Retainer And Attorney Trust Account
Jan. 6, 2023
A legal retainer is a sum of money that a client pays to a lawyer in advance to cover the lawyer's fees and expenses in representing the client. The lawyer holds the retainer in trust and uses it to pay for the legal services provided to the client.
In New Jersey, the handling of legal retainers is governed by Rule of Professional Conduct 1.15, which sets forth the rules for the safekeeping of client property. This rule requires lawyers to keep client funds separate from the lawyer's own funds, to maintain accurate records of client funds, and to promptly deliver any funds that the client is entitled to receive.
If a lawyer in New Jersey receives a legal retainer, they should deposit the retainer in a separate trust account and maintain accurate records of the retainer and any disbursements made from it. The lawyer should also provide the client with regular accountings of the retainer and any disbursements made from it.
If the lawyer's fees and expenses exceed the amount of the retainer, the lawyer may request additional funds from the client to cover the additional costs. The lawyer should provide the client with an estimate of the anticipated legal fees and expenses at the outset of the representation, and should keep the client informed of any changes to the estimated fees and expenses.
An attorney trust account, also known as a client trust account, is a type of bank account that is used by lawyers in New Jersey to hold funds that belong to their clients. The purpose of an attorney trust account is to ensure that the funds are kept separate from the lawyer's own funds and are used only for the benefit of the client.
An IOLTA (Interest on Lawyers Trust Accounts) account is a type of attorney trust account that is used in New Jersey to hold small amounts of client funds that are expected to be held for short periods of time. The purpose of an IOLTA account is to generate income for legal aid programs and other projects that benefit the public, while also ensuring that client funds are properly safeguarded.
In New Jersey, IOLTA accounts are governed by Rule of Professional Conduct 1.15C, which sets forth the rules for the administration of IOLTA accounts. Under this rule, lawyers are required to deposit client funds that are expected to be held for short periods of time and that are too small to generate a meaningful rate of interest in an IOLTA account. The rule also requires lawyers to maintain accurate records of IOLTA accounts and to report any interest earned on the accounts to the IOLTA Fund of the Bar of New Jersey.
It is important for clients to fully understand the terms of any legal retainer agreement and to carefully review any accountings provided by their lawyer to ensure that the retainer is being handled properly. If a client has any concerns about the handling of their legal retainer, they should raise the issue with their lawyer or seek legal advice.