It is grounds for disbarment when an attorney deposits a retainer into his or her business account without the client’s informed, written consent

In its July 24, 2015 opinion in Attorney Grievance Commission v. Kenneth Haley, the Maryland Court of Appears disbarred an attorney for depositing legal fees into his business account, instead of his Attorney Trust Account, without client’s informed, written consent.

In its strongly worded opinion, the Court of Appeals cogently explained: “A lawyer engages in misappropriation by intentionally depositing unearned fees into an operating account instead of an attorney trust account, or retaining unearned fees after the representation’s termination, without the client’s consent. See Garrett, 427 Md. at 227, 46 A.3d at 1179 (“Misappropriation is any unauthorized use by an attorney of a client’s funds entrusted to him or her, whether or not temporary or for personal gain or benefit.”  “[M]isappropriation of funds . . . is an act infected with deceit and dishonesty[,] and ordinarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanction.” Attorney Grievance Comm’n v. Wills, 441 Md. 45, 59, 105 A.3d 479, 487 (2014).  In Attorney Grievance Comm’n v. Roberts, 394 Md. 137, 166 (2006)  we stated: ‘The sanction of disbarment is so justified because attorneys are charged with remembering that the entrustment to them of the money and property of others involves a responsibility of the highest order. They must carefully administer and account for those funds. Appropriating any part of those funds to their own use and benefit without clear authority to do so cannot be tolerated'”.

Rule 1.15(c) of the Maryland Lawyers’ Rules of Profession Conduct requires that all fees paid by a client be deposited into the Attorney Trust Account, unless the client has given his or her informed, written consent to a different arrangement.  Informed, written consent requires the attorney to advise the client of both the advantages of depositing the fees into the Attorney Trust Account as well as the disadvantages of depositing the fees into the attorney’s business account.

Practice pointer for clients:  It is a common trick among Maryland attorneys to claim that a portion of your initial fee is “earned when paid” or constitutes a non-refundable retainer.  You should strike such language from any proposed retainer agreement.

A lawyer may only withdraw funds from the Attorney Trust Account as legal fees are earned or expenses incurred.  Accordingly, the invoices from your lawyer should reflect that your initial retainer was deposited into the law firm’s Attorney Trust Account.



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