Reference Note: Effective July 1, 2016, subdivision 4-1.15(f) of Rule 4 was repealed and a new subdivision 4-1.15(f) adopted in lieu thereof. This opinion is based on Rule 4-1.15 in effect prior to that date.

Reference Note:  Rule 4-1.15 was amended, effective July 1, 2013.  This opinion is based on the rule in effect prior to that date.  Please see the July 1, 2013 version of Rule 4-1.15(f).

QUESTION: Attorney has a contingency fee contract with a client. The client paid a retainer towards attorney´s fees. According to the contract with the client, if Attorney received fees which exceeded that retainer, Attorney would refund the retainer to the client. The contract also provided that the client would pay all out-of-pocket litigation expenses as they were incurred. The defendant ended up paying attorney´s fees of more than the retainer amount. The client received a separate check for the client´s portion of the settlement proceeds. At the time of the settlement, the client owed more than the retainer amount for out-of-pocket expenses advanced on the client´s behalf. The client does not dispute that Attorney paid the expenses, but disputes the legitimacy of some of the expenses. Attorney still holds the retainer. Must Attorney refund the retainer to the client or may Attorney apply the retainer toward the client´s outstanding expense bill?
ANSWER: Under Rule 4-1.15(c), Attorney must repay the retainer, unless the express language of Attorney´s contract permits Attorney to apply it against expenses. If the contract expressly permits Attorney to keep these funds and apply them to expenses and the client disputes Attorney´s position, Attorney must hold the funds in a trust account pending resolution of the dispute. The funds must be held in a separate, interest bearing account, with the recipient of the interest determined as a part of the resolution of the dispute. Attorney may attempt to resolve the dispute without litigation for a reasonable period of time, including participating in a fee dispute program. However, if the dispute is not resolved within a reasonable period of time, Attorney must initiate litigation or disburse the retainer plus interest to the client.

Informal Opinions are ethics advisory opinions issued by the Office of Legal Ethics Counsel to members of the Bar about Rule 4 (Rules of Professional Conduct), Rule 5 (Complaints and Proceedings Thereon), and Rule 6 (Fees to Practice Law) pursuant to Missouri Supreme Court Rule 5.30(c). Written summaries of select Informal Opinions are published for informational purposes as determined by the Advisory Committee of the Supreme Court of Missouri pursuant to Rule 5.30(c). Informal opinion summaries are advisory in nature and are not binding. These opinions are published as an educational service and do not constitute legal advice.

To request an Informal Opinion, please visit: https://mo-legal-ethics.org/for lawyers/requesting-an-informal-advisory-opinion/.

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