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The Florida Bar’s Board of Governors considers revisions to confidentiality, trust account and fee rules and include definitions of retainers, flat fees, and advance fees

Hello and welcome to this Ethics Alert blog which will discuss the recent Notice of the Florida Bar’s Board of Governors of its intent to consider changes to the Rules Regulating The Florida Bar. The Notice is in the February 15, 2014 Florida Bar News and is on the Bar’s website here:!OpenDocument

The most significant of the proposed revisions would amend Rule 4-1.6 to permit lawyers and law firms to reveal some confidential client information when a lawyer is changing law firms or law firms are merging if the confidential information will not injure the client. The proposed change to Rule 4-1.6 would add subsection (c)(6) to provide for limited disclosure of information “to detect and resolve conflicts of interest between lawyers in different firms arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.” Language would also be added subsection (e) to provide that, “A lawyer must make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”

Another proposed revision would amend Rule 4-1.5 stating that nonrefundable fees are considered earned on receipt and must not be placed in lawyers’ trust accounts and also providing a definition for retainers, flat fees, and advance fees. The Comment to Rule 4-1.5 would also provide, “A nonrefundable retainer or nonrefundable flat fee is the property of the lawyer and should not be held in trust. If a client gives the lawyer a negotiable instrument that represents both an advance on costs plus either a nonrefundable retainer or a nonrefundable flat fee, the entire amount should be deposited into the lawyer’s trust account, then the portion representing the earned nonrefundable retainer or nonrefundable flat fee should be withdrawn within a reasonable time. An advance fee must be held in trust until it is earned. Nonrefundable fees are, as all fees, subject to the prohibition against excessive fees.”

The proposed revisions would also amend Rule 5-1.1 and create an exception within subdivision (a)(1) related to commingling to permit a lawyer to deposit sufficient funds into the lawyer’s trust account to make up a shortfall in the trust account caused by misappropriation, bank error, bank charge or a bounced check.

The amendments to Rule 4-1.6 resulted from recommendations made by the ABA Ethics Commission 20/20 and, as I pointed out in a previous Ethics Alert, the amendments to Rule 4-1.5 resulted from an earlier attempt by The Florida Bar to amend the Comment to Rule 4-1.5 which was rejected by the Florida Supreme Court in an opinion stating that any definitions should be in the rule, not the comment. According to the Notice, if you would like a copy of the text of any of the proposed amendment, you can e-mail [email protected] or call Janellen Green at (850) 561-5751. You should refer to the title or item number and the date of publication (2/15/14).

Bottom line: If approved by the BOG and implemented by the Florida Supreme Court, these rule revisions would clarify issues related to confidentiality when a lawyer leaves a law firm and/or the law firm is purchased, prevent lawyers who place funds into a trust account to reduce shortages from being charged with commingling, clarify the nature of a non-refundable fee, and provide definitions for retainers, flat fees, and advance fees.

Be careful out there!

Disclaimer: this Ethics Alert is not an advertisement and is for informational purposes only. It does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire
Law Office of Joseph A. Corsmeier, P.A.
2454 McMullen Booth Road, Suite 431
Clearwater, Florida 33759
Office (727) 799-1688
Fax (727) 799-1670
[email protected]

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