Attorney Fees and Medicaid Planning: Opportunity to Comment on Proposed Rule Changes
Chapter members will soon have an opportunity to comment directly to the Supreme Court of Maryland on proposed changes addressing how attorneys may accept advance flat fees when representing clients in Medicaid planning and other means-tested benefit matters.
The proposals address a practical problem created by Maryland's current attorney trust-account rules: when a client pays an attorney in advance for Medicaid planning or an application, money that must remain in the attorney's trust account may continue to be treated as an available asset of the client for Medicaid eligibility purposes.
The Rules Committee has now voted to send two alternative solutions to the Supreme Court without recommending one over the other.
We are waiting for the proposals to be published in the Rules Committee's next formal report. Once the report is published, there will be a public comment period. We will circulate the report and instructions for submitting comments to Chapter members as soon as they are available.
The Supreme Court will then consider the proposals at an open Rules meeting, providing another opportunity for the elder law community to participate.
How We Got Here
In 2024, the Supreme Court changed Maryland's attorney trust-account rules governing fees paid in advance. The change became effective July 1, 2025.
Under the current rule, advance legal fees generally must remain in an attorney trust account until the attorney earns them.
That presents a particular problem for Medicaid planning. A client may have paid the attorney for the representation, but funds remaining in the attorney's trust account may still be treated as belonging to the client when determining eligibility for Medicaid.
Elder law and bankruptcy practitioners brought this problem to the Rules Committee. After considering the issue over several meetings, the Attorneys and Judges Subcommittee developed two possible solutions but could not agree on which should be recommended.
May-Lis Manley Testifies on the Medicaid Problem
At the full Rules Committee meeting on June 25, 2026, May-Lis Manley, Chair of the MSBA Elder Law and Disability Rights Section, appeared before the Committee to explain how the rule affects Medicaid clients and the attorneys who represent them.
May-Lis explained that Medicaid applicants must meet income and asset limits and that attorney fees remaining in escrow can continue to be considered within the client's possession and control. She told the Committee that the current rule has affected her ability to represent Medicaid clients and that she has had to turn away cases.
She asked the Committee to permit a limited exception, with safeguards for clients, allowing an advance flat fee to become the attorney's property when keeping the money in trust would interfere with the client's eligibility for benefits.
Minutes form the meeting limtited to May-Lis Manley’s testimony can be found here. May-Lis Manley Testimony (2026June)
Two Different Approaches Are Going to the Supreme Court
Both proposals would allow an attorney in specified circumstances to accept an advance flat fee without leaving the money in the attorney trust account until all of the work has been completed. Both also include disclosure and refund protections for the client.
The significant difference is how broadly the exception would apply.
Version A: A Targeted Medicaid and Benefits Exception
Version A is the narrower approach.
It would allow the advance flat fee to become the attorney's property when keeping the money in the attorney trust account would interfere with the client's eligibility for a financially restricted benefit or program for which the attorney was hired, or interfere with relief available under federal law.
For elder law attorneys, this directly addresses the Medicaid problem that prompted the proposed change.
Version B: A Broader Client “Best Interest” Exception
Version B would instead permit the arrangement when treating the advance flat fee as the attorney's property is “in the client's best interest.”
The accompanying Comment specifically identifies interference with eligibility for financially restricted benefits or federal-law relief as circumstances in which the arrangement would be in the client's best interest.
In short:
Version A puts a specific Medicaid/benefits-type exception directly into the rule. Version B creates a broader client-best-interest exception, with the Medicaid/benefits situation identified in the accompanying Comment.
Both Proposals Are Moving Forward
After hearing from the elder law and bankruptcy practitioners, the Rules Committee did not choose between the two alternatives.
Instead, on June 25, the Committee voted 11–6, with one abstention, to send both proposals to the Supreme Court without a recommendation. During the discussion, the stated purpose of doing so was to allow the practitioners to make their case directly to the Court and allow the Court to decide.
Our Next Opportunity to Participate
The next step is publication of the Rules Committee report containing the proposals.
Once that happens, Chapter members will have two important opportunities to participate:
1. Submit written comments to the Supreme Court during the public comment period.
2. Participate in the Supreme Court's open Rules meeting when the proposals are considered.
Because the report could be issued at any point, we should begin thinking now about the practical experiences and examples that will help explain why the current attorney-fee rules create problems for Medicaid clients and why a change is needed.
We will notify Chapter members as soon as the report is published and provide the comment deadline and information about the Supreme Court meeting.