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When in doubt, trust account?
Don't forget that if you have small amounts and you want to put it into trust, those would go into the Mandatory Attorney Client trust account where the interest goes to fund State Bar projects. These days a small separate account that bears interst might also have a service fee each month, so unless you mean a very large retainer as might be the case for a Chapter 11, I would put it into your operating account if the retainer allows this, and make sure it does.
Margaret Norman
111 N. Sepulveda Bld #355
Manhattan Beach, Ca. 90266
310-376-7873
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There is a SFO county bar opinion in the State Bar Ethics Compendium which says this. Since the state bar has published this opinion you can probably rely on the opinion, but it is not a state bar opinion.
Dennis McGoldrick
350 S. Crenshaw Bl., #A207B
Torrance, CA 90503
On Jan 5, 2010, at 7:16 PM, "Holly Roark" wrote:
This is a practice question.
It is my understanding that since we do flat fee work that technically our fees are all "earned" at the time we are retained and so can be deposited directly into our operating accounts. (My retainer says all fees are fully earned and nonrefundable for services rendered and for taking on the responsibility of representation.) As a practical matter, however, if someone is going to pay in installments, it seems that maybe those should go into the trust account until the full retainer fee is all paid up, or at least the installments should not be transferred to the operating account until a certain amount of work is performed to truly "earn" the fees. I know that contradicts the "fully earned" language, but I am just thinking out loud. It seems that if it is going to take a few months for the client to file, then it should be earning a least a little interest.
Does anyone care to share how they handle flat fee work and the trust account?
Holly Roark
holly@roarklawoffices.com
There is a SFO county bar opinion in the State Bar Ethics Compendium which says this. Since the state bar has published this opinion you can probably rely on the opinion, but it is not a state bar opinion.Dennis McGoldrick350 S. Crenshaw Bl., #A207BTorrance, CA 90503On Jan 5, 2010, at 7:16 PM, "Holly Roark" <roarklaw@yahoo.com> wrote:
This is a practice question.
It is my understanding that since we do flat fee work that technically our fees are all "earned" at the time we are retained and so can be deposited directly into our operating accounts. (My retainer says all fees are fully earned and nonrefundable for services rendered and for taking on the responsibility of representation.) As a practical matter, however, if someone is going to pay in installments, it seems that maybe those should go into the trust account until the full retainer fee is all paid up, or at least the installments should not be transferred to the operating account until a certain amount of work is performed to truly "earn" the fees. I know that contradicts the "fully earned" language, but I am just thinking out loud. It seems that if it is going to take a few months for the client to file, then it should be earning a least a little interest.
Does anyone care to share how they handle flat fee work and the trust account?
Holly Roark
holly@roarklawoffices.com
The post was migrated from Yahoo.
No minimum threshold is required. Client money belongs in a client trust account. There is, or at least used to be a rule which says that the more you hold, or the longer you hold it for, the more likely you have to open a segregated client trust account solely for the benefit of the one affected client. Clients in such cases are entitled to the interest on their money.Example 1: if you hold $1 million for a client for 10 days, that better be placed in an interest bearing trust account for the sole benefit of that one client. If not, you may be liable for the lost interest.
Example 2: if you hold $5,000 and plan to hold on to it for a year, then it better be placed in an interest bearing trust account for the sole benefit of that one client. Again, you fail to do so at your own peril.
There are no hard and fast rules here. Use your judgment. In short, when in doubt, trust account.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal Specialization.
on
hristine Wilton
Sent: Thursday, January 07, 2010 1:05 PM
To: cdcbaa@yahoogroups.com
Subject: Re: [cdcbaa] When in doubt, trust account?
My understanding is that the client trust account is solely for the purpose of holding funds for your client in trust. Other lawyers have advised that there is also a threshhold minimum amount of funds held in trust for a client before the requirement for a trust account is required. Our work and fees should not require a trust account, for the most part.
Now, my fee agreement states that my fees become fully earned the moment I commence work on their case; whether the client has paid them or not.
Christine
On Wed, Jan 6, 2010 at 9:02 PM, Matthew Gary Evans wrote:
[Attachment(s) from Matthew Gary Evans included below]
Heres an excerpt from the State Bars own trust accounting handbook, which is attached and also available on the bars website somewhere. The excerpt is from page 3:
You can't keep any money belonging to you or your law firm (other than money for bank
charges) in any of your client trust bank accounts. This is also known as commingling. That
means that when you're holding client money that includes your fees, you have to take those
fees out of the client trust bank account as you earn them. It's not a matter of your
convenience; you are ethically required to withdraw your money from that account as soon as
you reasonably can. (In fact, it would be a good idea for you to withdraw your fees on a
regular basis, perhaps when you do your monthly reconciliation. See Reconciliation, page
27. See also, State Bar Formal Op. No. 2005-169, Appendix 6, page 87.)
he client's as soon as, in
the words of rule 4-100(A)(2), your interest in that portion becomes fixed. BUTand this
is a big butyou can't withdraw any fees that the client disputes. As far as you're concerned,
from the moment a client disputes your fee, that money is frozen in the client trust bank
account until the fee dispute is resolved. As soon as your interest becomes fixed and is not in
dispute, you are obligated to withdraw that money promptly from the client trust bank
account. (See Appendix 3, page 71, for references to disciplinary cases and State Bar
Formal Opinion 2006-171 which discuss the issue of a redeposit of funds withdrawn from a
trust account.)
