Earned Upon Receipt In A Retainer Agreement

December 7, 2020 – 2:46 pm

Since true conservations are earned at reception, these are not “funds held for the benefit of the client.” Therefore, the prohibition against mixing “member funds” in Rule 4-100 means that the actual investments should be placed in the company`s account and not on the client`s trust account. As a former president and former member of the Crown Counsel`s Arbitration Committee, I have often been asked to review and evaluate the provisions of a pricing agreement that characterizes a payment by the client as “non-refundable” or “earned after receipt.” However, there are significant differences in how we, as lawyers, are required to process such payments, based on the true type of payment and regardless of the language used in the pricing agreement. These differences relate essentially (1) to the obligation of counsel to repay, if any, part or all of the down payment in the event of discharge or resignation, and (2) whether the advance is to be made on the fiduciary account of the lawyer`s account loyal to the client or on the lawyer`s own account. These are important distinctions to understand, because if mistreated by counsel, it can be a ground of discipline. These three types of pre-payment fees are different and it is up to the lawyer to explain to the client the nature of his fees. Otherwise, the payment (default) is an advance: it is presumed to be a “deposit intended to guarantee the payment of a tax to be won”. (RPC 158) Pricing rules may provide for more than one type of tax, but “there should be a clear agreement between the lawyer and the client on which part of the payment is a genuine general retention or a flat fee and what part of the payment is an advance. In the absence of such an agreement, the full payment must be paid into the trust account and is considered the client`s money until they are earned. (97 OTF 4) Counsel X`s fee agreement is unethical, since its fee agreement provided for a “non-recoverable custodian” for the payment of legal services prior to trial, which cannot be done by a non-recoverable custodian after PEC 611. In addition, Lawyer X levies another “non-refundable” judicial fee. In the background, lawyers must have a client receiver account in all jurisdictions in order to retain client money and property.

In most jurisdictions, a pre-guard (i.e. money paid in advance by a client for services) is considered the property of the client until the lawyer actually performs the work. That is why the money must be deposited into the trust account. The only time jurisdictions deviate from this rule is for lump sum fee payments that some states feel they deserve to be received – meaning they can be spent immediately instead of being abandoned in confidence. Similarly, a flat fee is reimbursed, even if the lawyer calls them “non-refundable.” A flat fee is a fixed fee for legal services, but if legal services are not essentially completed or earned, then a portion of the flat fee can be refunded.

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