Can a Virginia lawyer garnish a former client's unearned fees sitting in the new lawyer's trust account to collect unpaid fees?

Plain-English summary

A client fired Attorney A mid-litigation and hired Attorney B, owing A an unpaid balance for fees. Attorney A obtained a judgment for those fees and, to collect, served a garnishment summons on Attorney B as garnishee for "Custodian of client's retainer (unused)," along with a subpoena duces tecum for documents showing the retainer amount and the charges against it. The committee was asked whether this interferes with the client's right to terminate and choose counsel, whether it is ethically appropriate, and how current counsel should respond.

The committee first clarifies terminology. Citing LEO 1606 and LEO 510, it explains that calling an advanced legal fee a "retainer" is inaccurate: advanced fees are paid for services not yet performed, remain the client's property, and must be held in trust, while a true retainer is earned on receipt and is the lawyer's property. The committee treats the disputed funds as advanced legal fees.

Addressing the first two questions together, the committee respects the client's right to discharge counsel (Comment 3 to Rule 1.16; Comment 1 to Rule 5.6) but weighs it against the lawyer's right to be paid (Allen v. United States). Prior LEOs 1325 and 974 approved suing a former client for unpaid fees, and other jurisdictions approve referring overdue bills to collection agencies. The committee sees no reason to treat litigation and collection agencies as acceptable but garnishment as not. Because advanced fees in the trust account remain the client's property, the lawyer holding them has no authority to place himself ahead of the client's other creditors; the former attorney may legally garnish those funds. So it is not a per se violation to garnish them, and the fact that garnishment depletes the client's intended source for paying new counsel does not make it unethical.

On the third question, the committee notes any collection effort must comply with Rule 1.6: paragraph (b) permits disclosing confidential information to establish the lawyer's claim against a client, but only as much as is necessary for collection. The subpoena duces tecum would be improper if it seeks more detail than garnishment requires, a fact-specific determination the committee cannot make on these facts. Current counsel may challenge the subpoena if compliance would violate the client's Rule 1.6 protection (LEOs 1628, 1352, 967, 645, 334, 300), and should advise the client whether to challenge or accept the garnishment and the underlying debt.

In practice

The opinion holds that, under the Virginia rules as they stood at the time, garnishing a former client's unearned advanced fees held in successor counsel's trust account is not a per se ethics violation, because those funds remain the client's property and the holding lawyer has no priority over the client's other creditors. Per the opinion, a lawyer collecting a fee from a former client may disclose only the confidential information necessary for collection (Rule 1.6(b)), so a subpoena seeking more than garnishment requires may be improper, and successor counsel may challenge such a subpoena to protect the client's confidentiality.

Common questions

Q: Can a lawyer garnish a former client's unearned fees held in the new lawyer's trust account?

A: The opinion says yes; it is not a per se violation, because advanced (unearned) fees remain the client's property and the lawyer holding them has no authority to put himself ahead of the client's other creditors.

Q: Does garnishing those funds improperly interfere with the client's right to choose counsel?

A: The opinion says no. It weighs the client's right to discharge counsel against the lawyer's right to be paid and concludes that depleting the client's intended payment source does not, by itself, make the garnishment unethical.

Q: How much information can the former lawyer demand in the related subpoena?

A: The opinion says collection must comply with Rule 1.6: only the confidential information necessary for collection may be sought, so a subpoena seeking more detail than garnishment requires may be improper. Whether it does is fact-specific.

Q: What should the new lawyer do about the garnishment and subpoena?

A: The opinion says current counsel may challenge the subpoena if compliance would violate the client's Rule 1.6 protection, and should consider advising the client whether to challenge or accept the garnishment and the underlying debt.

