I hold escrow funds for a client who owes me disputed legal fees but won't let me take my fee from the escrow. Can I take it anyway?

Plain-English summary

The inquiring attorney held funds in escrow on behalf of a party who owed the attorney legal fees. The legal fees were in dispute, and the party refused to allow the attorney to take the amount due for the legal services out of the escrowed funds.

The panel took the position that the inquiry is governed by Rhode Island Rule of Professional Conduct 1.15. Under Rule 1.15, where a lawyer possesses property in which both the lawyer and another person claim interests, the property must be kept separate until there is an accounting and severance of their interests, and if a dispute arises concerning their respective interests, the disputed portion must be kept separate until the dispute is resolved.

The panel concluded that the attorney's ethical duty is to hold the disputed funds in the escrow account until the matter is resolved.

Currency note

This opinion was issued in 1991, after the Rhode Island Supreme Court adopted the Model Rules of Professional Conduct effective November 15, 1988, and it applies Rule 1.15 as originally adopted. The Rhode Island Supreme Court later revised the Rules of Professional Conduct in 2007 as part of the nationwide Ethics 2000 process, which renumbered and amended several provisions. 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 Treat this page as historical context, not current guidance.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 mentioned here.

Common questions

Q: Can I take my disputed fee out of a client's escrow funds?

A: Under this opinion, no. The panel concluded the attorney must keep the disputed funds in the escrow account until the dispute is resolved.

Q: What rule governs disputed funds I hold?

A: The panel applied Rule 1.15, which requires a lawyer to keep separate any property in which the lawyer and another person both claim an interest, and to keep the disputed portion separate until the dispute is resolved.

Q: What happens to the funds while the fee is disputed?

A: Per the opinion, they stay in the escrow account until the matter is resolved.

Background and rules framework

The opinion applies Rule 1.15 (Safekeeping Property), corresponding to Model Rule 1.15. The rule requires a lawyer holding property claimed by both the lawyer and another person to keep it separate until an accounting and severance of interests, and to keep any disputed portion separate until the dispute is resolved. The panel applied that provision directly to the disputed fee funds.

Citations and references

Rules of Professional Conduct:

• MR 1.15 (safekeeping property)
• RI RPC 1.15

Statutes:

• None cited.

Cases:

• None cited.

Other opinions cited:

• None cited.

See also

• RI EAP Op. 91-56: A Discharged Contingency-Fee Lawyer's Escrow Funds
• RI EAP Op. 91-32: Paying Medical Providers From a Client's Settlement Funds

Source

• Landing page: https://www.courts.ri.gov/attorney-resources/Pages/Ethics-Advisory-Panel-default.aspx
• Original PDF: https://www.courts.ri.gov/Opinions/EAP%2091-53.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

Digest of Ethics Advisory Panel
Opinion #91-53, Request #171
Issued August 16, 1991

An attorney seeks Panel advice concerning the attorney's ethical obligations under circumstances in which the attorney holds funds in escrow on behalf of a party who owes the attorney legal fees. The legal fees are in dispute. The party refuses to allow the attorney to take the amount due for the legal services out of the funds held in escrow.

The Panel takes the position that this inquiry is governed by Rhode Island Rule of Professional Conduct 1.15, which provides in pertinent part:

(c) When in the course of representation a lawyer is in possession of property in which both the lawyer and another person claim interests, the property shall be kept separate by a lawyer until there is an accounting and severance of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separate by the lawyer until the dispute is resolved.

The Panel is of the opinion that the attorney's ethical duty under these circumstances is to hold the disputed funds in the escrow account until the matter is resolved.