D.C. Court of Appeals Details Rules for Escrowing Up-Front Legal Fee
In one of the few decisions that addresses the proper handling of legal fees paid up front by the client before they are earned, the District of Columbia Court of Appeals held that they should be escrowed in the attorney’s trust account—and explains the rules for doing so.
At issue in the attorney discipline case filed against D.C. solo practitioner Robert Mance III was a criminal defense matter he agreed to handle for a flat fee of $15,000, with an upfront payment of $7,500. A three-judge appellate panel held that Mance, who was not immediately able to return the money when the matter concluded before much work was done, should be censured, reports the Blog of Legal Times.
The panel declined to impose harsher penalties recommended by bar counsel, saying that the ethical rules concerning up-front client legal fee payments hadn’t been entirely clear.
“We are not unaware that our holding today could impose a financial hardship on solo practitioners who rely on flat fees to maintain their practice,” the panel says in its written opinion. “But we also note that, consistent with the general requirement that a lawyer must entrust flat fees in a trust or escrow account until earned, the client may consent otherwise (if properly informed), and the fee arrangement may specify how and when the attorney is deemed to earn the flat fee or specified portions of the fee.”
Mance declined to comment when contacted by the legal publication.
