The Florida Bar

Ethics Opinion

Opinion 76-37

FLORIDA BAR ETHICS OPINION
OPINION 76-37
November 16, 1976
Advisory ethics opinions are not binding.
When receiving payment through an approved credit plan an attorney must absorb the discount.
Under such a plan an attorney may receive drafts for past or future services and expenses, but
any money received for future services and expenses must be kept in a trust account along with
an amount, from the attorney’s own funds, equal to the discount on the draft.
Integration Rule:
CPR:
Opinion:

Rule 11.02(4)
DR 2-106(D), DR 3-102(B), DR 5-103(A)(3), DR 5-108, DR 9-102(A), (C)
76-27

Chairman Sullivan stated the opinion of the committee:
This inquiry involves the use of Approved Credit Plans allowed by
amendments to the Code of Professional Responsibility, 1 and in particular to the
Master Charge agreement approved by the Supreme Court of Florida. 2 A member
of The Florida Bar poses three hypothetical situations:
1. A client gives his lawyer a Master Charge draft for $500 as an advance
for costs or expenses in a matter the lawyer is handling for the client.
2. A client gives his lawyer a Master Charge draft for $500, half of which
is for a fee to which the lawyer is already entitled and half of which is for an
advance for costs in a matter the lawyer is handling for the client.
3. A client gives his lawyer a Master Charge draft for $500. An
undetermined part of that draft is for an as-yet-unearned fee and the remainder is
for an advance for costs in a matter the lawyer is handling for the client.
We are asked to suggest procedures in each of those situations which would comply with
the Code. We are asked particularly about the use of a lawyer’s trust account, regular account or
both and the way a lawyer should handle the discount, i.e., the difference between the amount of
the Master Charge draft and the amount the lawyer receives from the bank which buys the draft.

1

In the Matter of The Florida Bar, Petitioner, In re Petition for Amendment of the Code of
Professional Responsibility and the Integration Rule of the Florida Bar, Fla. 1975, 316 So.2d 52.
2

The Florida Bar, Petitioner. In re Petition for Amendment of the Code of Professional
Responsibility and the Integration Rule of the Florida Bar, Fla. 1976, 329 So.2d 1.

The provisions of the Code dealing with the approved credit plans are DR 2-106(D), DR
3-102(B), DR 5-103(A)(3), DR 5-108 and DR 9-102(C). Also involved in the present inquiry are
Rule 11.02(4) of the Integration Rule and the approved agreement.
Before dealing with the three situations outlined above, we come first to the question of
the discount.
DR 2-106(D) provides:
Charges made by any lawyer or law firm under an approved credit plan shall
be only for services actually rendered or cash actually paid on behalf of the client.
No higher fee shall be charged and no additional charge shall be imposed by
reason of the lawyer’s or law firm’s participation in an approved credit plan.
DR 3-102(B) provides:
A lawyer or law firm may pay the discount charge incident to the use of an
approved credit plan for financing legal fees, costs and expenses. The fact that
reasonable fees charged a client may provide the funds with which to pay the
discount charge for the plan shall not constitute a violation of this rule, provided
that no separate or additional charge may be made for the purpose.
We interpret that language as requiring the lawyer to pay or absorb the discount, whether
the Master Charge draft which is discounted is for fees or costs or expenses or a combination of
these.
In other words, the lawyer who uses this plan gets paid or reimbursed now instead of
later. The quid pro quo is that the lawyer absorbs the discount the bank charges.
Next, we consider DR 9-102(A), which seems to allow advances for costs and expenses
to be deposited in a lawyer’s regular account, and Rule 11.02(4) of the Integration Rule, which
states that such money is held in trust. We discussed this apparent inconsistency in Opinion
76-27 and concluded that because Rule 11.02(4) had been amended after the enactment of the
Code the language in the Rule governs and such money should be deposited in a separate trust
account.
Third, we consider whether DR 2-106(D) (“Charges made by any lawyer or law firm
under an approved credit plan shall be only for services actually rendered or cash actually paid
on behalf of the client.”) prohibits use of the plan where any or all of the Master Charge draft is
for payment of fees to be earned or costs and expenses to be incurred.
We note that Paragraph 5 of the form of agreement which the Supreme Court approved
after the amendments to the Code allowing approved credit plans refers to drafts drawn by
clients to whom the participating lawyer “has rendered, or agreed to render, legal services.” We
read that language as including drafts for legal services to be performed in the future and are of
the opinion that DR 2-106(D) does not limit such Master Charge drafts to payment for legal
services already performed or for reimbursement for costs and expenses already incurred for
which the lawyer has advanced the money.

Turning now to the three hypothetical situations, the Committee offers these guidelines:
1. The lawyer should deposit the proceeds of a draft intended as an advance
for costs or expenses in his trust account and should additionally deposit in the
trust account an amount equal to the discount on that draft. That supplemental
amount should come from the lawyer’s own funds.
2. When one-half of the draft is in payment of fees already earned and the
remainder is an advance for costs and expenses, the lawyer should deposit the
entire proceeds in his trust account and then transfer to the regular account the
amount representing the fee already earned less the proportional amount of the
discount attributable to that fee. The lawyer should pay into the trust account from
his own funds (or by transferring a lesser amount of the earned fee to his regular
account and leaving that additional amount in the trust account) an amount equal
to the proportion of the discount attributable to the advance for costs.
3. Where the draft is intended as a deposit for fees still to be earned and costs
and expenses still to be incurred—all in undetermined amounts—the lawyer
should deposit the entire proceeds of the draft in his trust account and, in addition,
from his own funds, an amount equal to the discount on the draft. If and when the
lawyer becomes entitled to any part of that money as an earned fee, he can
withdraw from the trust account the total amount of that earned fee and in effect
receive back a proportion of the amount of the discount he paid into the trust
account.
In responding to this inquiry, we have not attempted to suggest the details of any
arrangements between a lawyer and a bank other than that there should be both trust account and
regular account. Depending upon the banking costs and services available at any time or place,
there may be and probably are a number of banking procedures that will comply with the
requirements of the Code, the Integration Rule and the approved agreement.