Is it commingling for a lawyer to leave fees she has already earned sitting in her client trust account?

Plain-English summary

Attorney A received a $2,000 advance against fees, to be charged at $100 per hour with the fee due when earned. After performing 20 hours of work, she informed the client and asked for an additional $1,000 to continue; the client never responded. A kept the entire original $2,000 in her client trust account. Bar Counsel asked whether A commingled her own funds with the client's by not withdrawing her fees as earned, and if so, what a reasonable withdrawal time would be.

The Commission interpreted Maine Bar Rule 3.6(f) ("Preserving Identity of Funds and Property"), which directs lawyers to place client funds in identifiable accounts and bars depositing funds belonging to the lawyer there, subject to Rule 3.6(f)(1)(ii). That provision states that funds belonging in part to a client and in part to the lawyer must be deposited in the account, but the lawyer's portion may be withdrawn when due unless the client disputes the right to receive it. The Commission concluded that, absent a dispute, the rule permits the lawyer to withdraw earned fees when due, acting as trustee and remaining strictly accountable to the client. As trustee, the lawyer has no proprietary interest in the client's funds but a claim to the portion representing earned fees and a right to disburse them; the rule permits but does not require withdrawal, so failing to withdraw earned money does not violate it.

The Commission found its conclusion consistent with commingling cases, which typically involve depositing client funds in personal accounts, using the trust account for personal expenses, or failing to keep accurate accountings, none of which were present. It distinguished two cases suggesting that leaving earned fees in trust violates the rule: Wright v. Virginia State Bar turned on Virginia record-keeping requirements absent from the Maine rules, with no record-keeping problem here; and North Carolina State Bar v. Speckman involved a lawyer who deposited additional personal funds and wrote checks for office expenses on the trust account, conduct distinguishable from simply leaving funds untouched. Finding no commingling, the Commission did not reach the second question, and expressly limited its opinion to the facts presented, noting that misappropriation or lax record-keeping could change the outcome.

Currency note

This opinion was issued in 1989, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Is leaving earned fees in the client trust account commingling?

A: The opinion concluded no, on the facts presented. The rule permits but does not require withdrawing earned fees when due, so leaving them in trust, without misuse or bad records, is not commingling.

Q: Does the trust-account rule require a lawyer to withdraw fees as soon as they are earned?

A: The opinion concluded no. Rule 3.6(f)(1)(ii) permits the lawyer's portion to be withdrawn when due, but does not mandate it, absent a client dispute over the right to the fee.

Q: What kind of conduct does count as commingling?

A: The opinion explained that commingling cases typically involve depositing client funds in personal accounts, paying personal expenses from the trust account, or failing to keep accurate accountings, none of which occurred here.

Q: Could the answer change on different facts?

A: The opinion expressly limited itself to the facts presented and noted that misappropriation of client funds or lax record-keeping could affect the outcome of a commingling case.

Background and rules framework

The opinion interprets Maine Bar Rule 3.6(f) (preserving the identity of client funds and property), including Rule 3.6(f)(1)(ii) (the lawyer's portion of mixed funds may be withdrawn when due unless disputed) and Rule 3.6(f)(2)(iii) (maintaining complete records of client funds). These correspond to ABA Model Rule 1.15 (safekeeping property and trust-account obligations).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.15 (safekeeping property; trust accounts)
• Maine Bar Rule 3.6(f), 3.6(f)(1)(ii), 3.6(f)(2)(iii); ABA EC 9-5

Cases:

• Bar Ass'n v. Marshall, 269 Md. 510, 307 A.2d 677 (1973), lawyer as trustee accountable for the account
• Wright v. Virginia State Bar, 357 S.E.2d 518 (Va. 1987), distinguished on record-keeping grounds
• North Carolina State Bar v. Speckman, 360 S.E.2d 129 (N.C. App. 1987), distinguished

See also

• Maine Ethics Op. 127: Disbursing Assigned Client Funds
• Maine Ethics Op. 116: Client Funds Owed to Third Persons

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=91492

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Issued by the Professional Ethics Commission

Date Issued: August 16, 1989

Facts

Attorney A receives a $2,000 advance against fees to commence some legal work on behalf of Client C. Their agreement is that she would charge her time against these funds at a rate of $100 per hour, and the fee is due when earned.

Attorney A performs 20 hours worth of work and writes to Client C informing him of the status of the case, supplying some requested information and informing Client C that she needs an additional $1,000 to continue with the work. Client C never writes back or otherwise responds to Attorney A.

To date, Attorney A has kept the entire original $2,000 in her client trust account.

Questions

• Has Attorney A commingled her own funds with her client's funds by not withdrawing her fees as earned?

• If the answer above is yes, what is a reasonable time to make withdrawals of such fees as earned so as to not commingle?

