ETHICS DOCKET NO. 1989-26

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 1989-26

Safekeeping Client’s Funds: Funds of Unidentified Client

In your inquiry, you indicate that your law firm maintains in its escrow account the sum of $100 representing a water escrow from a real estate settlement. You have attempted to refund the escrow to the appropriated party by mailing a check to three different addresses, and each time the check has been returned as unclaimed with no forwarding address indicated by the post office. Thus, you ask for the Committee's guidance on the appropriated manner with which to deal with these escrow monies.

Rule 1.15 of the Maryland Rules of Professional Conduct concerns a lawyer's obligations with regard to safekeeping property of clients or third persons which is in the lawyer's possession. Subsection (a) of Rule 1.15 provides as follows:

(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.

While this subsection establishes the requirement that records of account funds and other property held by a lawyer should be maintained and preserved by the lawyer for a period of five years after termination of the representation, it does not address specifically the issue of how the funds or property, when the owners cannot be located, should be handled.

Subsection (b) of Rule 1.15 sets forth the obligation of attorneys to notify the client or third person of the receipt of funds or property, and the obligation to promptly deliver to the client or third person funds or property to which the client or third person is entitled. Specifically, subsection (b) of Rule 1.15 provides:

b.) 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. Except as stated in this Rule or otherwise permitted by law or by agreement with the client, 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 and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

The comments to Rule 1.15 indicate that the lawyer ""should hold property of others with the care required of a professional fiduciary.""

Because no specific direction is provided in the Maryland Rules on Professional Conduct regarding the disposition of property which is unclaimed by clients or third persons, we believe that your questions are answered by the Maryland Uniform Disposition of Abandoned Property Act, which is codified in the Commercial Law Article Section 17-101, et seg. This act provides specific instructions as to the disposition of abandoned property, and creates certain presumptions as to the abandonment of various types of property after the passage of specified periods of time.

We would point out, however, that in our view Rule 1.15(b) requires that reasonable efforts be undertaken by a lawyer to deliver a property to a client or third party. What steps will be deemed to be reasonable will vary with the circumstances, but we would suggest that if any other reasonable means can be undertaken to located the owner of the property they should be pursued by your firm.