Effective July 1, 2025, attorneys practicing law in Maryland may no longer state that their fees are “earned upon receipt” in their engagement agreements. Under the new, amended Rule 19-301.15, “[a]n attorney shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the attorney only as fees are earned or expenses incurred.”
Under the current Rule 1.15, an attorney was permitted to deposit fees directly into his or her operating account if the client gave “informed consent, confirmed in writing[.]” Informed consent required that the attorney give his or her client any explanation reasonably necessary to inform the client of the material advantages and disadvantages of the proposed course of conduct and a discussion of the client’s options and alternatives. This Rule mirrored the District of Columbia Court of Appeals’ decision in In re Mance, 980 A.2d 1196 (D.C. 2009), which held for the first time that an attorney may treat fees as earned upon receipt with informed consent confirmed in writing.
The Rule, therefore, no longer permits a “carve-out” for informed consent. The change to Rule 1.15 can be visualized as follows, with the new portions of the Rule highlighted in blue, and the previous portions of the Rule highlighted in yellow:
(c) Unless the client gives informed consent, confirmed in writing, to a different arrangement, an attorney shall deposit An attorney shall deposit into a client trust account legal fees and expenses that have been paid in advance into a client trust account and may withdraw those funds for the attorney’s own benefit , to be withdrawn by the attorney only as fees are earned or expenses incurred.
The Rule change addresses an “advance payment,” not a traditional retainer. Although often used interchangeably in the legal field, there are differences between advanced payments and retainers. Simply put, as explained by the Maryland Supreme Court in Attorney Grievance Commission of Maryland v. Jones, 484 Md. 155 (2023), an advanced payment is an advance on the fee that the attorney will eventually earn through his or her work. A retainer, on the other hand, is a fee paid that will ensure that an attorney will be available for the client if required. By definition, a retainer is earned upon receipt.
The difference between an advanced fee and a retainer in a particular circumstance is a nuanced analysis. To be sure, attorneys cannot simply rename an advanced fee a “retainer” and expect to be in compliance with the “new” Rule 1.15.
Attorneys practicing in Maryland should be careful to take note of the change. Issues with comingling fees are one of the most common issues that catch the attention of the Attorney Grievance Commission. Rule violations relating to fees can – and often do – lead to discipline. If you have questions or concerns regarding whether your fee arrangement complies with the new Rule 1.15, or whether you are charging a traditional retainer, reach out to the legal ethics team with Carr Maloney.
Kelsey Williams (kelsey.williams@carrmaloney.com), or
Dennis Quinn (dennis.quinn@carrmaloney.com). By: Kelsey Williams and Dennis Quinn.