LEO: Trust Account: Deducting the Amount Owed LE Op. 1187
Trust Account: Deducting the Amount Owed to the Law Firm
From the Disbursement Due the Client.
January 4, 1989
You wish to know whether, at the time of settlement and receipt of funds
for a contingency case, the law firm may deduct from the disbursement due
to the client the fees owed to the law firm by the client for previously
rendered and invoiced services without the client's agreement, but upon
disclosure to the client. For purposes of this opinion, the Committee will
assume that the client has received the invoice and is not disputing the
firm's fees for previous professional services.
Disciplinary Rule 9-102(A)(2) [ DR:9-102] and 9-102(B)(1) and (3) are
the appropriate and controlling rules in this situation. Disciplinary Rule
9-102(A)(2) provides that funds belonging in part to a client and in part,
presently or potentially, to the lawyer or law firm must be deposited in a
lawyer's trust account, but the portion belonging to the lawyer or law
firm may be withdrawn when due unless the right of the lawyer or law firm
to receive it is disputed by the client, in which event the disputed
portion shall not be withdrawn until the dispute is finally resolved.
Disciplinary Rule 9-102(B)(1) and (3) provide that the lawyer also
maintain complete records of all funds of a client coming into the
possession of the lawyer and render appropriate accounts of the same to
the client. The Committee has previously opined in LE Op. 734 that an
attorney may apply the proceeds of a client's check toward legal fees owed
by the client to the attorney; however, the Committee did state that the
attorney must also satisfy the requirements of DR:9-102(B)(1) and (3) by
sending to the client's last known address a notice and an accounting of
the receipt of the check and the intended application of the proceeds
toward the client's financial obligation to the attorney.
The committee opines that since the client has been invoiced for the
services rendered and has not disputed the amount due, then upon sending
the notices required by DR:9-102(B)(1) and (3) outlined above, it would
not be improper for the law firm to deduct from the disbursement due the
client at the time of settlement the fees owed to the law firm.
Committee Opinion January 4, 1989