What does a lawyer do with leftover unidentified or unclaimed client funds in a trust account, and can the firm recover its own bank-fee deposit?
Apply this to your situation
This page answers the general question as of 2015. Ezel answers yours: whether it's allowed on your facts, under the current Illinois Rules of Professional Conduct, with citations.
Plain-English summary
A small firm closing after thirty years has a client trust account holding $1,000 of its own money deposited to cover a minimum-balance bank fee, plus about $600 whose owners it cannot identify or locate. The committee was asked whether the firm can repay itself and what to do with the remaining funds.
On repayment, the opinion applies Rule 1.15(b), which allows a lawyer to deposit the lawyer's own funds in a trust account solely to pay bank service charges, in the amount necessary. The committee, citing the ARDC Client Trust Account Handbook, concludes those funds remain the lawyer's property and not only may but should be withdrawn when no longer needed; leaving them in would be improper commingling.
On the leftover client funds, the opinion applies the Supreme Court's April 7, 2015 amendment to Rule 1.15, adding paragraph (i) effective July 1, 2015, which distinguishes "unidentified funds" from "unclaimed funds." For unidentified funds (ownership cannot be documented), the lawyer must make periodic efforts to identify and return them, and if after twelve months identification or return will not succeed, the funds must be remitted to the Lawyers Trust Fund of Illinois; a lawyer who remits in error or later identifies the owner may reclaim them. The amendment provides that reasonable judgment under paragraph (i) carries no charge of impropriety.
For unclaimed funds (the owner is known but has not claimed or cannot be located), the opinion applies the Uniform Disposition of Unclaimed Property Act (765 ILCS 1025) and ISBA Opinion 845. The funds stay in the trust account while reasonable location efforts are made (the committee lists examples from the ARDC Handbook, such as certified mail, contacting relatives or employers, and checking with the Social Security Administration), and after five years they are presumed abandoned and remitted to the Illinois State Treasurer's Unclaimed Property Division. Until the applicable one-year or five-year period runs, the funds, and likely the firm's bank-fee deposit, must remain in the account, so the closing firm should keep its trust account open until the funds have aged enough to remit.
In practice
Under this opinion, an Illinois firm may withdraw its own bank-charge deposit once it is no longer needed under Rule 1.15(b). The opinion holds that unidentified funds are remitted to the Lawyers Trust Fund of Illinois after twelve months of unsuccessful efforts under amended Rule 1.15(i), and that unclaimed funds with a known owner escheat to the State as abandoned property after five years under the Unclaimed Property Act. A closing firm should keep its trust account open until all such funds have aged to the point they can be remitted.
Common questions
Q: Can a firm take back the money it put in its trust account to cover bank fees?
A: Yes. The opinion concludes under Rule 1.15(b) those funds remain the lawyer's property and should be withdrawn once no longer needed for bank charges; leaving them would be improper commingling.
Q: What happens to trust funds whose owner cannot be identified?
A: Per amended Rule 1.15(i), after twelve months of unsuccessful identification or return efforts, unidentified funds must be remitted to the Lawyers Trust Fund of Illinois, subject to later reclaim if the owner is found.
Q: What about funds with a known owner who cannot be located?
A: The opinion treats these as unclaimed funds under the Uniform Disposition of Unclaimed Property Act; after reasonable location efforts and five years, they are presumed abandoned and remitted to the Illinois State Treasurer.
Q: Can a closing firm shut its trust account immediately?
A: Not if it still holds aging unidentified or unclaimed funds. The opinion concludes the firm should keep the trust account open until those funds can be remitted to the Lawyers Trust Fund or the State.
Background and rules framework
The opinion interprets Illinois Rule of Professional Conduct 1.15 (safekeeping property; Model Rule 1.15), including the 2015 addition of paragraph (i) on unidentified and unclaimed funds, read with the Uniform Disposition of Unclaimed Property Act (765 ILCS 1025) and the ARDC Client Trust Account Handbook.
Citations and references
Rules of Professional Conduct:
- Illinois RPC 1.15(b), (i) (Model Rule 1.15): safekeeping property; unidentified and unclaimed funds
Statutes:
- Uniform Disposition of Unclaimed Property Act, 765 ILCS 1025 et seq.
Other opinions cited:
- ISBA Opinion 845 (November 1983, reaffirmed July 2010): handling unclaimed client funds
See also
- ISBA Ethics Op. 14-01: Credit Card Used to Fund a Security Retainer
- ISBA Ethics Op. 20-06: Lawyer's Possession of Dispute Settlement Funds
- NY State Bar Op. 1188: Estate Funds in an Attorney Trust Account
Source
- Landing page: https://www.isba.org/ethics/opinions/1502
Get today's answer for your situation
You just read a 2015 opinion on this question. Ezel checks the current Illinois Rules of Professional Conduct and answers your specific situation, with citations.
Opens in Ezel Pro. Every answer cites the rules it relies on.