What can a lawyer do with a client's uncashed trust-account refund check, and can the lawyer set a fixed criminal-defense fee from the leftover after paying fines and costs?

Plain-English summary

The opinion answered two questions arising from a traffic-defense practice in which the lawyer collected an advance to cover estimated fines and costs and refunded any surplus by trust-account check.

On the first question, the lawyer asked whether, after a refund check sat uncashed for a period, he could stop payment and contribute the money to a charity in the client's name without the client's consent. The opinion concluded that he could not. Because the lawyer knows the client's identity and presumably has a recent address from the traffic ticket, the lawyer should make every effort to get the client to cash the check. Nothing else can be done with the client's money without the client's consent except escheating it to the State Treasurer under G.S. §116B, as prescribed by Rule 10.2(h)(3)(a); the opinion noted that G.S. §116B-31.5 provides a method for voluntary early delivery of funds to the Treasurer in certain circumstances, citing RPC 89.

On the second question, the lawyer asked whether he could tell clients that the total cost of the citation would be a set amount paid in advance, that fines and costs would be paid in full out of that sum, and that the balance would be his fee. The opinion concluded that he could not. A lawyer may not enter into a contingent fee arrangement for representing a defendant in a criminal case, and a fee dependent on the outcome (here, on how the fines and costs come out) is a contingent fee; the opinion also noted that a lawyer may not acquire a proprietary interest in the subject matter of litigation under Rule 5.3(a). The permitted alternative is to collect a fixed fee in advance plus an amount estimated for fines and costs under Rule 2.6(c), with the client remaining ultimately responsible for the actual expenses, citing RPC 76.

Currency note

This opinion was issued in 1993, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer stop payment on a client's uncashed refund check and donate the money to charity?

A: No. The opinion held that without the client's consent the lawyer must make every effort to get the client to cash the check, and otherwise the only permitted disposition is escheating the funds to the State Treasurer under G.S. §116B per Rule 10.2(h)(3)(a).

Q: What must a lawyer do with a client's unclaimed funds?

A: The opinion held the lawyer should try to reach the client, who is known and presumably locatable, and, failing that, escheat the money to the Treasurer; G.S. §116B-31.5 allows voluntary early delivery in certain circumstances.

Q: Can a criminal-defense lawyer keep whatever is left of a prepaid sum after paying fines and costs as the fee?

A: No. The opinion held that making the fee depend on what remains after fines and costs is a contingent fee, which is prohibited in a criminal case, and it implicates the bar on acquiring a proprietary interest in the litigation under Rule 5.3(a).

Q: How can the lawyer structure the advance instead?

A: The opinion held the lawyer may collect a fixed fee in advance plus an estimated amount for fines and costs under Rule 2.6(c), but the client must remain ultimately responsible for the actual expenses.

Background and rules framework

The opinion applied the North Carolina trust-account rules (Rule 10.2, corresponding to Model Rule 1.15's safekeeping and unclaimed-property requirements) together with the State's escheat statute, G.S. §116B. On the fee question it applied the prohibition on contingent fees in criminal cases and the bar on acquiring a proprietary interest in litigation (Rule 5.3(a), corresponding to Model Rule 1.8(i)), and Rule 2.6(c) on advances for fees and costs (corresponding to Model Rule 1.5).

Citations and references

Rules of Professional Conduct:

• MR 1.15 (safekeeping property; unclaimed funds)
• MR 1.5 (fees; contingent fees prohibited in criminal cases)
• MR 1.8 (proprietary interest in litigation)
• North Carolina Rule 10.2(h)(3)(a) (escheat of unclaimed client funds)
• North Carolina Rule 5.3(a) (proprietary interest in subject of litigation)
• North Carolina Rule 2.6(c) (advances for fees and costs)

Statutes:

• N.C. Gen. Stat. §116B (escheat of unclaimed property to the State Treasurer)
• N.C. Gen. Stat. §116B-31.5 (voluntary early delivery of funds to the Treasurer)

Other opinions cited:

• North Carolina RPC 89 (delivery of unclaimed funds to the Treasurer)
• North Carolina RPC 76 (advance for fees and costs in traffic matters)

See also

• NC Ethics Op. RPC 150: linking trust and business accounts
• NC Ethics Op. RPC 158: advance payment of legal fees and trust handling
• NC Ethics Op. RPC 155: contingent fees in child support cases

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-149/

Original opinion text

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

Inquiry #1:

When Attorney A undertakes to represent a client in regard to a traffic ticket, Attorney A tries to estimate the fines and costs and have the client pay that amount in advance. Sometimes the client is owed a refund. Attorney A sends a trust account check for the refund together with a receipt from the court. Sometimes the client never cashes the check and it stays on the books. After a certain period of time has elapsed, may the attorney stop payment on the check and contribute the money to a charity in the client's name but without the client's consent?

Opinion #1:

No. Since the attorney knows the identity of the client and presumably has a recent address for the client from the traffic ticket, the attorney should make every effort possible to get the client to cash the trust account check. Nothing else can be done with the client's money, without the client's consent, except escheating it to the treasurer pursuant to G.S. §116B as prescribed by Rule 10.2(h)(3)(a). G.S. §116B-31.5 provides a method for voluntary early delivery of funds to the treasurer under certain circumstances. See RPC 89.

Inquiry #2:

Attorney A is considering writing clients that the total costs of the citation will be a certain amount payable in advance, that any fines and costs will be paid out of that in full and that the balance will be his fee. Would that be ethical? Is there any better way to handle this problem?

Opinion #2:

No. A lawyer shall not enter into a contingent fee arrangement for representing a defendant in a criminal case. A contingent fee is one which is dependent on the outcome of the matter for which service is rendered. Further, a lawyer shall not acquire a proprietary interest in the subject matter of litigation he is conducting for a client. Rule 5.3(a). The lawyer may collect a fixed fee in advance and an amount estimated for the fines and costs, but the client must remain ultimately responsible for the actual expenses. Rule 2.6(c). See RPC 76.