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firm may be withdrawn when due unless the right of the lawyer or law firm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portion shall not be withdrawn until the dispute is finally resolved.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