Opinion ID: 1831592
Heading Depth: 1
Heading Rank: 3

Heading: L. Matter

Text: The referee found that Nelson did not have a written retainer agreement with M.L. and failed to deposit M.L.'s funds in a client trust account. Instead, Nelson placed the funds into a personal account and spent the monies for his own benefit. The referee also found that Nelson failed to refund the unearned portion of the client's funds when requested. The referee concluded that Nelson violated Rule 1.15(a), as interpreted in Opinion No. 15, and Rules 1.15(c)(4) and 1.16(d). [4] Nelson argues that he had an oral retainer agreement with M.L. to provide services on a project fee basis, which was then permitted by Opinion No. 15, and implies that the funds paid as a project fee become the funds of the attorney and need not be deposited in a trust account. He argues that even if he and M.L. had made a written retainer agreement, it would not have changed his conduct. Rather, he states: The thing that was wrong was that [he] did not have sufficient cash flow to make the refund at the time that he had agreed to make it   . The fact that [he] did not have sufficient income to comply with the terms of the agreement    should not be a basis for discipline. In mitigation, Nelson argues that he refunded the unearned portion of the funds to M.L. in full, with interest. The problem with Nelson's argument is that Opinion 15 only recognized a project fee, which the opinion referred to as a non-refundable retainer agreement, where it was clearly set forth in a written retainer agreement that notified the client that the funds will not be refunded, and will not be placed in a trust account. Nelson had no such written agreement with M.L., and therefore Nelson was required to place the $4,750 payment in a trust account until earned. Nelson did not earn the entire $4,750 because he did not complete the project, but withdrew from representation. Later, Nelson agreed with M.L. that $2,500 of the payment was not earned and would be refunded. We conclude that the referee's findings that Nelson failed to deposit M.L.'s funds in a trust account and failed to refund the unearned portion of the client's funds when requested were not clearly erroneous.