Ezel / Ethics Opinions / VTBAR

May a Vermont lawyer take fees from trust funds claimed by a lender?

Short answer Opinion 10-01 made ownership decisive: the lawyer could deduct reasonable fees from client-owned funds with client consent, but could not deduct them from lender-owned funds without the lender's consent.
Bar
VTBAR
Issued
2010
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 2010. Ask about yours and see what the current Vermont Rules of Professional Conduct say for your facts, with citations.

Currency note: this opinion is from 2010
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
View original ethics opinion (PDF)

Plain-English summary

A lawyer representing a real estate seller held additional funds in an IOLTA account that the seller's lender would claim. The lawyer had worked on the seller's behalf but the lender refused to pay the bill. He asked whether he could deduct fees from the funds before releasing the balance.

The committee answered conditionally. If the lender owned the funds, the lawyer could not deduct fees without the lender's consent and had to explain any payment of less than the full amount. If the seller owned them, the lawyer could deduct reasonable fees with the seller's consent. The opinion identified interpleader as a way to resolve a dispute over ownership.

In practice

Under this opinion, a fee deduction depends first on who owns the funds, then on that owner's consent and, for client funds, the reasonableness of the fee under Rule 1.5. The committee did not resolve the lender and seller's competing ownership claims on the facts supplied.

Common questions

Q: Could the lawyer deduct fees if the lender owned the funds?

A: No, unless the lender consented. The opinion also required an explanation if the lawyer sent the lender less than the full amount.

Q: What if the seller owned the funds?

A: The lawyer could deduct reasonable fees before paying the balance to the seller if the seller consented.

Q: Did the committee decide who owned the money?

A: No. It gave separate answers for lender and seller ownership and mentioned interpleader if ownership was disputed.

Background and rules framework

The opinion quoted Vermont Rule 1.15(a)(1) on property of clients and third persons, referred to “Rules 1.15A and B” for account funds, and applied Rule 1.5 to the reasonableness of a fee deducted from client-owned funds.

Citations and references

Rules of Professional Conduct:

  • Vermont Rules of Professional Conduct 1.15(a)(1), 1.15A, 1.5

See also

Source

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