I signed a contract with a lawyer 2 days ago, can I cancel today with no penalty and have my deposit returned>

You can terminate the services of a lawyer at any time. As to the nonrefundable retainer, Illinois appears to allow them under limited circumstances. That means that while you are always free to cancel, they may be able to keep some or the entire amount depending on the deposit, what was done and other facts.

You should read this article http://www.dcba.org/brief/aprissue/2006/northern0406.htm and contact a local attorney with expertise in Illinois professional responsibility rules.

DISCLAIMER—This answer is for informational purposes only and discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney client relationship.

Although Illinois does allow non-refundable deposits, it must be reasonable. In your case, since the attorney has likely done little to no work in your matter, yet, he would probably not be allowed to keep the whole deposit; although he would be allowed to keep reasonable payment for what-ever services he did render.

I would agree with my colleagues. You have the absolute right to fire your lawyer at any time. However, the lawyer is entitled to be paid for the expenses incurred and for the legal work he or she has performed through the termination date.

As for your deposit, Illinois allows nonrefundable fees but does limit them by requiring them to be reasonable. In general, 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 or contingent.

Also, Illinois has new rules concerning fees - which are not yet effective and would not (directly) apply to your case, but can be informative. The new rules indicate that an advance fee or deposit may be collected, but any "unearned" portion would have to be returned. Depending on what type of law and what the attorney may have done in the 2 days since you engaged him, I would assume a significant portion would be unearned and should be returned (despite the fact that the contract indicates it is nonrefundable).

This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. Please contact me to discuss further. Otherwise, you need to consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.