(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, subject to Rule 1.6.
(c) When in the course of representation a lawyer is in possession of property in which interests are claimed by the lawyer and another person, or by two or more persons to each of whom the lawyer may have an obligation, the property shall be kept separate by the lawyer until there is an accounting and severance of interests in the property. If a dispute arises concerning the respective interests among persons claiming an interest in such property, the undisputed portion shall be distributed and the portion in dispute shall be kept separate by the lawyer until the dispute is resolved. Any funds in dispute shall be deposited in a separate account meeting the requirements of paragraph (a).
(d) Advances of unearned fees and unincurred costs shall be treated as property of the client pursuant to paragraph (a) until earned or incurred unless the client gives informed consent to a different arrangement. Regardless of whether such consent is provided, Rule 1.16(d) applies to require the return to the client of any unearned portion of advanced legal fees and unincurred costs at the termination of the lawyer’s services in accordance with Rule 1.16(d).
(e) Nothing in this rule shall prohibit a lawyer or law firm from placing clients’ funds which are nominal in amount or to be held for a short period of time in one or more interest-bearing accounts for the benefit of the charitable purposes of a court-approved “Interest on Lawyers Trust Account (IOLTA)” program. The IOLTA program rules are set forth in Appendix – to Rule X of the Court’s Rules Governing the Bar of the District of Columbia, and are hereby incorporated into these rules.
(f) Nothing in this rule shall prohibit a lawyer from placing a small amount of the lawyer’s funds into a trust account for the sole purpose of defraying bank charges that may be made against that account.
Commrnt
[1] A lawyer should hold property of others with
the care required of a professional fiduciary. Securities should be
kept in a safe deposit box, except when some other form of safekeeping
is warranted by special circumstances. All property that is the property
of clients or third persons should be kept separate from the lawyer’s
business and personal property and, if monies, in one or more trust
accounts maintained with financial institutions meeting the requirements
of paragraph (a). Separate trust accounts may be warranted when administering
estate monies or acting in similar fiduciary capacities. This rule,
among other things, sets forth the longstanding prohibitions of the
misappropriation of entrusted funds and the commingling of entrusted
funds with the lawyer’s property. This rule also requires that
a lawyer safeguard “other property” of clients, which may
include client files. For guidance concerning the disposition of closed
client files, see D.C. Bar Legal Ethics Committee Opinion No.
283.
[2] Paragraph (d) of Rule 1.15 permits advances against
unearned fees and unincurred costs to be treated as either the property
of the client or the property of the lawyer, but absent informed consent
by the client to a different arrangement, the rule’s default position
is that such advances be treated as the property of the client, subject
to the restrictions provided in paragraph (a). In any case, at the termination
of an engagement, advances against fees that have not been incurred
must be returned to the client as provided in Rule 1.16(d). For the
definition of “informed consent,” see Rule 1.0(e).
[3] The District of Columbia Court of Appeals has
promulgated specific rules allowing lawyers to place clients’
funds that are nominal in amount, or that are to be held for a short
period of time, into interest-bearing accounts for the benefit of the
charitable purposes of a court-approved “Interest on Lawyers Trust
Account (IOLTA)” program.
[4] Lawyers often receive funds from third parties
from which the lawyer’s fee will be paid. The lawyer is not required
to remit to the client funds that the lawyer reasonably believes represent
fees owed. However, a lawyer may not hold funds to coerce a client into
accepting the lawyer’s contention. The disputed portion of the
funds should be kept in trust and the lawyer should suggest means for
prompt resolution of the dispute, such as arbitration. The undisputed
portion of the funds should be promptly distributed.
[5] Third parties, such as a client’s creditors,
may have just claims against funds or other property in a lawyer’s
custody. A lawyer may have a duty under applicable law to protect such
third-party claims against wrongful interference by the client, and
accordingly may refuse to surrender the property to the client. However,
a lawyer should not unilaterally assume to arbitrate a dispute between
the client and the third party. See D.C. Bar Legal Ethics Committee
Opinion 293.
[6] The obligations of a lawyer under this rule are
independent of those arising from activity other than rendering legal
services. For example, a lawyer who serves as an escrow agent is governed
by the applicable law relating to fiduciaries even though the lawyer
does not render legal services in the transaction.
[7] A “clients’ security fund” provides
a means through the collective efforts of the Bar to reimburse persons
who have lost money or property as a result of dishonest conduct of
a lawyer. Where such a fund has been established, a lawyer should participate.
[8] With respect to property that constitutes evidence,
such as the instruments or proceeds of crime, see Rule 3.4(a).
