Supreme Court of Missouri
en banc
July 23, 2018
Effective January 1, 2019
Effective January 1, 2019
In re:
Repeal of subdivision (c) of subdivision 4-1.15, entitled "Trust Accounts and Property of Others;" and paragraphs [5] and [6] of the Comment to subdivision 4-1.15; all of the foregoing as a part of Rule 4, entitled "Rules of Professional Conduct," and in lieu thereof adoption of a new subdivision (c) of subdivision 4-1.15, entitled "Trust Accounts and Property of Others;" and new paragraphs [5], [6], and [20] of the Comment to subdivision 4-1.15 entitled "Trust Accounts and Property of Others."
ORDER
1. It is ordered that effective January 1, 2019, subdivision (c) of subdivision 4-1.15, and paragraphs [5] and [6] of the Comment to subdivision 4-1.15 be and the same are hereby repealed and a new subdivision (c) of subdivision 4-1.15; and new paragraphs [5], [6], and [20] of the Comment to subdivision 4-1.15 adopted in lieu thereof to read as follows:
4-1.15 TRUST ACCOUNTS AND PROPERTY OF OTHERS
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(c) A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred, except that an advanced flat fee which does not exceed $2,000 is exempted from this requirement and may be deposited into another account.
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Comment
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[5] Rule 4-1.15(a)(6) establishes that a lawyer must wait a reasonable period of time for deposited funds to be collected by the financial institution in which the trust account is located before disbursing funds on that deposit. This is often referred to as the deposit being "good funds." It is not sufficient to wait only until the deposit is "cleared" or "available" according to financial institution records. In either of those situations, the transaction may be reversed by the financial institution if a problem arises. The amount of time that is reasonable to wait may vary from one financial institution to another, depending on the financial institution's processing method. Waiting 10 days after the date the bank records the deposit is presumed to be a reasonable period, unless a lawyer has actual notice of a reason to wait longer on a specific deposit. A shorter period may be reasonable, in some circumstances. A lawyer must also delay disbursement and take extra measures to ensure collection before disbursement if the lawyer is aware of information that causes doubt about the collection or collectability of the deposit.
[6] While normally it is impermissible to commingle the lawyer's own funds with client funds, Rule 4-1.15(b) provides that it is permissible when necessary to pay financial institution service charges on that account. Accurate records must be kept regarding which part of the funds are the lawyer's.
Except as provided in 4-1.15(b), funds belonging to the lawyer must be disbursed to the lawyer reasonably promptly after the fee is earned or the expense paid and the client: has been billed, has had an opportunity to dispute the disbursement, or otherwise has agreed to the disbursement. Disbursement within a period of one month shall be presumed to be reasonably promptly. A longer period may be considered reasonably prompt, in some circumstances.
[6] While normally it is impermissible to commingle the lawyer's own funds with client funds, Rule 4-1.15(b) provides that it is permissible when necessary to pay financial institution service charges on that account. Accurate records must be kept regarding which part of the funds are the lawyer's.
Except as provided in 4-1.15(b), funds belonging to the lawyer must be disbursed to the lawyer reasonably promptly after the fee is earned or the expense paid and the client: has been billed, has had an opportunity to dispute the disbursement, or otherwise has agreed to the disbursement. Disbursement within a period of one month shall be presumed to be reasonably promptly. A longer period may be considered reasonably prompt, in some circumstances.
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[20] Even though an advanced flat fee that will be promptly paid and which does not exceed $2,000 may be placed directly into the office operating account, if the attorney-client relationship is terminated prior to the advanced flat fee being earned then any unearned portion of the advanced fee shall be refunded.
2. It is ordered that notice of this order be published in the Journal of the Missouri Bar.
3. It is ordered that this order be published in the South Western Reporter.
Day – to – Day
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ZEL M. FISCHER
Chief Justice
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ZEL M. FISCHER
Chief Justice