If someone pays a cash retainer but the lawyer never meets them and cannot reach them, what must the lawyer do with the money?

Plain-English summary

A woman called a lawyer asking about the fee for her fiancé's uncontested, no-children divorce; the lawyer quoted the fee and set an appointment but got no phone number or address. That afternoon, while the lawyer was out, a man claiming to be the client paid the receptionist the quoted fee in cash. He never came to the appointment and never made contact again. The lawyer, unable to locate him through the directory or a city address check, held the cash in the firm trust account and asked about further ethical duties.

The Committee concluded that regardless of whether a lawyer-client relationship formed, MRPC 1.15(a) required the lawyer to deposit the funds in the trust account and maintain them until receiving instructions on their disposition. Citing prior opinion RI-38, it concluded the lawyer must take reasonable efforts to locate the "client," and if those efforts are unsuccessful, the money is forfeited to the state under the statutory escheat procedure. It concluded that, on these facts, no lawyer-client relationship formed: payment of a retainer alone did not create one where the lawyer had never met the person and had no way to contact him or to act on his objectives, so the competence, diligence, and communication duties (MRPC 1.1, 1.2, 2.1, 3.1) did not come into play.

The Committee added that MRPC 1.15 requires complete trust-account records preserved for five years, which presumably could not be complete without the person's contact information, and that to avoid similar problems the lawyer should establish procedures for accepting funds and make reasonable efforts to ensure subordinates comply, under MRPC 5.3. It concluded that whether the lawyer could later take the same or a substantially related matter for another client, or use a fact adverse to the prospective client, would have to be analyzed on the facts under MRPC 1.7, 1.8, and 1.9 if such circumstances arose.

Currency note

This opinion was issued in 1990 and interprets the Michigan Rules of Professional Conduct as they then stood. The applicable unclaimed-property statute has since changed: the Uniform Unclaimed Property Act, MCL 567.221 et seq., now creates a presumption that property is abandoned after three years (see the statute for exceptions), superseding the MCLA 567.11 et seq. procedure cited in the opinion. MRPC 1.15 has also been amended. Treat this page as historical context, not current guidance. Verify against current rules and the current statute before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: What does a lawyer do with a retainer from a client who never comes back?

A: The opinion concluded the lawyer must keep the funds in the trust account under MRPC 1.15, make reasonable efforts to locate the person, and if unsuccessful, hold the money for escheat to the state.

Q: Does paying a retainer by itself create a lawyer-client relationship?

A: Not on these facts. The opinion concluded that payment of a retainer alone did not form a relationship where the lawyer had never met the person and had no way to contact him or to act on his objectives, so no duty to act on the divorce arose.

Q: What should the lawyer change going forward?

A: The opinion concluded that complete trust-account records under MRPC 1.15 presumably require the client's contact information, and that the lawyer should establish intake procedures and make reasonable efforts to ensure subordinates follow them under MRPC 5.3.

Background and rules framework

The opinion interpreted MRPC 1.15 / Model Rule 1.15 (safekeeping client and third-party property, trust accounting, and record retention), MRPC 5.3 / Model Rule 5.3 (responsibility for nonlawyer assistants), and MRPC 3.1 / Model Rule 3.1, alongside the Michigan escheat statute then in force. It distinguished the duties that attach only once a lawyer-client relationship forms (MRPC 1.1, 1.2, 2.1) from the trust-property duties that apply regardless.

