A New York lawyer may place advance retainers in the lawyer's or law firm's operating account or in a client trust account. The New York Rules of Professional Conduct, unlike the Model Rules, do not expressly require any specific treatment of advance fee payments. New York ethics opinions conclude that a lawyer may ethically deposit advance retainers in the lawyer's or law firm's operating account unless the client and lawyer have expressly agreed that it be placed in a client trust account. New York lawyers and law firms should be aware that depending on how they treat advance retainers, there may be additional obligations under the Rules that they need to comply with. Moreover, out-of-state lawyers who are admitted to practice in New York, and multi-office law firms that have New York offices, should be familiar with New York's rather unique treatment of advance retainers.
Devika Kewalramani is a partner at Moses & Singer and cochair of its legal ethics and law firm practice group. Jordan Greenberger is an associate in the firm's litigation department.
1. In April 2009, the Code of Professional Responsibility was replaced with the Rules of Professional Conduct.
2. The old Code provision, DR 9-102, is substantially similar to the new Rule provision, Rule 1.15.
3. Although these opinions predated the adoption of the Rules of Professional Conduct, the Code provisions they reference are virtually identical to the corresponding Rule provisions.
4. 22 NYCRR §603.15 (1st Dept.); 22 NYCRR §691.12 (2d Dept.); 22 NYCRR §1022.6 (4th Dept.).
5. American Bar Association, A Legislative History: The Development of the ABA Model Rules of Professional Conduct, 1982-2005, at 342 (2006).
6. Matter of Stern, 92 N.J. 611, 458 A.2d 1279 (N.J. 1983); New Jersey Advisory Committee on Professional Ethics, Opinion 644 "Nonrefundable Retainers," 126 N.J.L.J 966 (1990).
7. Dowling v. Chicago Options Assocs., 226 Ill.2d 277, 286-87 (Ill. 2007).