable,” or similar terms in a written agreement signed by the client. That agreement had to explain two things: (i) that the funds would not go into the lawyer trust account, and (ii) that the client could discharge the lawyer at any time and might then be entitled to a refund of all or part of the fee if the work was not completed.[4]
The old framework contained a built-in tension because a fee could be labeled “nonrefundable,” even though the same rule required the lawyer to disclose that it was, in fact, refundable if the services were not completed. For clients—and for more than a few lawyers—that was confusing at best and misleading at worst.[5]
What the rule says now
The amended rule splits the topic into two provisions.
RPC 1.5(c)(3) now flatly prohibits the old terminology. A lawyer may not enter into an arrangement for, charge, or collect a fee denominated as “earned on receipt,” “nonrefundable,” or similar terms—period. There is no longer a disclosure path that rehabilitates those labels.[6]
RPC 1.5(c)(4) is the new home for the concept. A lawyer may treat an advance payment as a “prepaid fee” (and keep it out of trust) only under a written agreement signed by the client that explains:[7]
- the nature of the fee arrangement and the scope of the services to be provided;
- the total amount of the fee and the terms of payment;
- that the fee will not be deposited into a lawyer trust account;
- that the client may terminate the lawyer’s services at any time, for any reason or no reason; and
- that the client may be entitled to a refund of all or part of the fee if the services for which the fee was paid are not completed, and how any such refund would be calculated.
Two of those disclosures are genuinely new. The rule now requires lawyers to spell out the scope of services and the total fee and payment terms, and—critically—to explain how a refund would be calculated. A boilerplate clause that simply gestures at the possibility of a refund will not satisfy the fifth requirement. There is also a corresponding amendment to RPC 1.15-1 (Safekeeping Property) to keep the trust-accounting rules in sync.[8]
Why the change happened
The amendments did not come out of nowhere. In 2022, the Oregon State Bar’s Client Security Fund Committee asked the Legal Ethics Committee to revisit the rule after finding that roughly a quarter of CSF claims involved lawyers failing to refund unearned fixed fees.[9] After a multi-year study and outreach process, the Legal Ethics Committee’s proposal moved through the Board of Governors—which approved sending it to the House of Delegates in April 2025—and on to the Oregon Supreme Court, which adopted it effective January 1, 2026.[10]
The reform also tracks a broader national trend. ABA Formal Opinion 505 (2023) sharply criticized the “earned on receipt” and “nonrefundable” labels, describing them as an attempt to sidestep a lawyer’s ethical duty to safeguard client funds.[11] Oregon’s own case law had long pointed the same direction—from In re Hedges, 313 Or. 618 (1992), and In re Biggs, 318 Or. 281 (1994), through In re Long, 368 Or. 452 (2021)—recognizing that fees collected for work not performed are problematic regardless of the label attached to them.[12] The new rule simply removes the misleading vocabulary and replaces it with disclosures aimed at making the arrangement transparent to the client from the outset.
A caution: much of the Bar’s secondary guidance has not caught up
This rule is new, and the body of secondary guidance built up around the old framework has only begun to be revised. Practitioners should rely on the current rule text rather than older practice aids—several of which still reference the superseded language.
The clearest example is the Oregon State Bar’s own ethics library. Former Formal Opinion 2005-151 (Fee Agreements: Fixed Fees), which discussed fixed fees using the now-prohibited terms, was withdrawn by the Board of Governors in April 2026—but a replacement opinion has not yet been issued, leaving a gap in formal guidance on the topic.[13] Other widely used resources still describe the pre-2026 rule. The Professional Liability Fund’s “Engagement Letters & Fee Agreements” practice aid (last revised in 2018), for instance, continues to cite former RPC 1.5(c)(3), the now-withdrawn Formal Opinion 2005-151, and an October 2011 Bar Bulletin article on “nonrefundable” fees—all of which predate the amendment.[14] Sample forms and checklists drawn from those materials should not be used without updating them to the current rule.
What Oregon lawyers should do now
If you charge fixed or flat fees and want to treat them as earned when paid, three steps are worth taking promptly:
- Purge the prohibited terms. Search your engagement letters, fee agreements, and intake templates for “earned on receipt,” “earned upon receipt,” and “nonrefundable.” Those words now create exposure rather than protection.
- Rebuild around the five disclosures. Revise your prepaid-fee agreements to address each element of RPC 1.5(c)(4)—including a clear, workable method for calculating a refund if the representation ends early. This is the element most likely to trip up agreements that were merely relabeled rather than rewritten.
- Verify any form against the current rule. Because the Bar’s secondary guidance is still being updated, confirm that any template or checklist you rely on reflects the January 1, 2026 amendments rather than the prior framework. Lawyers practicing across state lines should also remember that the ABA Model Rules and other jurisdictions treat advance fees differently, so an Oregon-compliant agreement is not automatically compliant elsewhere.[15]
The stakes for getting it wrong
A lawyer who collects an advance fee outside of trust without a fully compliant RPC 1.5(c)(4) agreement risks a disciplinary action from the Oregon State Bar. At least one ethics practitioner has opined that the precise checklist style of the rule would undercut a “substantial compliance” argument.[16] Beyond discipline, fee agreements that fail to meet mandatory requirements can be found unenforceable, which can leave a lawyer worse off than if no special agreement had been used at all.[17]
For attorneys who find themselves facing a Bar inquiry over fee handling—or who simply want a second set of eyes on their engagement agreements before a problem arises—this is a good moment to take stock. Reuter Corbett’s professional license and disciplinary defense practice regularly advises Oregon and Washington lawyers on compliance with the Rules of Professional Conduct and represents them in matters before the disciplinary authorities. If you have questions about how the amended rule affects your practice, we are glad to help.
