Under Missouri's January 2019 rule, when could an advanced flat fee be deposited outside trust?

Plain-English summary

The opinion applies Rule 4-1.15(c) effective January 1, 2019. A fee above $2,000 goes to trust unless $2,000 or less is clearly communicated, preferably in writing, as the entire-matter flat fee; expense advances remain in trust.

The lawyer may choose to keep an eligible flat fee in trust. Splitting a flat fee above $2,000 into smaller installments does not qualify them for the exception. An undesignated combined payment also stays in trust. All payments remain refundable to the unearned or unincurred extent after termination.

Currency note

This opinion applies Rule 4-1.15(c) effective January 1, 2019. Its dollar threshold and account treatment reflect that version of the rule and should be checked against current Missouri law.

In practice

Under the rule described, the entire fee amount, clear client communication, and separation of expenses determine account placement, not installment size alone.

Common questions

Q: Was the operating-account exception mandatory?

A: No. An eligible fee could remain in trust.

Q: Could a $6,000 fee qualify through three $2,000 installments?

A: No.

Q: What happened to undesignated fee-and-expense advances?

A: The entire payment remained in trust.

Background and rules framework

Rules 4-1.15(c), 4-1.5, 4-1.4, and 4-1.16(d) govern account placement, communication, and refunds under the version addressed.

Citations and references

• Missouri Rules 4-1.4, 4-1.5, 4-1.5(b), 4-1.15(c), and 4-1.16(d); Rule 4-1.15 Comment [20]

See also

• Minnesota LPRB Op. 15: Advance Fee Payments
• Georgia Formal Advisory Op. 03-1: Nonrefundable Retainers

Source

• Landing page: Missouri Informal Opinion 2018-15

Original opinion text

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

Question 1: Attorney charges Client $2,500 in advance for representation in a matter. May Attorney deposit any portion of the $2,500 directly in the operating account before fees are earned or expenses incurred?

Answer 1: (Note: This opinion is based on Rule 4–1.15(c) effective January 1, 2019.) Rule 4–1.15(c) requires a lawyer to deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred, except that an advanced flat fee which does not exceed $2,000 may be deposited into an account other than a client trust account. Unless Attorney has clearly communicated with the client, preferably in writing, that $2,000 or less of the advanced payment constitutes the flat fee covering the entire matter, the advanced payment of $2,500 must be deposited in the trust account, to be withdrawn only as fees are earned or expenses incurred. See also Rule 4–1.5(b). If Attorney has communicated with the client, preferably in writing, that $2,000 or less of the advanced payment constitutes the advanced flat fee covering the entire matter, Attorney may deposit in the operating account the advanced flat fee. The advanced payment of expenses must be deposited in the trust account, to be withdrawn only as expenses are incurred. All fee and expense payments are subject to refund to the extent the attorney-client relationship is terminated prior to the advanced flat fee being earned or expenses incurred. Rule 4–1.15, Comment [20]; Rule 4–1.5; Rule 4–1.16(d).

Question 2: May Attorney deposit an advanced flat fee of $2,000 or less in the client trust account, to be withdrawn as fees are earned?

Answer 2: (Note: This opinion is based on Rule 4–1.15(c) effective January 1, 2019.) Yes. The exemption in Rule 4–1.15(c), allowing deposit in another account of advanced flat fees that do not exceed $2,000, is permissive rather than mandatory.

Question 3: Attorney charges Client a flat fee of $6,000 for representation in a matter. Attorney charges the fee in three advanced payment installments throughout the representation. May Attorney deposit each advanced fee installment of $2,000 in the operating account, per the exemption in Rule 4–1.15(c)?

Answer 3: (Note: This opinion is based on Rule 4–1.15(c) effective January 1, 2019.) No. Only an advanced flat fee which does not exceed $2,000 is exempted from the general rule that all unearned fees must be deposited in the trust account, to be withdrawn only as fees are earned. Rule 4–1.15(c). Installments of any amount toward an advanced flat fee of more than $2,000 must be deposited in the client trust account, to be withdrawn only as fees are earned. Rule 4–1.15(c).

Question 4: Attorney charges Client $1,100 in advance for representation in a matter. The advanced payment constitutes the flat fee, and it also will be used for expenses Attorney anticipates expending on behalf of Client. The representation agreement does not designate what portion of the $1,100 constitutes the flat fee and what portion will be used for the payment of expenses. May Attorney deposit the $1,100 directly in the operating account before the fees are earned or expenses incurred?

Answer 4: (Note: This opinion is based on Rule 4–1.15(c) effective January 1, 2019.) No. Because Attorney has not communicated to the client, preferably in writing, what portion of the advanced payment constitutes the advanced flat fee for the representation, no amount constituting an unearned fee or expense not yet incurred may be deposited in the operating account per Rule 4–1.15(c). See also Rule 4–1.5(b) and Rule 4–1.4.