Background and rules framework

The opinion interprets Rule 1.16 (Model Rule 1.16), the client's right to discharge counsel (Comment 3) and the Rule 1.16(d) duty to protect the client's interests on termination, and Rule 1.6 (Model Rule 1.6), including the paragraph (b) exception allowing disclosure to establish the lawyer's claim in a controversy with a client. It also cites Comment 1 to Rule 5.6 on a client's freedom to choose a lawyer, and distinguishes advanced fees from retainers using LEOs 1606 and 510.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.16 / Virginia Rule 1.16 (right to discharge counsel; 1.16(d) protecting the client's interests)
• Model Rule 1.6 / Virginia Rule 1.6(b) (confidentiality; disclosure to establish a claim against a client)
• Model Rule 5.6 / Virginia Rule 5.6 (Comment 1, a client's freedom to choose a lawyer)

Cases:

• Allen v. United States, 606 F.2d 432 (4th Cir. 1979) (a client who authorizes litigation must expect to pay a reasonable fee)

Other opinions cited:

• Virginia LEOs 1606, 510 (advanced fees vs. retainer); 1325, 974 (suing a former client for fees); 1628, 1352, 967, 645, 334, 300 (challenging subpoenas over confidentiality)
• Arizona Op. 2000-07; D.C. Op. 298 (2000); West Virginia Op. 94-1; Ohio Op. 91-6; New York Op. 608 (1990); Georgia Op. 49 (1985) (collecting overdue fees from former clients)

See also

• VA LEO 1835: Disbursing Uncollected Trust Funds
• ABA Formal Op. 505: Fees Paid in Advance
• ABA Formal Op. 02-427: Security Interest to Secure a Fee
• ABA Formal Op. 471: Surrendering Papers to a Former Client

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1807.pdf

Original opinion text

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

LEGAL ETHICS OPINION 1807

GARNISHMENT OF A RETAINER FEE HELD
IN THE ATTORNEY’S TRUST ACCOUNT.

You have presented a hypothetical in which a client terminated his relationship with Attorney
A during the course of litigation. The client then hired Attorney B. The client has an unpaid
balance with Attorney A for attorney’s fees. Attorney A obtained a judgment against the client
for fees incurred in the course of the litigation. In an attempt to collect on the judgment,
Attorney A caused a garnishment summons to be served on Attorney B as garnishee. The
summons specifically is for “Custodian of client’s retainer (unused).” Attorney A also had
served on Attorney B a subpoena duces tecum for “all documents that disclose the amount of
retainer paid to the custodian by client and that disclose all charges against said retainer.”
Under the facts you have presented, you have asked the committee to opine as to the following
questions:
1) Does the conduct of former counsel described in the hypothetical interfere with the client’s
right to terminate the attorney/client relationship and be represented by counsel of his own
choosing?
2) Is the conduct of the former counsel described in the hypothetical ethically appropriate?
3) How should current counsel respond to the garnishment and subpoena?
Before analyzing the specific issues raised regarding this hypothetical, the committee notes one
clarification. In the hypothetical, the client’s funds in the trust account are referred to as a
“retainer.” As identified in LEO 1606, the use of the word “ retainer” for an “advanced legal
fee,” while common, is inaccurate. As explained in that opinion, “advanced legal fees” are “fees
paid in advance for particular services not yet performed.” Id. In contrast, a “retainer” is a
“payment by a client to an attorney to insure the attorney’s availability for future legal services
and/or as consideration for his unavailability to a potential adverse party in the future.” Id. The
difference is significant in that advanced legal fees remain the property of the client and must be
placed in the trust account, whereas a retainer is earned immediately upon receipt, is property of
the lawyer, and should not be in the trust account. Id. The label given a fee does not determine
whether it is an advanced legal fee or a retainer; only the purpose of the payment is dispositive.
LEO 510. The committee assumes that the client funds in this hypothetical were paid as
advanced legal fees, despite the term “retainer” being used. Throughout this opinion, the
committee will refer to and treat this money as advanced legal fees.
The committee will address the first two questions together as each question is essentially
asking whether this attorney’s garnishment is unethical as improperly interfering with the rights
of the client.

