What happens to the money I pay my attorney?
Whether they bill on an hourly or flat-fee basis, lawyers routinely ask clients to pay more up front than is currently owed. This practice is perfectly legal and ethical if the attorney properly handles the excess funds.
In short, ethical rules typically require that lawyers keep money that they haven’t yet earned in a separate trust account. Once representation has concluded, the lawyer must return any funds that remain in the account (and that the lawyer hasn’t earned) to the client. (For more on the finances of representation, see Paying a Private Defense Attorney.)
The prohibition against “commingling”—keeping excess funds from a client in the lawyer’s account or storing the lawyer’s money in the client trust account—is designed to protect clients. If, for example, a lawyer’s creditors try to seize his assets, the client’s funds will be safe.
Lawyers who charge hourly typically ask for a sum to bill against. For example, a lawyer who charges $150 per hour and doesn’t anticipate spending too much time on the case at hand may ask the client for an initial deposit of $1,500. The client’s money must go into the trust account and the lawyer can only withdraw those funds that she has earned. (If the lawyer eventually exhausts the funds in the trust account, she will ask the client for another deposit.)
Likewise, whether they bill hourly or via flat fee, attorneys often ask for a deposit for the payment of expenses. This money belongs to the client and goes into the trust account; the lawyer uses these funds for the sole purpose of paying costs.
If you have any questions about how your attorney or one you’re considering hiring will handle your money, make sure to ask them. The best practice is for clients and attorneys to begin their relationship by discussing finances and contingencies that could affect how much the client owes.