What can a lawyer do with unclaimed client funds in the trust account when the owner can't be found?

Plain-English summary

The opinion answered a recurring question from Georgia lawyers: what to do with client funds or other fiduciary funds held in an escrow trust account when the lawyer cannot locate the rightful recipient and the recipient does not claim the funds. The Board concluded that the lawyer may remove the unclaimed funds and deliver them to the State under O.C.G.A. 44-12-190 et seq., the Disposition of Unclaimed Property Act, provided the lawyer first exhausts all reasonable efforts to locate the rightful recipient.

The Board grounded the analysis in Standards 61, 62, 63, and 65, which govern holding and delivering client funds. Standard 61 requires a lawyer to promptly notify a client of the receipt of funds and promptly deliver them; implicit in that duty, and in the duty of zealous representation, is the duty to exhaust all reasonable efforts to locate the rightful recipient so delivery can occur.

The Board explained that after the lawyer exhausts all reasonable efforts and the Act's five-year period expires, if the recipient still cannot be located and does not claim the funds, the funds are no longer treated as client or fiduciary funds but are presumed abandoned as a matter of law, except as the Act otherwise provides. A lawyer who then delivers the unclaimed funds to the State in accordance with the Act does not violate the Standards.

Currency note

This opinion was issued in 1998, before the State Bar of Georgia adopted the Georgia Rules of Professional Conduct in 2001, which replaced the Standards of Conduct this opinion construes. The State Bar's headnote maps Standards 61, 62, 63, and 65 to Rule 1.15(I) (safekeeping property). Subsequent rule amendments or later opinions may have changed the analysis, and the Unclaimed Property Act's timing and procedures may have been revised. Treat this page as historical context, not current guidance. Verify against the current Rules of Professional Conduct and the current Act before relying on any specific rule, period, or requirement mentioned here.

Common questions

Q: Can a lawyer send unclaimed client trust funds to the State?

A: Yes, under this opinion, a lawyer may deliver unclaimed funds to the State under the Disposition of Unclaimed Property Act, but only after exhausting all reasonable efforts to locate the rightful recipient.

Q: When do the funds stop being client trust funds?

A: The opinion said that after reasonable efforts are exhausted and the Act's five-year period runs without the recipient claiming the funds, the funds are presumed abandoned as a matter of law and are no longer client or fiduciary funds, except as the Act otherwise provides.

Q: Does escheating the funds violate the trust-account rules?

A: No. The opinion concluded that a lawyer who delivers the unclaimed funds to the State in accordance with the Act does not violate the Standards governing client funds.

Background and rules framework

The opinion construed former Standards of Conduct 61, 62, 63, and 65 (holding and delivering client funds and property), now associated with Rule 1.15(I), against the requirements of the Disposition of Unclaimed Property Act, O.C.G.A. 44-12-190 et seq.

Citations and references

Rules of Professional Conduct:

• MR 1.15 / Ga. RPC 1.15(I) (safekeeping client funds and property; analog to former Standards 61-65)

Former standards construed:

• Standards of Conduct 61, 62, 63, and 65

Statutes:

• O.C.G.A. 44-12-190 et seq. (Disposition of Unclaimed Property Act)

See also

• GA Ethics Op. 91-2: Advance Fee Payments and the Operating Account
• TX Ethics Op. 245: Client Funds in a General Account

Source

• Landing page: https://www.gabar.org/handbook?rule=rule512

Original opinion text

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

State Bar of Georgia

Issued by the Supreme Court of Georgia

On June 1, 1998

Formal Advisory Opinion No. 98-2

This opinion relies on Standards of Conduct 61, 62, 63, and 65 that bear upon matters directly addressed by Rule 1.15(I) .

For an explanation regarding the addition of headnotes to the opinion, click here .

QUESTION PRESENTED:

When a lawyer holding client funds and/or other funds in a fiduciary capacity is unable to locate the rightful recipient of such funds after exhausting all reasonable efforts, may that lawyer remove the unclaimed funds from the lawyer's escrow trust account and deliver the funds to the custody of the State of Georgia in accordance with the Disposition of Unclaimed Property Act?

SUMMARY ANSWER:

A lawyer holding client funds and/or other funds in a fiduciary capacity may remove unclaimed funds from the lawyer's escrow trust account and deliver the funds to the custody of the State of Georgia in accordance with the Disposition of Unclaimed Property Act only if the lawyer, prior to delivery, has exhausted all reasonable efforts to locate the rightful recipient.

OPINION:

Many members of the Bar have contacted the State Bar of Georgia for guidance on how to manage client funds and/or other funds held in a fiduciary capacity in the lawyer's escrow trust account when the lawyer is unable to locate the rightful recipient of the funds and the rightful recipient fails to claim the funds. More specifically, the lawyers have asked whether they could ethically remove the unclaimed funds from the lawyer's escrow trust account and disburse the funds in accordance with O.C.G.A. §§ 44-12-190 et seq., the Disposition of Unclaimed Property Act.

In those cases where a lawyer is holding client funds and/or other funds in a fiduciary capacity, the lawyer must do so in compliance with Standards 61, 62, 63 and 65. When the funds become payable or distributable, Standard 61 speaks to the lawyer's duty to deliver funds: "A lawyer shall promptly notify a client of the receipt of his funds, securities or other properties and shall promptly deliver such funds, securities or other properties to the client."Implicit both in this Standard, and the lawyer's responsibility to zealously represent the client, is the lawyer's duty to exhaust all reasonable efforts to locate the rightful recipient in order to ensure delivery.

When a lawyer holding funds attempts to deliver those funds in compliance with Standard 61 but is unable to locate the rightful recipient, the lawyer has a duty to exhaust all reasonable efforts to locate the rightful recipient. After exhausting all reasonable efforts and the expiration of the five year period discussed in the Act, if the lawyer is still unable to locate the rightful recipient and the rightful recipient fails to claim the funds, the funds are no longer considered client funds or funds held in a fiduciary capacity, but rather, the funds are presumed to be abandoned as a matter of law, except as otherwise provided by the Act, and the lawyer may then deliver the unclaimed funds to the State of Georgia in accordance with O.C.G.A. §§ 44-12-190 et seq., the Disposition of Unclaimed Property Act. A lawyer who disburses the unclaimed funds as discussed above shall not be in violation of the Standards.