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MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1988-24
Trust Funds: Check and Stock Warrant Received on Escrow Account
You indicate that you had clients' escrow account at a bank which merged with another bank. As a result, you received a check as well as a warrant for the purchase of stock in the surviving bank. You indicate that the escrow account was set up under IOLTA, wherein the interest was transferred to the Maryland State Bar Association for its pro bono program. You inquire as to who is entitled to the check and warrants.
Although it is not entirely clear from your letter, the Committee assumes that the check and warrants are over and above all amounts due your clients with respect to the escrow account. Thus, in effect, the check and warrants represent additional interest on those clients' funds. Under IOLTA, any additional interest would be paid directly to the Maryland State Bar Association. The Committee believes, based upon Rule 1.15 of the Maryland Rules of Professional Conduct, that you should notify IOLTA about the merger and arrange for the check and warrants to be reissued in favor of IOLTA. Rule 1.15(b) provides that ""upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person ... a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive.. . ."" Accordingly, if the check and warrants are attributable to a clients' funds, then the check and warrants must be reissued in favor of the client; on the other hand, if they represent in effect interest over and above client funds, they belong to IOLTA and you should take the necessary steps to notify IOLTA and arrange for the check and warrants to be reissued in favor of IOLTA.
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