FW: State Bar Rule 1.15 Safekeeping Funds and Property of Clients and Other Persons
Posted: Sun Nov 04, 2018 7:54 pm
Unfortunately we are stuck with rule 1.15! When I raised the issue at the CDCBAA seminar a couple months ago, judge Bluebond pointed out that consumer bankruptcy attorneys can have an attorney lien on funds held in the trust account. Of course in order to do so we have to have attorney lien language compliant with the state bar rules regarding attorney liens. Far more inconvenient is the impact of the automatic stay. Monies in the trust account at the time of filing are an asset of the Bk estate. Even with an attorney lien we cannot touch the money until the automatic stay ends or there is an order (chapter 13) granting us the fees/costs. When we are entitled to say the fees are earned and when we are entitled to withdraw the filing fee is a thorny issue!
Mark Jessee
Sent from my iPhone
> On Nov 4, 2018, at 4:39 PM, Desiree Causey causeylaw@gmail.com [cdcbaa] wrote:
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> Here are the new rules.
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> http://www.calbar.ca.gov/Portals/0/docu ... onduct.pdf
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> Desiree Causey
> Law Office of Desiree Causey
> 7755 Center Avenue, Suite 1100
> Huntington Beach, CA 92647
> 714-372-2225
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> Sent from my iPad
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>> On Nov 4, 2018, at 4:17 PM, 'Steven B. Lever' sblever@leverlaw.com [cdcbaa] wrote:
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>> Thanks for the input Desiree. However, Im still wondering if State Bar Rule 1.15 even exists or it was merely proposed. I dont see Rule 1.15 on the bars website. I only see 1.5 as to fees.
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>> Id rather not make the change for a rule that was merely proposed.
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>> Btw, the Bar Journal has a thoughtful analysis about why this is (or would be) bad for criminal and bankruptcy attorneys. Here is the relevant part below, with the most critical part italicized.
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>> 5. Other peoples money. The Model Rules require a lawyer to hold the funds or property of clients or third parties separate from the lawyers own funds or property. This general fiduciary standard includes a specific requirement that a lawyer deposit into a client trust account all fees that have been paid in advance, and that the lawyer withdraw such advance fees only after they have been earned. Californias rules permit, but do not require, advance fees to be deposited into a client trust account.. As proposed, Rule 1.15 would continue Californias existing standard. This is a longstanding difference between the ABA and California rules and the bar previously has considered moving to the more client-oriented Model Rule policy, which requires advance fees to be held in trust. When the bar has explored this change, however, it has received critical opposition from the private criminal defense bar, bankruptcy lawyers and others who argue that access to justice dictates that lawyers and clients retain the freedom to contract for advance fees that are not treated as trust funds. If not, a criminal defendants advance fee payment held in their lawyers trust account might be subject to a prosecutors forfeiture action, or bankruptcy debtors fees might be claimed by the bankruptcy trustee as estate property to be divided among creditors. In either scenario, there would be a chilling effect on the lawyers willingness to handle such cases in the future.
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>> Sent: Sunday, November 04, 2018 3:15 PM
>> To: cdcbaa@yahoogroups.com
>> Subject: Re: [cdcbaa] FW: State Bar Rule 1.15 Safekeeping Funds and Property of Clients and Other Persons
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>> I have added the entire rule into my retainer agreement and added a paragraph that states that the client recognizes that the fees will be placed in the operating account or trust account (depends on the individual situation), pursuant to the rule.
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>> Further, I created an amendment to any existing fee agreement to add an acknowledgment of the clients of the new rule and if they are mid -Bk that they understand their fee will be (or was) placed in the operating account.>>
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>> For clients wanting their fees placed in the trust account, I am also adding a provision on when they agree the fee is earned. We are still thinking about when our BK fees are earned. I am thinking at the filing of the case or the 341. But would love to hear what others are doing and thinking.
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>> Desiree Causey
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>> Law Office of Desiree Causey
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>> 7755 Center Avenue, Suite 1100
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>> Huntington Beach, CA 92647
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>> 714-372-2225
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>> Sent from my iPad
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>> On Nov 4, 2018, at 10:41 AM, 'Steven B. Lever' sblever@leverlaw.com [cdcbaa] wrote:
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>> Dear List Mates;
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>> Ive started redrafting my retainer letters to exclude the new rules effective Nov. 1 2018 as to flat fees being kept in the trust.
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>> However, I dont see a rule 1.15 now (as set forth below here) on the bars website, and only see a rule 1...5 relating to flat fees. Im not seeing the new language below in 1.5.
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>> Was this rule only proposed and didnt make it through? Have I been worrying about nothing since getting advised of this supposed rule 1.15???
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>> Steve Lever
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>> Rule 1.15 Safekeeping Funds and Property of Clients and Other Persons
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>> (Rule Approved by the Supreme Court, Effective November 1, 2018)
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>> (a) All funds received or held by a lawyer or law firm* for the benefit of a client, or other person* to whom the lawyer owes a contractual, statutory, or other legal duty, including advances for fees, costs and expenses, shall be deposited in one or more identifiable bank accounts labeled he State of California, or, with written* consent of the client, in any other jurisdiction where there is a substantial* relationship between the client or the clients business and the other jurisdiction.
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>> (b) Notwithstanding paragraph (a), a flat fee paid in advance for legal services may be deposited in a lawyers or law firms operating account, provided:
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>> (1) the lawyer or law firm* discloses to the client in writing* (i) that the client has a right under paragraph (a) to require that the flat fee be deposited in an identified trust account until the fee is earned, and (ii) that the client is entitled to a refund of any amount of the fee that has not been earned in the event the representation is terminated or the services for which the fee has been paid are not completed; and
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>> (2) if the flat fee exceeds $1,000.00, the clients agreement to deposit the flat fee in the lawyers operating account and the disclosures required by paragraph (b)(1) are set forth in a writing* signed by the client.
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>> Law Offices of Steven B. Lever
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>> Steven B. Lever
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>> ( Tel. (562) 436-5456 ext. 1
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>> ( Fax (562) 485-6886
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>> * sblever@leverlaw.com
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>> www.leverlaw.com
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