Opinion 1863

I have been instructed by the Rules of Professional Conduct Committee to respond to your ethics inquiry #1863 concerning monies held in trust account at conclusion of services.

The Committee has reviewed your inquiry and determined the following:

Facts:

You were retained to represent Husband in connection with his application for U. S. citizenship. Husband and Wife were recently married, and Wife was to be the sponsoring petitioner for Husband’s citizenship petition. Your flat fee of $1,500 was paid by wife, and wife also paid $250 toward filing fees and copy costs, the latter amount having been deposited into your trust account. Wife was advised that Husband is your client and that any privileges belong only to him. There is a retainer agreement that says, inter alia, that upon conclusion of services, whether by withdrawal or otherwise, any funds other than earned fees will be returned to "Client."

Wife has subsequently advised you that she no longer wants to support Husband and also wants a full refund of amounts paid to date. You reminded Wife that Husband was the client, and indicated that you would speak with Husband about the funds. Client asked you to give him some time to work things out with Wife, and to hold all funds in the meantime, since the money could still be used towards the case if Wife changes her mind.

Questions:

1. How do you handle the $250 in the trust account? If Wife requests refund of unexpended funds, and Husband objects, whose desires control?

2. Are you obligated to return any of the flat fee that was paid up front if you have done substantially most of the work?

3. If Husband and Wife reconcile, do you have an ethical problem filing petition with INS indicating a valid marriage because you have personal knowledge that marriage was not stable to begin with?

Analysis:

Rules implicated: RPCs 1.5, 1.8(f), 1.14, 3.1, 3.3, 4.1 and 8.4(c).

At the outset, we note that your description of the problem implies that there is no attorney-client relationship between you and Wife, and we have accepted this premise for purposes of this analysis. Given that the existence of such a relationship often depends upon the subjective perception of the putative client, this assumption may not be accurate as a factual matter. See, Bohn v. Cody, 119 Wn.2d 357, 832 P.2d 71 (1992). If there were an attorney-client relationship with wife, and Husband and Wife continue to disagree on the desired outcome, RPC 1.7 (conflict with current client) and possibly 2.2 (intermediary) may be pertinent as well.

RPC 1.5 requires that your fee be reasonable, and sets forth several factors to be considered in determining reasonability. Determining whether a flat fee of $1,500 for filing and pursuing a citizenship petition is reasonable, and whether the work performed by you prior to being advised that the petition may not proceed constituted "substantially most" of the work contemplated, is beyond the scope of this Committee.

RPC 1.5 also requires that the terms of the fee arrangement be clearly communicated to the client, preferably in writing. It appears that there was a written retainer agreement that presumably satisfied this requirement. It appears that both Husband and Wife signed the agreement. Subject to the reasonability requirement, the precise nature of the arrangement between you, Husband and Wife is not regulated by the RPCs, and any questions arising under that retainer agreement would be resolved by the application of general contract law, and those questions would be beyond the scope of this Committee.

RPC 1.8(f) prohibits accepting payment of fees from a third party unless the client consents and your independence is not thereby compromised. Although it appears
from your representation that these conditions have been satisfied, a final determination would require a factual inquiry that is beyond the scope of this Committee. Your inquiry letter posits that the fees were paid by Wife and implies that these were her separate funds rather than community property under her control. Again whether that is accurate is beyond our ability to determine.

RPC 1.14 requires that funds belonging to the client must be deposited into an IOLTA trust account. Clearly this applies to the $250.00 paid for expenses. The status of the $1,500 is less clear. If it is indeed a flat fee that was due upon signing the retaining agreement, it became your funds upon payment and need not be deposited into the trust account. On the other hand, if it was in the form of a deposit for fees to be earned in the future, it could only be withdrawn as those fees are earned, with notice to the client, and could not be withdrawn so long as the client contests the right to withdraw. Again, how these general rules apply in this situation would require a factual determination that the committee is not in a position to make.

The third question that you posed requires us to speculate that Husband and Wife will report a reconciliation and request that you initiate the citizenship petition, and further to speculate about your state of knowledge at that time about the stability of the marriage and its implications for federal immigration law. Obviously, there are too many variables to determine exactly how this scenario might play out, but the following observations may be of assistance to you.

RPC 3.1 and 3.3 prohibit an attorney from making legal or factual arguments to a tribunal that are frivolous or false, and require that you disclose any previously undisclosed information the nondisclosure of which is necessary to avoid assisting a fraudulent action. RPC 4.1 similarly prohibits making statements to a third party that are false, and requires disclosure of facts the nondisclosure of which is necessary to avoid assisting a fraudulent or criminal act. Which rule is applicable depends on whether one views the Immigration and Naturalization Service as a "tribunal" or a "third party," but either way you must not prepare or submit documents that include statements that you knows to be false or misleading. Finally, RPC 8.4(c) prohibits you from engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. Should Husband and Wife request that you initiate citizenship petitions in the future, your conduct should be guided by these general rules.