For the Defense - Vol. 4, Issue 4 - 26

magic words in your agreement: "non-refundable"
AND "earned upon receipt." Once you include
this language, theoretically, at least according to
Ostrowski, you should be able to deposit the fee in
your operating account without fear. However, the
belt and suspenders approach that I recommend
incorporates a requirement included in Rule 1.15(i)
which applies when advanced fees are deposited
into an operating account. The Rule states:
A lawyer shall deposit into a Trust Account
legal fees and expenses that have been
paid in advance, to be withdrawn by the
lawyer only as fees are earned or expenses 	
incurred, unless the client gives informed
consent, confirmed in writing to
the handling of fees and expenses in a
different manner. (Emphasis added - note
that this is one of the few places in the
Rules where informed consent requires
confirmation in writing.)
This is where it gets a little tricky: my
interpretation of Ostrowski and the Rule's
description of fees to "be paid in advance" is
that a fee agreement that describes a fee as
"non-refundable" and "earned upon receipt"
should not be considered to be an "advance"
fee that is required to be deposited into a Trust
Account. However, to protect yourself from a

26

For The Defense

l

Vol. 4, Issue 4

later determination that you are not correctly
characterizing the fees as "the lawyer's property"-
which I have seen happen-state in your fee
agreement that you are not depositing the
fees into your trust account and have the
client counter-sign the agreement. Here is a
suggested version of the language that you
can use:
We have agreed that the fee in this matter
is a flat, non-refundable fee which is earned
upon receipt and covers the following work
(insert scope of the engagement.) As such, it
will not be placed in an attorney trust account
to be billed against.
This language should protect you both ways:
first, by establishing that you are not receiving
an advance fee that has to be deposited into an
IOLTA and second, by getting the client's informed
consent to deposit the fee in the operating account,
notwithstanding how the fee is characterized.

Rule 1.15: The Rule of Safekeeping
Property: Trial Balances, RecordKeeping Requirements and Three-Way
Reconciliations
Rule 1.15 is complicated: it has twenty subsections and twelve interpretive comments.
Subsection 1.15(a) alone has eleven separate sub-


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For the Defense - Vol. 4, Issue 4

Table of Contents for the Digital Edition of For the Defense - Vol. 4, Issue 4

Contents
For the Defense - Vol. 4, Issue 4 - 1
For the Defense - Vol. 4, Issue 4 - 2
For the Defense - Vol. 4, Issue 4 - Contents
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