Do you ever collect fees in advance for work to be performed in the future?
Do you tell your clients these funds are nonrefundable?
What do you call this payment – a retainer, an advance, a paid-in-full fee?
Where do you deposit these funds?
For guidance on these and related ethical issues, you should first turn to your state bar or licensing and disciplinary authority to find out what rules apply in your jurisdiction.
Recent guidance is provided by ABA Formal Ethics Opinion 505, issued in June 2023.
“Under the Model Rules of Professional Conduct, a fee paid to a lawyer in advance for services to be rendered in the future must be placed in a client trust account and may be withdrawn only as earned by the performance of the contemplated services,” according to the opinion. “This protects client funds and promotes client access to legal services in the event the representation terminates before all contemplated services have been rendered. All fees must be reasonable, and unearned fees must be returned to the client. Therefore, it is not accurate to label a fee ‘nonrefundable’ before it actually has been earned, and labels do not dictate whether a fee has been earned.”
Do you have a Law Firm Compensation Plan? Without one, you’re hampering the success of your practice. An effective and equitable pay structure will increase firm productivity, reduce turnover and boost office morale. It will help you recruit and retain the highest caliber of legal talent. And it will allow you to provide consistently excellent client service. Join us on September 27 for the CLE webinar, Creating an Attorney Compensation Plan That Will Build Firm Culture and Attract Top Talent, and learn how to design and develop a compensation plan that’s right for your practice – whether you’re building one from scratch or updating an existing plan. This free, one-hour CLE will be taught by two of the country’s top authorities on law firm economics, Brenda A. Barnes and Camille Stell, co-authors of the book RESPECT: An Insight to Attorney Compensation. Don’t miss this latest installment in Alta Pro’s highly popular, cutting-edge CLE webinar series. Register now!
Alta Pro RPG now offers Lawyers Professional Liability Insurance in 15 states: Arizona, Colorado, Georgia, Iowa, Illinois, Indiana, Kentucky, Michigan, Minnesota, North Carolina, Ohio, South Carolina, Tennessee, Texas or Wisconsin? Membership in the Alta Pro Lawyers Risk Purchasing Group (RPG) offers a wealth of benefits for your practice: free, cutting-edge CLE webinars featuring top experts tackling timely topics; the Pro Practice Playbook; the Pro Practice Blog; Reminger’s ProLink risk management assistance; Reminger’s Claim Repair Hotline; discounts on CLIO practice management software; tax savings on health insurance; and access to the Risk Pro, to keep your firm safe and successful. Click here to learn more about Alta Pro RPG benefits.