Can a lawyer withdraw earned hourly fees from a trust-account retainer when billing, and must the lawyer put the money back if the client later disputes the bill?
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This page answers the general question as of 2026. Ezel answers yours: whether it's allowed on your facts, under the current Oregon Rules of Professional Conduct, with citations.
Plain-English summary
A lawyer agrees to work for a client on an hourly basis, billing monthly, and the client provides a $10,000 advance retainer, properly deposited in a trust account. The lawyer sends a $2,000 bill, then withdraws the $2,000 from trust and spends it. The opinion addresses two questions: whether the lawyer may withdraw the $2,000 when the bill is sent, and whether, if the client objects to the bill, the lawyer must replenish the trust account in full. It answers the first yes, qualified, and the second no, qualified.
The opinion applies Oregon RPC 1.15-1, which requires client and third-person funds, including advance fees, to be held in trust and withdrawn only as earned. It explains that funds may be withdrawn for payment when earned if the lawyer is not aware of any dispute over the right to payment, and that hourly fees are ordinarily considered earned when the client is invoiced, so a lawyer may withdraw to cover hourly fees simultaneously with sending the invoice. A lawyer who leaves personal funds in a trust account, by contrast, is subject to discipline for commingling under Oregon RPC 1.15-1(a) and (b) (citing OSB Formal Ethics Op. No. 2005-145 and In re Mannis). Although not required, the lawyer may wait a reasonable period, such as 30 days after invoicing, before withdrawing earned funds (In re Whipple).
On the second question, the opinion reasons that because Oregon RPC 1.15-1 does not expressly mandate replenishment after a lawyer has withdrawn funds without knowledge of a dispute, replenishment is not required. It adds that a lawyer who does return funds to trust under these circumstances would not be commingling, citing Guzzetta v. State Bar of California for the point that restoring funds withdrawn from a trust account is not a further violation. The opinion replaces OSB Formal Ethics Op. No. 2005-88.
In practice
The opinion holds that the timing of a permissible withdrawal keys off when the fee is earned and the lawyer's knowledge of any dispute: hourly fees may be drawn at invoicing absent a known dispute, and a later objection does not, by rule, force the lawyer to put the money back. Per the opinion, the analysis turns on the absence of a known dispute at the time of withdrawal and the fact that the rule contains no replenishment mandate, while leaving voluntary return permissible and not a commingling violation. Verify the current text of Oregon RPC 1.15-1 before relying on any specific point.
Common questions
Q: Can a lawyer take earned hourly fees out of the trust account at the same time as billing?
A: Yes, qualified. The opinion concludes hourly fees are ordinarily earned when the client is invoiced, so the lawyer may withdraw them simultaneously with sending the invoice, provided the lawyer is unaware of any dispute over payment.
Q: If the client disputes the bill after the money is withdrawn, must the lawyer put it back?
A: No, qualified. The opinion concludes Oregon RPC 1.15-1 does not mandate replenishment where the lawyer withdrew the funds without knowledge of a dispute.
Q: Is it commingling to voluntarily return the disputed funds to trust?
A: No. The opinion concludes that returning the funds under these circumstances would not be commingling, citing Guzzetta v. State Bar of California.
Background and rules framework
The opinion interprets Oregon RPC 1.15-1 (safekeeping property; trust accounts; advance fees and disputed funds), corresponding to Model Rule 1.15, including the bar on commingling personal funds and the treatment of earned fees. It references Oregon RPC 1.5(c)(4) on fees that need not be held in trust and OSB Formal Ethics Op. No. 2005-151 on when fixed fees are earned.
Citations and references
Rules of Professional Conduct:
- Oregon RPC 1.15-1 / Model Rule 1.15 (trust accounts; earned fees; no commingling)
Cases:
- In re Whipple, 320 Or 476, 886 P2d 7 (1994) (lawyer may wait a reasonable period before withdrawing earned funds)
- In re Mannis, 295 Or 594, 668 P2d 1224 (1983) (commingling)
- Guzzetta v. State Bar of California, 43 Cal 3d 962, 741 P2d 172 (1987) (restoring withdrawn funds is not commingling)
Other opinions cited:
- OSB Formal Ethics Op. No. 2005-145 (no cushions in trust accounts)
- OSB Formal Ethics Op. No. 2005-151 (rev 2026) (when fixed fees are earned)
- OSB Formal Ethics Op. No. 2005-88 (replaced by this opinion)
See also
- OSB Ethics Op. 2005-145: Trust-Account Cushions to Avoid Overdrafts
- OSB Ethics Op. 2005-117: IOLTA vs. Interest-Bearing Trust Account
- OSB Ethics Op. 2005-111: Bankruptcy Client Owing the Lawyer Fees
Source
- Landing page: https://www.osbar.org/ethics/toc.html
- Original PDF: https://www.osbar.org/_docs/ethics/2005-149.pdf
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