____________________________________
Law Office of Matthew Gary Evans
Matthew Gary Evans, Esq.
16 North Marengo Avenue, Room 219
Pasadena, California 91101
Tel.: (626) 405-9448
Fax: (626) 768-7565
Cell: (213) 842-6645
Email: matthew@matthewgaryevanslaw.com
www.matthewgaryevanslaw.com
www.matthewgaryevanslaw.net/Bankruptcy
please visit my blog at matthewevanslaw.wordpress.com
Member: California State Bar, American Bar Association, Consumer Attorneys Association of Los Angeles, Central District Consumer Bankruptcy Attorneys Association, National Association of Consumer Bankruptcy Attorneys, Pasadena Chamber of Commerce
NOTICE: This message is intended only for the individual named. If you are not the named addressee please do not disseminate, print, or copy this e-mail. Please notify the sender immediately by reply e-mail if you have received this e-mail by mistake and delete this e-mail from your system. Thank you.
The post was migrated from Yahoo.
Heres an excerpt from the State Bars own trust accounting handbook, which is attached and also available on the bars website somewhere. The excerpt is from page 3:
You can't keep any money belonging to you or your law firm (other than money for bank
charges) in any of your client trust bank accounts. This is also known as commingling. That
means that when you're holding client money that includes your fees, you have to take those
fees out of the client trust bank account as you earn them. It's not a matter of your
convenience; you are ethically required to withdraw your money from that account as soon as
you reasonably can. (In fact, it would be a good idea for you to withdraw your fees on a
regular basis, perhaps when you do your monthly reconciliation. See Reconciliation, page
27. See also, State Bar Formal Op. No. 2005-169, Appendix 6, page 87.)
he client's as soon as, in
the words of rule 4-100(A)(2), your interest in that portion becomes fixed. BUTand this
is a big butyou can't withdraw any fees that the client disputes. As far as you're concerned,
from the moment a client disputes your fee, that money is frozen in the client trust bank
account until the fee dispute is resolved. As soon as your interest becomes fixed and is not in
dispute, you are obligated to withdraw that money promptly from the client trust bank
account. (See Appendix 3, page 71, for references to disciplinary cases and State Bar
Formal Opinion 2006-171 which discuss the issue of a redeposit of funds withdrawn from a
trust account.)
____________________________________
Law Office of Matthew Gary Evans
Matthew Gary Evans, Esq.
16 North Marengo Avenue, Room 219
Pasadena, California 91101
Tel.: (626) 405-9448
Fax: (626) 768-7565
Cell: (213) 842-6645
Email: matthew@matthewgaryevanslaw.com
www.matthewgaryevanslaw.com
www.matthewgaryevanslaw.net/Bankruptcy
please visit my blog at matthewevanslaw.wordpress.com
Member: California State Bar, American Bar Association, Consumer Attorneys Association of Los Angeles, Central District Consumer Bankruptcy Attorneys Association, National Association of Consumer Bankruptcy Attorneys, Pasadena Chamber of Commerce
NOTICE: This message is intended only for the individual named. If you are not the named addressee please do not disseminate, print, or copy this e-mail. Please notify the sender immediately by reply e-mail if you have received this e-mail by mistake and delete this e-mail from your system. Thank you.
The post was migrated from Yahoo.
This is a practice question.
It is my understanding that since we do flat fee work that technically our fees are all "earned" at the time we are retained and so can be deposited directly into our operating accounts. (My retainer says all fees are fully earned and nonrefundable for services rendered and for taking on the responsibility of representation.) As a practical matter, however, if someone is going to pay in installments, it seems that maybe those should go into the trust account until the full retainer fee is all paid up, or at least the installments should not be transferred to the operating account until a certain amount of work is performed to truly "earn" the fees. I know that contradicts the "fully earned" language, but I am just thinking out loud. It seems that if it is going to take a few months for the client to file, then it should be earning a least a little interest.
Does anyone care to share how they handle flat fee work and the trust account?
Holly Roark
holly@roarklawoffices.com
The post was migrated from Yahoo.