Can a non-profit law firm charge a flat non-refundable fee for incidental file-opening costs and deposit it in its regular account instead of its trust account?

Plain-English summary

The inquiring lawyer is part of a non-profit firm that represents clients of limited means. The firm charges no attorney fees but currently requires clients to pay $100 toward costs, which it places in an IOLTA account until disbursed to pay costs. The firm proposed instead to charge a $100 "non-refundable fee" for each case, to be used for incidental costs associated with opening a file, and asked whether it could place that non-refundable fee in its regular account when received.

The committee concluded that the firm may do so.

Currency note

This opinion was issued in 2003, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct, which renumbered and revised the trust-account rule (then RPC 1.14, now RPC 1.15). 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 Treat this page as historical context, not current guidance.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.

In practice

Under the Washington rules as they stood at the time of the opinion, the committee treated a $100 non-refundable fee for the incidental costs of opening a file as money the firm could deposit in its regular account on receipt, in contrast to the $100 advance-toward-costs payment the firm currently holds in IOLTA until disbursed. Per the opinion, the committee approved the proposed regular-account deposit of the non-refundable fee without further conditions on the limited facts presented.

Common questions

Q: Can a firm deposit a non-refundable file-opening fee in its operating account instead of trust?

A: The committee concluded that the non-profit firm may place its proposed $100 non-refundable fee for incidental file-opening costs in its regular account when it is received.

Q: How does that differ from the firm's current $100 cost payment?

A: The firm's current $100 payment toward costs is placed in an IOLTA account until disbursed to pay costs; the inquiry concerned a different, non-refundable fee, which the committee said may go in the firm's regular account.

Background and rules framework

The opinion concerns the handling of client-related funds under Washington's trust-account rule (then RPC 1.14, corresponding to Model Rule 1.15 and renumbered RPC 1.15 in 2006), which requires funds belonging to the client to be held in a trust account, while funds belonging to the lawyer are not held in trust. The committee treated the proposed non-refundable file-opening fee as appropriate for the firm's regular account, distinguishing it from advance payments toward costs that are held in IOLTA. Rule numbers reflect Washington's pre-2006 numbering.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.15 / Washington RPC 1.14 (pre-2006 numbering) (safekeeping property; client trust and IOLTA accounts)

See also

• WSBA Ethics Op. 1838: Nonrefundable Flat Fees
• WSBA Ethics Op. 1966: Flat Fees and Trust Accounts
• WSBA Ethics Op. 2014: Joint Account With a Client

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1266

Original opinion text

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

Advisory Opinion: 2024
Year Issued: 2003
RPC(s):
Subject: non-refundable fee for costs, non-profit law firm

The inquiring lawyer is part of a non-profit law firm which represents clients of limited means. They do not charge attorney fees, but currently require that clients pay $100 towards costs. These payments are placed in an IOLTA account until disbursed to pay for costs. The inquirer proposes to charge a $100 “non-refundable fee” for each case to be used for “incidental costs associated with the opening of a file.” The inquirer asks if the firm may place the $100 “non-refundable fee” in its regular account when it is received. The committee opined that the firm may do so.