Although the default rule is that an attorney must hold flat fees in a client trust or escrow account until earned, an attorney may obtain informed consent from the client to deposit all of the money in the lawyer's operating account or to deposit some of the money in the lawyer's operating account as it is earned, per their agreement. D.C. R. Prof. Conduct 1.15(d). Consent means a client's uncoerced assent to a proposed course of action following consultation with the lawyer regarding the matter in question. Consultation requires communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question. In order to ensure knowing client consent to a different arrangement concerning the treatment of flat fees, the attorney must expressly communicate to the client verbally and in writing that the attorney will treat the advance fee as the attorney's property upon receipt; that the client must understand the attorney can keep the fee only by providing a benefit or providing a service for which the client has contracted; that the fee agreement must spell out the terms of the benefit to be conferred upon the client; and that the client must be aware of the attorney's obligation to refund any amount of advance funds to the extent that they are unreasonable or unearned if the representation is terminated by the client.
The attorney charged a flat fee to defend his client's son on homicide charges. The client paid half of the fee, most of which the attorney placed in a trust account, but later demanded a refund; the attorney took some time in complying. The Board determined that the flat fee became the attorney's property upon receipt; in the alternative, the client consented to having the fee treated as belonging to the attorney.
Should a "flat fee" paid in advance for legal services be deemed an "advance of unearned fees" that is required to be treated as property of the client under Rule 1.15 (d) of the D.C. Rules of Professional Conduct?
The court held that under D.C. R. Prof. Conduct 1.15(d)., a flat fee was an advance of unearned fees and had to be treated as the client's property until earned unless the client consented to a different arrangement. The client did not give the attorney informed consent to treat the fee as the attorney's property. But as the flat fee rule applied prospectively, the attorney could only be liable for commingling funds, in violation of Rule 1.15(a), and failing to promptly return the fee, in violation of D.C. R. Prof. Conduct 1.16(d). In mitigation, he cooperated with Bar Counsel and did not act dishonestly or try to misappropriate client funds. In aggravation, he had prior discipline and his client was prejudiced because he needed a refund in order to hire a new lawyer.