Inside Track: Ethical dilemmas: Retainer or advanced fee? Business or trust account?:

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  • Ethical dilemmas: Retainer or advanced fee? Business or trust account?

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    Jan. 18, 2012 – Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by State Bar’s ethics counsel org tpierce wisbar Timothy Pierce, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.

    Question

    I normally charge clients a $1,500 retainer for taking on a case, and after I have put in 10 hours, I begin to send them billing statements at my normal hourly billing rate of $150. I’ve always put the $1,500 in my business account because, as a retainer, I thought it was my property upon receipt. Now I’ve been told that I could get in trouble with Office of Lawyer Regulation if I don’t put these retainers in my trust account. Is that right?

    Answer

    Retainers and advanced fees are now specifically defined under Wisconsin’s Rules, and what is described here is an advanced fee. It must, therefore, be placed in trust until earned, unless the lawyer complies with the alternative protection for advanced fees under SCR 20:1.15(b)(4). It is also arguably deceptive to call an advanced fee a retainer.

    References: SCR 20:1.0(ag) and (mm), SCR 20:1.15(b) and SCR 20:7.1, New Trust Account Rules: Lawyer Fees and Fee Agreements, Timothy J. Pierce, 80 Wis. Law. 6 (June 2007).

    For guidance and help in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys, visit the Ethics webpage on WisBar.