Hello and welcome to this Ethics Alert blog which will discuss the decisions of the Board of Governors of The Florida Bar (BOG) at its March 28, 2014 meeting, approving significant revisions to the trust account and lawyer referral rules. Articles in the March 1, 2014 issue of The Florida Bar News with summaries of the trust account and lawyer referral rule revisions are here:
https://www.floridabar.org/DIVCOM/JN/jnnews01.nsf/cb53c80c8fabd49d85256b5900678f6c/6a48fd5b0e9bed1a85257c89004b2314!OpenDocument&Highlight=0,trust,account,rules* and here: https://www.floridabar.org/DIVCOM/JN/jnnews01.nsf/cb53c80c8fabd49d85256b5900678f6c/76e33d6475ce3e1185257c89004b56a7!OpenDocument&Highlight=0,lawyer,referral,service,rule,amendments*
The BOG also adopted a new policy on advertising filing fees which will require a lawyer to pay the $150.00 filing fee (or $250.00 late fee) on any advertisement that renders the advertisement a “new advertisement” except when a revision is “solely to comply” with a Bar opinion that the advertisement does not comply with the rules.
As I previously reported, the BOG’s Special Committee on Lawyer Referral Services began a review of the lawyer referral service rule several years ago. Significant proposed revisions include requiring lawyers who belong to lawyer referral services to report their participation to the Bar; requiring that clients make the initial contact after being referred to a lawyer; and language that would prohibit a lawyer from recommending that a referred client use other services provided by the referral service (such as medical treatment) unless the lawyer is satisfied that the referral is in the client’s best interest and the client gives written confirmation that he or she has been told about the potential conflict.
The BOG also approved significant revisions to the trust account rules. As I previously reported, the most significant proposed revisions would amend Rule 4-1.5 to explicitly state that nonrefundable fees are considered earned on receipt and must not be placed in lawyers’ trust account and also providing a definition for retainers, flat fees, and advance fees.
The Comment to Rule 4-1.5 would also state, “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(a)(1) to create an exception 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.
Bottom line: The proposed rule revisions will now be sent to the Supreme Court of Florida for review and, if they are implemented by the Supreme Court of Florida, they will impose additional restrictions and requirements on lawyers and lawyer referral services and will clarify the trust account rules related to non-refundable fees and create an exception to the commingling prohibition.
Let’s be careful out there.
Disclaimer: this e-mail 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
Thank you for sharing this revision. It’s about time the BOG finally came-out and clarified what we’ve been teaching lawyers for more than a decade about how to handle non-refundable retainers and negotiable instruments.
Unfortunately most lawyers only learn about what NOT to do with an IOLTA client property trust account. I’m glad to see the BOG is finally beginning to help clarify what a lawyer IS supposed to do.
Most lawyers are not aware that the whole idea of our Client Property Trust Account was originally meant to help us run our firms more profitably!
I hope you don’t mind me sharing this link to a free lesson on how to set-up, manage and use your IOLTA Client Property Trust Account as the PROFITABLE law firm management tool it was meant to be: https://www.howtomanageasmalllawfirm.com/iolta/