The Ethical Esquire

By Maryam Hatcher, Esq.

Dear Ethical Esquire:  I’m having a labor issue that I’m hoping you can help with.  I recently hired a very experienced paralegal, and I asked her to handle some tasks while I was on vacation.  First, I asked her to deposit a settlement check made out to Client A into my firm’s bank account, which I will give to the client once I return from my 14-day Mediterranean cruise.  Second, I asked my paralegal to deposit a $5,000 retainer from Client B into my personal checking account for a matter I will handle when I return from my cruise (the matter will end up costing my client at least $30,000, so there is no way any of this cash will be returned to Client B after my representation ends).  Upon hearing my requests, my paralegal seemed concerned that I was inappropriately intermingling client funds with my own.  My question for you is: would it be unethical for me to fire my paralegal for insubordination?

– Big Boss Barrister*

Dearest Big Boss:  I will hold off on giving you my recommendation for your labor dispute while I tackle the client funds issue at hand because it is, as they say in modern day parlance, a doozy.

Let’s start with dearest Client A, for whom you seem to have helped secure a settlement of some kind.  Kudos to you!  But do you think it is correct to make your client wait to receive those settlement funds while you bask in the glow of the Mediterranean sun?  The ABA Model Rules of Professional Conduct don’t think so.  Specifically, Rule 1.15(d) requires attorneys to “promptly deliver to the client . . . any funds or other property that the client . . . is entitled to receive.”  There may be circumstances in which waiting 14 days to give a client his or her entitled funds may still constitute a “prompt” distribution of those funds, but I don’t think your vacation is a reasonable reason to make your client wait.

Also, you did not mention whether or not you were entitled to any portion of that settlement check, but you implied that at least some of it belongs to your client.  Per Rule 1.15(a), any funds that belong to your client must be kept in a separate account from your or your firm’s account – this is true regardless of how careful you are about keeping an accounting of which funds belong to whom.  For the brief time you hold on to a client’s funds that are owed to him, keep those funds apart from your own.

Next, let’s move on to dearest Client B, who has paid you up front for at least some of the services you will be rendering on his behalf.  Even if you’re 100 percent confident that you will end up using the entire retainer on legitimate legal services and expenses, you cannot put that money in your personal bank account to spend on vacation tchotchkes.  Rule 1.15(c) requires that you place yet-to-be earned legal fees in a client trust account, which you cannot withdraw until you have provided the corresponding legal services or accrued related expenses.  That money is not yours until you do the work to earn it – plain and simple.

Thank you for indulging me as I went on and on about a pesky little issue you did not even ask about.  While I offer no opinion on the question of whether it would be unethical for you to fire your paralegal for insubordination, I must say that I think it would be terribly unwise.

Now – go forth and be ethical!

–  EE

*Disclaimer: “Big Boss Barrister” is a fictional advice seeker.  This blog is satirical in nature and, though it aims to provide helpful guidance regarding professional responsibility dilemmas, it is not intended to offer legal advice.

In our next post, Ethical Esquire will tackle the very serious issue of substance abuse in the legal community.