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MARYLAND STATE BAR ASSOCIATION, INC.
COMMITTEE ON ETHICS
ETHICS DOCKET NO. 1989-35
Safekeeping client’s funds; clients un-locatable
In your inquiry, you indicate that you frequently receive refunds from the United States Bankruptcy Court for clients that you are no longer able to locate. While the refunds are normally of modest amounts, they occasionally are for several hundred dollars. You have asked the Committee's guidance on the appropriate way to handle these client monies.
Rule 1.15 of the Maryland Rules of Professional Conduct concerns a lawyer's obligation with regard to safe keeping 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 of such account funds and of other property 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 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 of 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 § 17-101, et seq. 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 b deemed to be reasonable will vary with the circumstances, but we would suggest that if any other reasonable means can be undertaken to locate the owner of the property they should be pursued by your firm.
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