Bar Counsel Notes: Fee Issues
Non-client Smith paid Attorney X's firm a $4,000 retainer for client Doe's case. Client Doe then promised to reimburse payor Smith @ $100 per month, a fact unknown to Attorney X. Thereafter, Doe failed to make any payments to Smith. As a result, Smith has now requested that the firm pay Smith the $350 balance of that retainer. Should the firm do so or not?
No. That money was received by Attorney X's firm for client Doe's legal matter. Moreover, there was no prior agreement between client Doe and payor Smith that any dispute over the funds paid would result in a return of those funds to Smith. As a result, it must remain in the IOLTA for Doe, subject to the conditions listed in MRPC 1.15(e). As is explained in Rule 1.15(e) the firm is not required or permitted to give any of the remaining fee to Smith unless and until the dispute is resolved. It is no longer Smith's money, and that money dispute between Smith and Doe is not a matter in which the firm should become involved.
*Disclaimer: The Informal Ethics Advisory Notes from Bar Counsel are intended as outreach by the office of Bar Counsel for the use and benefit of the Maine bar. These scenarios are drawn from actual telephone calls received by the attorneys in the office of Bar Counsel in the course of providing informal advice on the Code of Professional Responsibility, known as Bar Counsel's "Ethics Hotline." The particular advice in each case is limited with reference to the particular factual situation related by the inquiring attorney who must be inquiring about his or her own conduct or the conduct of a member of his or her firm. We do not provide any advice to one attorney about the conduct of another attorney unless they are members of the same law firm. In the telephone opinions, we usually explore and discuss additional factual variables. However, I have attempted to pare down these factual scenarios to make the email newsletter more readable and useful in a general sense. Obviously, that creates the risk that slight variations on the facts, to a learned reader, may give rise to a different analysis and conclusion.