The committee does respect the importance of the principle that a client must be free to select
the attorney of his choice, including the right of termination. Comment 3 to Rule 1.16
(“Declining or Terminating Representation”) states that a “client has a right to discharge a
lawyer at any time, with or without cause.” This principle is also reflected in Comment 1 to Rule
5.6, which states that an “agreement restricting the rights of lawyers to practice after leaving a
firm not only limits their professional autonomy but also limits the freedom of clients to choose a
lawyer.”(Emphasis added.) The question becomes is it an improper restriction on a client’s
freedom to choose a lawyer (and discharge a lawyer) for a former attorney to garnish the
advanced legal fees in a subsequent attorney’s trust account.
The importance of the client’s freedom to choose a lawyer must be weighed against the
attorney’s right to be paid for his services. See Allen v. United States, 606 F.2d 432 (4th Cir.
1979)(a client who authorizes litigation on his behalf must expect to pay a reasonable fee for
services performed by his lawyer). This committee has weighed that balance in prior opinions
and found permissible an attorney’s suing a former client for unpaid legal fees. LEOs 1325, 974.
Other jurisdictions have similarly approved the referral of a former client’s overdue legal bill to a
collection agency. See Arizona Ethics Op. 2000-07; D.C. Ethics Op. 298 (2000); West Virginia
Ethics Op. 94-1; Ohio Ethics Op. 91-6; New York Ethics Op. 608 (1990); Georgia Ethics Op. 49
(1985). Of course, any such collection effort by an attorney against a former client must be
pursued in compliance with Rule 1.6. Paragraph (b) does allow the disclosure of confidential
information “to establish a claim…on behalf of the lawyer in a controversy between the lawyer
and the client.” While the need to take collection action against a former client does allow the
attorney to disclose confidential information necessary to collect the fee; the attorney must not
disclose any confidential information beyond that needed for collection of the fee.
With regard to collecting fees from a former client, this committee sees no reason to
distinguish between litigation and collection agencies as acceptable but garnishment as not
acceptable. Of course, the garnishment at issue is of the funds paid in advance to the client’s
new attorney. That attorney may think of those funds, once deposited into his trust account, as
somehow belonging to him, or at least reserved exclusively for him, but that is not the case. As
outlined above, the funds in a lawyer’s trust account remain property of the client. At any time,
the client could request return of the funds to pay some other creditor, such as for a mortgage.
The lawyer in possession of trust account funds lacks the authority to place himself ahead of any
other creditor of the client, should the client choose to pay another creditor or if, as in this case,
the creditor (i.e., the former attorney) legally garnishes the funds. As the new attorney has not
yet earned the legal fees, he has no legal claim to them and holds them only on behalf of the
client. The committee opines that it is not a per se violation for an attorney to garnish the funds
of a former client that are in a new lawyer’s trust account.
That the funds through garnishment deplete the client’s suggested payment source for a new
lawyer does not render the garnishment unethical. While it may or may not make it harder for
the client to obtain new counsel, it is not unreasonable to this committee for the right to be paid
of a lawyer who has already performed legal services to have priority over the right to be of a
lawyer who has not yet performed legal services. It was ethically permissible for the former
attorney in this hypothetical to garnish the trust account funds so long as he lawfully was entitled
to the funds.
As part of the garnishment procedure, the former attorney also had issued a subpoena duces
tecum requesting detailed information regarding the size of the retainer and the billing records.
As identified above, in collecting an overdue fee from a client, Rule 1.6 permits the attorney to
disclose only that confidential information necessary for collection of the fee. Similarly, an

attorney, in collecting his fee in this particular situation, should not seek more confidential
information from the new attorney than is necessary for collection. That limitation is in line both
with the importance of the attorney/client privilege and with the attorney’s duty to terminate the
attorney/client relationship in such a way as to “protect the client’s interest.” Rule 1.16(d).
Whether the terms of this subpoena comport with that standard is a fact-specific determination.
The hypothetical lacks sufficient facts for the committee to make that determination.
In addressing the third question, this is a question of both fact and law, exact resolution of
which is outside the purview of this committee. However, the committee can highlight
principles that should be considered for making that determination. As just mentioned above, the
subpoena would be improper if it seeks greater detail about the client’s new representation than
is necessary for the purposes of garnishment. The new attorney should consider that in
determining whether to challenge the summons, through legal means, or whether to recommend
to the client that the garnishment should be accepted. This committee has repeatedly concluded
that where an attorney thinks complying with a subpoena request violates his client’s
confidentiality protection under Rule 1.6, that attorney may rightfully challenge the request. See
LEOs ## 1628, 1352, 967, 645, 334, 300. A similar determination should be made as to the
merit and amount of the underlying debt. Again, the attorney would need to determine whether
to recommend to the client that the garnishment should be challenged or accepted. Resolution of
those issues remains outside the purview of this committee.
This opinion is advisory only, based only on the facts you presented and not binding on any
court or tribunal.
Committee Opinion
September 20, 2004