CBA Record March-April 2024

THE YOUNG LAWYERS SECTION

Attorney Fees and Safekeeping Client Property: Recent Amendments to Illinois Rules of Professional Conduct 1.5 and 1.15 By Stephanie Moon

T he Illinois Rules of Professional Conduct were adopted in 1980 to provide guidance on a wide range of ethical topics. The original rules were amended in 2009 to account for wide spread access to the internet; other rules were amended in 2010. Most recently, the Illinois Supreme Court amended Rules 1.5 and 1.15 of the IRPC, effective July 1, 2023. The amend ments were proposed by the Illinois Attorney Registration and Disciplinary Commission and the Lawyers Trust Fund. Rule 1.5 governs an attorney’s ability to collect fees. The newly amended rule now prohibits non-refundable fees or retainers. It also prohibits any agreement that attempts to restrict or otherwise limit a client’s right to fire their counsel or to obtain a refund of unearned or unreason able fees. Rule 1.15 governs how attorneys must safeguard their clients’ funds or prop erty. The amended rule now requires that “[a] lawyer must not, even temporarily,

use funds or property of clients or third persons for the lawyer’s own purposes without authorization…” The rule also requires that lawyers must deposit all funds belonging to clients and third per sons into one of two types of client trust accounts: (1) Interest on Lawyer Trust Accounts, with interest remitted to the LTF; and/or (2) interest-bearing client trust accounts established to hold a client’s funds, with the client receiving the inter est. Specific guidance concerning client trust accounts is provided in the Client Trust Account Handbook published by the ARDC. Newly added Comments 5 and 6 to Rule 1.15 stress that attorneys must exercise, implement, and/or take reasonable steps to safeguard their clients’ funds when using electronic platforms to move or transfer client monies. Comment 1 to Rule 1.15 was also revised to state that an attorney’s unau thorized use of funds is conversion. Although the term “conversion” is a new addition to Rule 1.15, prior disciplinary

matters addressed by the ARDC used the term. For example, in a 2023 Statement of Charges Pursuant to Supreme Court Rule 762(a) filing in Commission No. 2023-PR-00027, the ARDC found that an attorney’s failure to hold his clients’ property in a secure account was “conver sion” in violation of Rule 1.15. As of Feb ruary 1, 2024, the ARDC had yet to issue any formal opinions under the newly amended rule. The Illinois Supreme Court also added Rules 1.15A, 1.15B, and 1.15C. Most of the content of these new rules is directly copied from text of the 2010 Rule 1.15. Attorneys can access the rules here: https://www.illinoiscourts.gov/rules/ supreme-court-rules.

Stephanie Moon is a litigation associate at Armstrong Teasdale LLP, where she focuses on professional liability, shareholder disputes, cannabis, and employment.

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