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Rule 1.15. Safekeeping Property.

(a) A lawyer shall hold property of clients or third persons that is ina lawyer's possession in connection with a representation separate from thelawyer's own property. Funds shall be kept in a separate account maintained inthe state where the lawyer's office is situated or elsewhere with the consentof the client or third person. The account may only be maintained in afinancial institution that agrees to report to the Office of ProfessionalConduct in the event any instrument in properly payable form is presentedagainst an attorney trust account containing insufficient funds, irrespectiveof whether or not the instrument is honored. Other property shall be identifiedas such and appropriately safeguarded. Complete records of such account fundsand other property shall be kept by the lawyer and shall be preserved for aperiod of five years after termination of the representation.

(b) A lawyer may deposit the lawyer?s own funds ina client trust account for the sole purpose of paying bank service charges onthat account, but only in an amount necessary for that purpose.

(c) A lawyer shall deposit into a client trust accountlegal fees and expenses that have been paid in advance, to be withdrawn by thelawyer only as fees are earned or expenses incurred.

(d) Upon receiving funds or other property in which a client or thirdperson has an interest, a lawyer shall promptly notify the client or thirdperson. Except as stated in this Rule or otherwise permitted by law or byagreement with the client, a lawyer shall promptly deliver to the client orthird person any funds or other property that the client or third person isentitled to receive and, upon request by the client or third person, shallpromptly render a full accounting regarding such property.

(e) When in the course of representation a lawyer is in possession ofproperty in which two or more persons (one of whom may be the lawyer) claiminterests, the property shall be kept separate by the lawyer until the disputeis resolved. The lawyer shall promptly distribute all portions of the propertyas to which the interests are not in dispute.

Comment

[1] A lawyer should hold property of others with the care required of aprofessional fiduciary. Securities should be kept in a safe deposit box, exceptwhen some other form of safekeeping is warranted by special circumstances. Allproperty which is the property of clients or third persons, includingprospective clients, must be kept separate from the lawyer's business and personalproperty and, if monies, in one or more trust accounts. Separate trust accountsmay be warranted when administering estate monies or acting in similarfiduciary capacities. In addition to normal monthly maintenance fees on eachaccount, the lawyers can anticipate that financial institutions may chargeadditional fees for reporting overdrafts in accordance with this Rule. A lawyershould maintain on a current basis books and records in accordance withgenerally accepted accounting practice and comply with any recordkeeping rulesestablished by law or court order. See, e.g., ABA Model Financial RecordkeepingRule.

[2] While normally it is impermissible to commingle thelawyer?s own funds with client funds, paragraph (b) provides that it ispermissible when necessary to pay bank service charges on that account.Accurate records must be kept regarding which part of the funds are thelawyer?s.

[3] Lawyers often receive funds from third parties from which thelawyer's fee will be paid. The lawyer is not required to remit to the clientfunds that the lawyer reasonably believes represent fees owed. However, alawyer may not hold funds to coerce a client into accepting the lawyer'scontention. The disputed portion of the funds must be kept in a trust account,and the lawyer should suggest means for prompt resolution of the dispute, suchas arbitration. The undisputed portion of the funds shall be promptlydistributed.

[4] Paragraph (e) also recognizes that third parties may have lawfulclaims against specific funds or other property in a lawyer's custody, such asa client?s creditor who has a lien on funds recovered in a personal injuryaction. A lawyer may have a duty under applicable law to protect suchthird-party claims against wrongful interference by the client. In such cases,when the third-party claim is not frivolous under applicable law, the lawyermust refuse to surrender the property to the client until the claims areresolved. A lawyer should not unilaterally assume to arbitrate a disputebetween the client and the third party, but, when there are substantial groundsfor dispute as to the person entitled to the funds, the lawyer may file anaction to have a court resolve the dispute.

[5] The obligations of a lawyer under this Rule are independent of thosearising from activity other than rendering legal services. For example, alawyer who serves as an escrow agent is governed by the applicable law relatingto fiduciaries even though the lawyer does not render legal services in thetransaction and is not governed by this Rule.

[6] A lawyers? fund for client protection provides a means through thecollective efforts of the Bar to reimburse persons who have lost money orproperty as a result of dishonest conduct of a lawyer. Where such a fund hasbeen established, a lawyer must participate where it is mandatory, and, evenwhen it is voluntary, the lawyer should participate.

[6a] This Rule is identical to ABA Model Rule 1.15except it incorporates two sentences that were added to the prior version ofthis Rule in 1997. These two sentences are the third sentence of paragraph (a)of the Rule and the corresponding fifth sentence of Comment [1].

 

EffectiveNovember 1, 2005