Safekeeping Property · 2-8% of the exam
20.2.3Withdrawal timing: only as earned (Rule 1.15(c))
On this page
- Rule 1.15(c) — Withdrawal timing
Why
Tying withdrawal to completed work is what gives the trust account real protection. A lawyer who can draw at any time provides no safeguard. The account would become a second operating account under another name, and the client's money would sit exposed to the very risk that separating it was meant to remove.
Plain English
Draw from trust only after performing the work or incurring the expense corresponding to the amount withdrawn. The timing of the withdrawal, not the eventual outcome, determines whether a violation occurred. Upon termination of the representation, however it comes about, any unearned advance payment of fee or expense must be refunded to the client.
Rule
Rule 1.15(c) — Withdrawal timing
A lawyer may withdraw funds from the client trust account:
- only as fees are earned or
- expenses are incurred.
Premature withdrawal is a violation even if the lawyer ultimately earns the full amount.
Upon termination of the representation, however it comes about, any unearned advance payment of fee or expense must be refunded to the client (cross-reference Rule 1.16(d)).
Example 1
Ex. 1
Kim pays a $10,000 advance fee on the day they sign the engagement letter. The lawyer withdraws the entire $10,000 from trust on day one, confident the transaction will occupy roughly one month of work. Everything proceeds as expected; within 30 days all tasks are complete and the full fee is unquestionably earned.
The violation occurred at the moment of the day-one withdrawal. The question isn't whether the fee was ultimately earned but whether the work had been performed at the time of withdrawal. It had not. A compliant practice would draw amounts incrementally as work was performed. Rewind to day one and look only at the work performed by then.
Trap
Tip
Questions · 1
Q 01ch20-e07
Question 1 of 1 · Rule 1.15(c)
A Developer engaged Attorney to obtain permits for a small housing project and paid twenty-four thousand dollars in advance against the work. Attorney deposited the payment into the client trust account the day it arrived. Two days later, before doing anything on the file, Attorney moved the whole twenty-four thousand dollars into the firm operating account, confident that the permitting work would take about six weeks. The work went as expected, and Attorney finished every task within six weeks so that the full fee was earned. The Developer was pleased with the result and raised no complaint about the fee or the timing. Is Attorney subject to discipline?
Keys 1 to 4 choose.