Opinion

Determination of the questions before the Commission requires an interpretation of Maine Bar Rule 3.6(f), "Preserving Identity of Funds and Property." This rule directs all lawyers and law firms to place any funds paid by a client, other than retainers and advances for costs and expenses, into "one or more identifiable accounts." The rule prohibits any funds "belonging to the lawyer or law firm" from being deposited in this account, with the following relevant exception, contained in Rule 3.6(f)(1)(ii):

Funds belonging in part to a client and in part presently or potentially to a lawyer or law firm must be deposited therein, but the portion belonging to the lawyer or law firm may be withdrawn when due unless the right to receive it is disputed by the client; in that event, the disputed portion shall not be withdrawn until the dispute is finally resolved.

Thus, unless there is a dispute between the lawyer and the client, Rule 3.6(f)(1)(ii) permits the lawyer or law firm to withdraw fees earned when they are due. In performing such a withdrawal, the lawyer is acting in his or her capacity as trustee for the client, and remains strictly accountable to the client for his or her conduct in administering the account. See Bar Ass'n v. Marshall, 269 Md. 510, 307 A.2d 677 (1973). It is the opinion of the Commission that, as trustee, the lawyer does not have a proprietary interest in the client's funds, but rather has a claim to those funds representing fees earned, and has the right to disburse those funds to himself or herself. The rule permits, but does not require, the withdrawal of funds belonging to the lawyer when due. Thus, the failure of a lawyer to withdraw money from the trust account when earned does not violate the rule.

While few cases have dealt directly with the issues involved here, the Commission's conclusion is consistent with the decisions of many courts who have considered the question of commingling. Nearly all the cases involve lawyers who have either deposited the client's funds in their personal accounts, In re Barron, 246 Ga. 327, 271 S.E.2d 474 (1980); used the client's trust account for their personal expenses, The Florida Bar v. Padgett, 481 So.2d 919 (Fla. 1986); or who failed to keep an accurate accounting of the client's money, Louisiana State Bar Ass'n v. Hopkins, 447 So.2d 464 (La. 1985).

None of the above factors are present here, and the Commission's determination that undisbursed funds for fees earned do not constitute "funds belonging to the lawyer or law firm" does not conflict with ABA Ethical Consideration 9-5, which states in part that "separation of the funds of a client from those of his lawyer not only serves to protect the client but also avoids even the appearance of impropriety." It is difficult to imagine how simply delaying disbursement of earned fees would create a threat to the client's funds or the appearance of impropriety.

There are two cases in which courts have implied that leaving earned fees in a client's trust account violated the rule against commingling. In Wright v. Virginia State Bar, 357 S.E.2d 518 (Va. 1987), the lawyer, Wright, was accused of several ethics code violations. In upholding the commingling convictions of the lower court, the Virginia Supreme Court said that "between October 1983 and December 1984, Wright routinely permitted his fees to remain in his trust account. He failed to record such amounts on his trust account records and thereby commingled his own funds with those of his clients." Wright, 357 S.E.2d at 519.

While the Virginia court's holding seems to contradict the conclusion of the Commission the two cases are actually very different. In Wright, the lawyer was charged with violating a series of Virginia record-keeping requirements that do not even exist in the Maine Bar Rules. As to the general requirement that the lawyer shall "maintain complete records of all funds . . . of a client coming into possession of the lawyer," which is contained in Maine Bar Rule 3.6(f)(2)(iii), there is no evidence of any record-keeping problems in the present case, and hence the Virginia ruling would not apply.

In a second case, North Carolina State Bar v. Speckman, 360 S.E.2d 129 (N.C. App. 1987), the lawyer deposited a $70,000 settlement check on behalf of his client into his trust account. After paying the client her share of the settlement, the lawyer left his fee in the account and wrote checks on the account to cover his office expenses.

In a somewhat confusing opinion, the court confirmed the conviction for commingling, but implied in its opinion that the lawyer had also deposited additional personal funds in the trust account, something not mentioned in the original recitation of the facts. In its opinion, the court said that "defendant claims he placed personal funds in his trust account for the sole purpose of making it possible to clear personal injury settlement drafts and checks . . .", Speckman, 360 S.E.2d at 133. The court went on to hold that the defendant's motivation was irrelevant to whether he violated the ethics code, apparently basing its conclusion of guilt on the additional funds placed in the account and not on the failure to disburse the fees earned. Even if the court intended to base its conviction on the facts as originally stated, the fact that the lawyer in Speckman had actually written checks for his expenses on the trust account distinguishes it from the present case, where the funds were simply left untouched in the client's trust account. In either case, therefore, the holding does not apply to the present case.

Because we find that no commingling of funds has occurred in the present case, we see no need to address the issue posed by Question No. 2. However, since there was no evidence of misappropriation of client funds or laxity of record-keeping, factors which could affect the outcome of a commingling case, we explicitly limit the application of our opinion to the facts presented herein.