If a California lawyer or legal aid office holds client funds in trust but cannot locate the clients, can the lawyer move that money into the firm's general account?

Currency note

This opinion was issued in 1975, before the State Bar of California's adoption of the November 1, 2018 revisions to the Rules of Professional Conduct. The opinion interprets former California Rule 8-101 (preserving the identity of client funds and property), the predecessor to current Rule 1.15 and Model Rule 1.15. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, account-handling requirement, or statute mentioned here.

Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the State Bar of California's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.

About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. The opinion text is reproduced at the bottom; the official source (linked) controls.

View original opinion

Plain-English summary

The committee was asked about money long held in the trust account of a legal aid society whose attorneys had been unable in good faith to locate the clients. The attorneys wanted to transfer the trust funds to their general account, with a provision that the amounts would be paid to the clients if they later appeared to claim the money. The committee concluded that such a transfer would be improper.

It applied former Rule 8-101, adopted effective January 1, 1975, which required that all funds received or held for clients be deposited in an identifiable account labeled as a trust or client's-funds account, with no commingling of the lawyer's own funds except for limited bank-charge and disputed-portion situations. The committee read the rule to permit no other exceptions, noting that the relevant portions of ABA Code DR 9-102 were identical. It cited ABA informal opinion No. 991 (1967), which held that a lawyer may not even offset the expense of running a trust account by placing trust funds in a separate savings account, quoting that the language of the former canon was "too plain to receive or permit interpretation."

The committee suggested that the unclaimed monies be subject to distribution under the Unclaimed Property Law (Code of Civil Procedure section 1518 et seq.), and stated that it would see no impropriety if those provisions were followed.

Common questions

Q: Can a California lawyer keep unclaimed client trust money in the firm's general account if the client disappears?

A: No, under this opinion. The committee concluded former Rule 8-101 required client funds to remain in an identifiable, non-commingled trust account and recognized no exception for unclaimed funds, even where the clients could not be located.

Q: Does it help that the lawyer promises to pay the client if they ever reappear?

A: The committee said it did not. The transfer to the general account would still violate former Rule 8-101's prohibition on commingling, regardless of a promise to repay on the client's later appearance.

Q: What should be done with the unclaimed funds?

A: The committee pointed to the Unclaimed Property Law (Code of Civil Procedure section 1518 et seq.) and said it would see no impropriety if those provisions for distribution of unclaimed trust funds were followed.

Background and rules framework

The opinion interprets former California Rule 8-101 (preserving the identity of funds and property of a client), which required client funds to be held in a clearly labeled, identifiable account with no commingling of the lawyer's own money, subject only to narrow exceptions for bank charges and for portions whose ownership is fixed or disputed. That rule is the predecessor to current California Rule 1.15 and Model Rule 1.15. The committee read it against the identical relevant portions of ABA Code DR 9-102 and against the Unclaimed Property Law, Code of Civil Procedure section 1518.

Citations and references

Rules of Professional Conduct:

• Former California Rule 8-101
• ABA Code of Professional Responsibility, DR 9-102
• Current analogs: Model Rule 1.15 / California Rule 1.15

Statutes:

• California Code of Civil Procedure section 1518 et seq. (Unclaimed Property Law)

Other opinions cited:

• ABA Committee on Professional Ethics informal opinion No. 991 (1967)

See also

No sibling opinions yet indexed.

Source

• Landing page: https://www.calbar.ca.gov/legal-professionals/ethics-compliance-practice-resources/ethics/ethics-opinions
• Original opinion: https://www.calbar.org/ethics/Opinions/1975-36.htm

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

THE STATE BAR OF CALIFORNIA
STANDING COMMITTEE ON PROFESSIONAL RESPONSIBILITY AND CONDUCT
FORMAL OPINION NO. 1975-36

ISSUE:

Ethical responsibilities involved in preserving the identity of trust account funds.

DIGEST:

It is improper for an attorney to transfer clients' funds held in a trust account to the attorney's general account, even if the clients can no longer be located.

AUTHORITIES INTERPRETED:

Rule 8-101 of the Rules of Professional Conduct of the State Bar.

American Bar Association Code of Professional Responsibility, Disciplinary Rule 9-102.

Code of Civil Procedure section 1518.

DISCUSSION

The Committee has been requested to render an opinion as to the status of monies long held in a trust account of a legal aid society, the attorneys having been unable in good faith to locate said clients. The attorneys wish to be advised with respect to the propriety of transferring said trust funds to their general account, with the express provision that said amounts will be payable to said clients when and if said clients appear to claim the monies. For reasons hereinafter stated, the Committee is of the opinion that such transfer would be improper.

The applicable provision of the Rules of Professional Conduct of the State Bar, as adopted by the Board of Governors and approved by the California Supreme Court effective January 1, 1975, is rule 8-101 which, in relevant part, reads as follows:

"Rule 8-101. Preserving Identity of Funds and Property of a Client.

"(A) All funds received or held for the benefit of clients by a member of the State Bar or firm of which he is a member, including advances for costs and expenses, shall be deposited in one or more identifiable bank accounts labeled "Trust Account," "Client's Funds Account" or words of similar import, maintained in the State of California, or, with written consent of the client, in such other jurisdiction where there is a substantial relationship between his client or his client's business and the other jurisdiction and no funds belonging to the member of the State Bar or firm of which he is a member shall be deposited therein or otherwise comingled therewith except as follows:

"(1) Funds reasonably sufficient to pay bank charges may be deposited therein.

"(2) Funds belonging in part to a client and in part presently or potentially to the member of the State Bar or firm of which is member must be deposited therein and the portion belonging to the member must be withdrawn at the earliest reasonable time after the member's interests in that portion becomes fixed. However, when the right of the member of the State Bar or firm of which the right of the member to receive a portion or trust funds is disputed by the client, the disputed portion shall not be withdrawn until the dispute is finally resolved."

No other exceptions are either noted or, by inference, approved. The relevant portions of American Bar Association Code of Professional Responsibility, Disciplinary Rule 9-102 are identical to the above-quoted subsection of rule 8-101 of the Rules of Professional Conduct.

American Bar Association Committee of Professional Ethics, informal opinion No. 991 (1967) held that an attorney may not offset the expense of running a trust account by putting trust funds in a separate savings account, stating:

"The language of this Canon [former canon 11] is too plain to receive or permit interpretation. When the Canon states that money of the client or collected for the client or other trust property coming into the possession of the lawyer should not under any circumstances be used by him, it means exactly what it says..." (Emphasis added.)

The Committee suggests that said unclaimed monies be subject to distribution pursuant to California Code of Civil Procedure section 1518. The Committee observes that, if the provisions pertaining to trust funds contained in the Unclaimed Property Law (Code Civ. Proc., Sec. 1518 et seq.) were followed, the Committee would see no impropriety.

This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of the State Bar of California. It is advisory only. It is not binding upon the courts, The State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.