Citations and references

Rules of Professional Conduct:

• MR 1.15 / MRPC 1.15 (safekeeping property; trust accounting; five-year record retention)
• MR 5.3 / MRPC 5.3 (responsibility for nonlawyer assistants)
• MR 3.1 / MRPC 3.1 (meritorious claims)

Statutes:

• MCLA 567.11 et seq. (escheat procedure, as cited; see Currency note for the superseding statute)

Other opinions cited:

• RI-38: disposition of an unclaimed retainer and escheat

See also

• AL Ethics Op. 1990-08: Closing a Dormant Trust Account
• AL Ethics Op. 1988-92: Unclaimed Trust Funds
• ABA Formal Op. 92-369: A Deceased Sole Practitioner's Files

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=928&Type=6

Original opinion text

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

NOTE: The applicable statute has changed since the original publication date of this opinion. See Uniform Unclaimed Property Act, MCL 567.221, et sec, which creates a presumption that property is abandoned after three years. See the statute for exceptions.

RI-58

September 5, 1990

SYLLABUS

A lawyer who has accepted a retainer for future legal work to be performed, but who has no way of contacting the client for instructions and consultation relating to the representation, must maintain the retainer in the lawyer trust account and await further instructions.

A lawyer should establish procedures for accepting funds and make reasonable efforts to ensure that all employees comply with those procedures.

Whether the lawyer would be permitted to engage in the same or substantially related matter on behalf of another client, or use a fact adverse to the prospective client, must be analyzed on the facts of each case.

References: MRPC 1.15, 3.1, 5.3; RI-38; MCLA 567.11 et seq.

TEXT

A lawyer received a phone call from a woman who was inquiring for her fiancé as to the attorney fee in an uncontested divorce case without children. The lawyer quoted the applicable fees and expenses, and scheduled an appointment for the fiancé for the next morning. The lawyer was not given a phone number or address for the prospective client.

That afternoon while the lawyer was out of the office a man purporting to be the client came into the office and paid the lawyer's receptionist a cash amount equal to the discussed applicable fee. The client did not appear for the scheduled appointment nor has he contacted the office since that time. The lawyer never talked to or met with the prospective client.

The lawyer has checked the telephone directory and requested an address verification through the city, but has been unable to establish contact. The lawyer has no information with which to start a domestic relations suit, and maintains the cash fee in the firm's trust account. The lawyer asks for guidance with respect to any further ethical duties.

Regardless of whether or not a lawyer-client relationship has been established, MRPC 1.15(a) requires a lawyer to deposit funds of clients or third parties coming into the lawyer's possession in the firm trust account, or a segregated trust account in the name of the individual. The funds are to be maintained until the lawyer receives notice or instructions as to their disposition. The issues involving disposition of the retainer have been previously discussed and resolved in a prior opinion, RI-38. Essentially, the lawyer must take reasonable efforts to locate the "client," and if those efforts are unsuccessful the money is forfeited to the state pursuant to the statutory escheat procedure in MCLA 567.11, et seq.

The remaining issues involve what, if any, professional obligations are owed to this "client." Under these facts, the lawyer has insufficient information to prepare initial pleadings, notices, or even communications concerning the legal matter, and thus is under no obligation to act in the divorce matter discussed. MRPC 1.1, 1.2, 2.1, 3.1, require a lawyer to provide competent services in order to achieve the client's objectives in a diligent and timely manner, and to keep the client reasonably informed of the status of the matter. These criteria do not come into play until a lawyer-client relationship has been formed. While the point of formation of such a relationship may vary depending on the facts of each case, it would be unrealistic to conclude that a lawyer-client relationship was formed by payment of a retainer, where the lawyer had never met the "client" and had no information with which to contact the client or do any other act to meet the "client's" objectives.

MRPC 1.15 requires a lawyer to keep complete records of all trust account funds and preserve them for a period of five years. Presumably, a record of this sort could not be complete without having the "client's" address and/or telephone number or some other means of contacting the client. To avoid similar problems in the future the lawyer should establish procedures for accepting funds and make reasonable efforts to ensure that the subordinates comply with those procedures. MRPC 5.3.

Whether the lawyer would be permitted to engage in the same or substantially related matter on behalf of another client, or use a fact adverse to the prospective client, must be analyzed on the facts if such circumstances arise and pursuant to MRPC 1.7, 1.8, 1.9.