Ethics Hotline & Opinions

Ethics Docket No. 1990-02

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 1990-02

Real Estate Settlement Fees, Retaining Interest on Escrows

 

In your letter you state that your firm is considering offering two plans for real estate settlements. Plan 1 would provide a fee of three hundred dollars ($300.00) with interest earned being sent to IOLTA. Plan 2 would involve a real estate settlement charge with a fee of two hundred dollars ($200.00) with interest earned being retained by the firm. You have requested interest earned being retained by the firm. You have requested that we provide you with our opinion with respect to this matter.

In Ethics Docket Number 89-19, the Committee determined that it was ethically impermissible for an attorney to agree with a client that interest deposited in the lawyer's account be credited to the attorney. A copy of Ethics Docket 89-19 is enclosed for you. Earlier, in Ethics Docket 81-44, the Committee determined that it was unethical for an attorney to put a client's money in an interest bearing account and request the client to waive the interest unless the earned interest was directly attributable to and credited against a specific or specifically ascertainable fee. A copy of Ethics Docket 81-44 is also enclosed for you. Further, reference is made to Disciplinary Rules 1.5, 1.7 and 1.8. A discussion of those Rules is contained in Ethics Docket 89-19.

In addition to the above-referenced Disciplinary Rules, you may also wish to review the provisions of Section 44 of Article 10 of the Maryland Annotated Code which limits the circumstances in which an attorney may place a client's money in an interest bearing account without crediting the interest to the client. You may also wish to review the provisions contained in subtitle BU of Chapter 1100 of the Maryland Rules entitled "Attorney Trust Accounts."

For all of the above reasons, the Committee has determined that it would not be permissible for you to offer the schedule of fees set forth in your suggested Plan 2.

References: Ethics Dockets 1981-44 and 1989-19

 

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