Thursday, February 14, 2008

Flat Fee Must Be Escrowed Until Earned

An attorney who had charged a flat fee, commingled the unearned fee with his funds, and made several withdrawals was charged with misappropriation of client funds. The New Mexico Supreme Court held that non-refundable unearned fees are unreasonable and that advanced fees must be held in trust until earned. However, disbarment was not imposed:

"the evidence was sufficient to support findings that Respondent commingled his client's funds with his own and withdrew funds that he had not yet earned. The evidence may have supported a finding of wrongful intent necessary to conclude that Respondent misappropriated or converted his client's funds, but neither the hearing committee nor the hearing panel made any such finding. We defer to the hearing committee when it comes to fact-finding. Without such a finding of wrongful intent, the only conclusion that can be drawn is that Respondent misused or commingled his client's funds, but did not convert them, and should be punished accordingly."

The court imposed a one-year suspension with one-year of probation on reinstatement. (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2008/02/an-attorney-w-3.html

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