Keeping Your Fee Deposit Topped Up

client should top off fee deposit like a gas tankDo you know how to keep your client’s fee deposit from emptying out as you earn the fees? Here are two ways to do it.

  1. When the original deposit runs out, make another one. The first way requires the client to make an additional deposit in the amount of the original deposit whenever the balance in the client’s account (s) has been depleted.
  2. Top it up with each bill. The second way, sometimes called an “evergreen” or “replenishing” deposit, calls for the client to “top up” the amount on deposit with the attorney as the balance is expended, as reflected in each billing statement sent by the attorney.

Once you choose which way you want to go, include an appropriate provision in your fee agreement. Here are sample provisions:

[Alternative 1: Additional deposit when original exhausted]

Attorney will notify Client whenever the full amount of any deposit has been applied to _ _[attorney fees/costs/attorney fees and costs]_ _ incurred by Client. Within _ _[number, e.g., 15]_ _ days after each notification is mailed, Client will pay to Attorney an additional deposit in the same amount as the initial deposit to be applied in the same manner. _ _[Deposit of such additional amounts and payment of any interest earned will be made in the same manner as for the initial deposit. Client authorizes Attorney to withdraw the principal from the trust account to pay _ _[attorney fees/costs/attorney fees and costs]_ _ as they are incurred by Client.]_ _ The balance remaining of such additional deposits will also be refundable. If, at the termination of services under this agreement, the total amount incurred by Client for _ _[attorney fees/costs/attorney fees and costs]_ _ is less than the total amount of all deposits, the difference will be refunded to Client.

[Alternative 2: Replenishing deposit]

Attorney will provide Client with a monthly statement of all _ _[attorney fees/costs/attorney fees and costs]_ _ incurred by Client during the applicable billing period. Attorney will apply the deposit to the balance shown on the statement. If _ _[attorney fees/costs/attorney fees and costs]_ _ exceed the amount of the deposit, Client will pay any additional balance due on receipt of Attorney’s monthly statement. Client will also replenish the deposit each month in the amount of all payments made to Attorney from the deposit. At the conclusion of the matter, the deposit will be applied to the final statement. Client will be responsible for any amount due over and above the deposit. If the amount due from Client in the final statement is less than the amount of the deposit, the difference will be refunded to Client.

Note that these provisions wouldn’t be appropriate for use in cases in which the overall fee amount is based on the recovery in the case, such as a contingent fee agreement.

Get a sample billing letter to send to a client requesting that the client replenish retainer fees and many more useful forms and letters in CEB’s California Client Communications Manual: Sample Letters and Forms, chap 3. And get sample fee agreements with expert commentary in CEB’s Fee Agreement Forms Manual.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2018. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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