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This post is provided for general informational purposes and does not constitute legal advice or create an attorney-client relationship. The Oregon Rules of Professional Conduct are subject to change; consult the current rules and qualified counsel regarding your specific situation. Sources below were last verified on July 7, 2026.
Notes
[1] Oregon Rules of Professional Conduct, RPC 1.5 (amendment note: “Amended 01/01/26: . . . paragraph (c)(3) amended to no longer allow ‘earned on receipt’ or ‘nonrefundable’ in fee agreement; paragraph (c)(4) added related to prepaid fee agreement”), https://www.osbar.org/\_docs/rulesregs/orpc.pdf; “Language Updates About Fees,” OSB Bulletin (April 2026), p 9, (Oregon Supreme Court enacted the change to RPC 1.5(c)(3) effective Jan. 1, 2026), https://www.osbar.org/bulletin/issues/2026/2026April/offline/download.pdf.
[2] Mark J. Fucile, “Prepaid Fees: New Take on an Old Subject,” Multnomah Lawyer — Ethics Focus (April 2026), http://www.frllp.com/docs/752/f688630eecd6c6bdd8e3afafc13c049717e50e90/April2026MultnomahLawyerEthicsFocusPrepaidFeesNewTakeonanOldSubject.pdf.
[3] Id. (noting that the clarity of the new rule “doesn’t leave much room for a defense of ‘substantial compliance'”).
[4] Former Oregon RPC 1.5(c)(3) (2010–2025); see also Amber Hollister, “How Much Do I Owe You?: ‘New’ Guidelines for Fixed and So-called Nonrefundable Fees,” OSB Bulletin (October 2011), https://www.osbar.org/publications/bulletin/11oct/barcounsel.html.
[5] BOG Resolution No. 2, Amend Oregon RPC 1.5(c) and 1.15-1 (Oregon State Bar Board of Governors) (observing that the former rule “even requires notice that a ‘nonrefundable fee’ is refundable” and that the language “confuses clients and the public”), https://bog.osbar.org/files/BOG-Resolution-No-2-Amend-RPC-1.5-and-1.15-2.pdf.
[6] Oregon RPC 1.5(c)(3) (eff. Feb. 1, 2026), https://www.osbar.org/\_docs/rulesregs/orpc.pdf.
[7] Oregon RPC 1.5(c)(4) (eff. Feb. 1, 2026), https://www.osbar.org/\_docs/rulesregs/orpc.pdf; Fucile, supra note 2 (reproducing the five required disclosures).
[8] Oregon RPC 1.15-1 (corresponding 2026 amendment); Fucile, supra note 2.
[9] Fucile, supra note 2 (the OSB Client Security Fund approached the Legal Ethics Committee in 2022 because roughly 25 percent of CSF claims involved the failure to refund unearned fixed fees); BOG Resolution No. 2, supra note 5.
[10] BOG Resolution No. 2, supra note 5; Board of Governors Agenda, RPC 1.5 and 1.15-1 (April 18, 2025), https://bog.osbar.org/files/7B-2025.04-BOG-LEC-1.5-1.15.pdf; OSB Bulletin (April 2026), supra note 1.
[11] ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 505, “Fees Paid in Advance for Contemplated Services” (May 3, 2023) (at 5: the Model Rules do not permit a lawyer to “sidestep the ethical obligation to safeguard client funds” by characterizing an advance as “nonrefundable” and/or “earned upon receipt”).
[12] In re Hedges, 313 Or. 618 (1992); In re Biggs, 318 Or. 281 (1994); In re Long, 368 Or. 452 (2021); see also Fucile, supra note 2 (surveying this case history).
[13] OSB Formal Opinion No. 2005-151, Fee Agreements: Fixed Fees [Withdrawn] (“Withdrawn by the Board of Governors, April 2026”), https://www.osbar.org/\_docs/ethics/2005-151.pdf; Oregon State Bar, Formal Ethics Opinion Library — Table of Contents (listing 2005-151 as “[Withdrawn 2026]”), https://www.osbar.org/ethics/toc.html.
[14] Oregon State Bar Professional Liability Fund, “Engagement Letters & Fee Agreements” (Rev. 01/2018) (citing OSB Formal Opinion 2005-151, former Oregon RPC 1.5(c)(3) and RPC 1.15-1(c), and the October 2011 Bar Bulletin article), https://assets.osbplf.org/forms/pdfs/Engagement%20Letters%20and%20Fee%20Agreements.pdf.
[15] Fucile, supra note 2 (noting that ABA Model Rule 1.5 contains no comparable provision and that states vary in their approach to advance fees).
[16] Id.
[17] Id. (citing Bechler v. Macaluso, Case Number CV 08-3059-CL (D. Or. May 14, 2010) (unpublished), where a contingent fee that failed to comply with ORS 20.340 was held unenforceable).
