Can a lawyer hold a client's retainer in an interest-bearing trust account and apply the interest to the fee?

Currency note

This opinion was issued in 1989 under the former Ohio Code of Professional Responsibility, which was superseded by the Ohio Rules of Professional Conduct effective February 1, 2007. The statute it references, Ohio Rev. Code 4705.09, and Ohio's IOLTA framework have also changed since. Treat this page as historical context, not current guidance. Verify against the current Ohio Rules of Professional Conduct (Ohio Prof. Cond. R. 1.15) and current statutes before relying on any specific rule mentioned here.

Plain-English summary

The inquiring lawyer asked whether he could establish interest-bearing accounts for retainer fees paid by individual clients and use the interest to supplement the retainer. The arrangement was that the lawyer would hold the retainer in an interest-bearing trust account for the representation, bill the client monthly, expect timely payment, apply the retainer against any unpaid fees at the end, and return the balance plus earned interest to the client.

The Board started from DR 9-102(A), which required all client funds to be kept in one or more separate bank accounts with no lawyer funds, and DR 9-102(A)(2), which required funds belonging in part to the client and in part presently or potentially to the lawyer to be deposited in a separate, identifiable account. It noted the 1985 enactment of Ohio Rev. Code 4705.09 dealing with interest on lawyer trust accounts, declined to interpret the statute, and urged the lawyer to become familiar with it. Applying DR 9-102(A)(2), the Board concluded that the money the client advanced would belong in part to the client and in part to the lawyer and therefore had to be deposited in a separate, identifiable account, with the disposition of the interest controlled by Ohio Rev. Code 4705.09.

Common questions

Q: Where must a billed-against retainer be held?

A: The opinion concluded the funds belonged in part to the client and in part to the lawyer, so under DR 9-102(A)(2) they had to be kept in a separate, identifiable bank account, not the lawyer's own account.

Q: Who controlled what happened to the interest?

A: The Board concluded the disposition of interest from such an account was governed by Ohio Rev. Code 4705.09, and it declined to interpret that statute, urging the lawyer to become familiar with it.

Background and rules framework

The opinion interprets the former Ohio Code of Professional Responsibility, DR 9-102 (preserving the identity of client funds and property), including DR 9-102(A)(2) on funds belonging in part to the client and in part to the lawyer. It references Ohio Rev. Code 4705.09, the 1985 statute on interest on lawyer trust accounts, without interpreting it.

Citations and references

Rules of Professional Responsibility (Ohio):

• Former Code of Professional Responsibility, DR 9-102(A), client funds in separate accounts
• Former Code of Professional Responsibility, DR 9-102(A)(2), mixed client/lawyer funds in a separate, identifiable account

Statutes:

• Ohio Rev. Code 4705.09 (interest on lawyer trust accounts)

See also

• Ohio BPC Opinion 1988-031: No Fee Where No Services Are Performed
• Ohio BPC Opinion 1987-001: Advancing Litigation Expenses

Source

• Landing page: https://ohioadvop.org/advisory-opinion-index/
• Original PDF: https://www.ohioadvop.org/wp-content/uploads/2017/04/Op-89-007.pdf

Original opinion text

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

The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
41 SOUTH HIGH STREET-SUITE 3370, COLUMBUS, OH 43215-6105
(614) 644-5800 FAX: (614) 644-5804

OFFICE OF SECRETARY

OPINION 89-07
Issued April 14, 1989

[CPR Opinion-provides advice under the Ohio Code of Professional Responsibility which is superseded by the Ohio Rules of Professional Conduct, eff. 2/1/2007.]

SYLLABUS: Pursuant to DR 9-102, all funds of clients paid to a lawyer or law firm, other than advances for costs and expenses, shall be deposited in one or more identifiable bank accounts maintained in the state in which the law office is situated and no funds belonging to the lawyer or law firm shall be deposited therein. Funds belonging in part to a client and in part presently or potentially to the lawyer or law firm must be deposited therein, 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.

OPINION: We have before us your request for an advisory opinion on whether you may establish interest-bearing accounts for retainer fees paid by individual clients and use the interest to supplement the retainer.

Under DR 9-102(A), all funds of clients paid to a lawyer shall be kept in one or more separate bank accounts and no funds belonging to the lawyer shall be kept in those accounts. Funds belonging in part to the client, and in part presently or potentially to the lawyer, must also be deposited in a separate, identifiable bank account. Code of Professional Responsibility, DR 9-102 (A)(2).

In 1985, the State Legislature passed Ohio Rev. Code §4705.09 which deals with the interest on the trust accounts that lawyers maintain for their clients. While we will not engage in statutory interpretation, we urge you to become familiar with the requirements under that statute.

In your request letter you inquire whether it would be permissible for you to keep a retainer from a client in an interest-bearing trust account for the duration of the representation. You would continue to bill your client monthly and expect payment in a timely manner. At the conclusion of the particular representation, the retainer would be applied against any unpaid fees. The balance, including earned interest, would then be returned to the client.

The type of situation you propose is controlled by DR 9-102 (A) (2). In our view, the money advanced by the client would belong in part to the client and in part to you. Therefore, you must deposit those funds in a separate, identifiable bank account. The disposition of the interest from such an account is controlled by Ohio Rev. Code §4705.09.

This is an informal, non-binding advisory opinion based upon the questions presented and limited to questions arising under the Code of Professional Responsibility.