What must a Mississippi lawyer do with client or third-party funds that go unclaimed, and does it matter whether the owner is a client?

Plain-English summary

The Committee was asked about a lawyer's duties toward funds belonging to a non-client. In the facts presented, Attorney A held jointly owned funds belonging to his client and the client's ex-spouse pending a Chancery Court order. After the court directed disbursement, a check payable jointly to the ex-spouse and the ex-spouse's lawyer (Attorney B) was returned because Attorney B no longer represented the ex-spouse; the funds were then sent directly to the former client. Attorney A later merged firms, closed the old trust account, moved the funds to a new trust account, and issued a replacement check that, roughly four years later, had not been negotiated, leaving the funds in the successor firm's account.

The opinion explained that under Rule 1.15 a lawyer must keep funds in a separate account, identify and safeguard other property, keep complete records, promptly notify the client or third person of receipt, and, absent competing claims, promptly deliver the funds and render an accounting on request. It pointed to the comment to Rule 1.15, which provides that a lawyer holding property or money for clients with whom contact has been lost must retain and account for those funds subject to the Mississippi Uniform Disposition of Unclaimed Property Act.

The opinion concluded that the attorney's obligations are governed by statute and that it makes no difference whether the funds belong to a client or a third party; the obligations are the same in both cases (citing prior Opinions Nos. 98, 104, and 178). The length of time the property must be retained is governed by statute and may vary according to the nature of the property.

Currency note

This opinion was issued in 1998, interpreting the Mississippi Rules of Professional Conduct (adopted effective June 22, 1994, and amended February 5, 1999). Mississippi did not adopt the ABA's 2002 Ethics 2000 revisions wholesale, but subsequent rule amendments or later opinions, and amendments to the cited statute, may have changed the analysis. Treat this page as historical context, not current guidance.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 trust funds the owner never claims?

A: The opinion concluded the lawyer must continue to hold and account for the funds under Rule 1.15 and dispose of them under the Mississippi Uniform Disposition of Unclaimed Property Act when the owner cannot be located.

Q: Does it matter whether the unclaimed funds belong to a client or a non-client?

A: No. The opinion concluded the lawyer's obligations are the same whether the funds belong to a client or a third party.

Q: How long must the lawyer hold the funds before acting?

A: Per the opinion, the retention period is governed by statute (the Uniform Disposition of Unclaimed Property Act) and may vary according to the nature of the property.

Background and rules framework

The opinion interprets Mississippi Rule of Professional Conduct 1.15 (safekeeping property; cf. Model Rule 1.15) and its comment, read together with the Mississippi Uniform Disposition of Unclaimed Property Act. It relies on the Committee's prior Opinions Nos. 98, 104, and 178.

Citations and references

Rules of Professional Conduct (Mississippi; cf. Model Rules):

• MRPC 1.15 (safekeeping property) (cf. Model Rule 1.15)

Statutes:

• Mississippi Uniform Disposition of Unclaimed Property Act, Miss. Code Ann. § 89-12-1 et seq.

Other opinions cited:

• Mississippi Opinions Nos. 98, 104, and 178

See also

• AL Op. 1988-92: Unclaimed Client Trust Funds Escheat to State
• DC Op. 359: Disposition of a Missing Client's Trust Account Monies
• IL Op. 15-02: Disposition of Unclaimed and Unidentified Client Funds
• DC Op. 251: Safekeeping Settlement Proceeds Claimed by a Third Person

Source

• Landing page: https://www.msbar.org/ethics-discipline/ethics-opinions/formal-opinions/243/
• Original PDF: https://www.msbar.org/media/1480/35a_et_op_243.pdf

Original opinion text

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

ETHICS OPINION NO. 243

OF THE MISSISSIPPI BAR

RENDERED April 02, 1998

PROPERTY AND/OR FUNDS OF BOTH CLIENTS AND THIRD PARTIES - Must be held by a lawyer pursuant to the provisions of Rule 1.15 of the Mississippi Rules of Professional Conduct and in the event such property is abandoned by the client or party, disposition shall be in accordance with the Mississippi Uniform Disposition of Unclaimed Property Act, § 89-12-1, et seq. of the Mississippi Code of 1972, as amended.

The Ethics Committee of The Mississippi Bar has been requested to render an opinion as to an attorney's duties with respect to funds belonging to a non-client in the following factual situation:

Attorney A was required to hold jointly owned funds belonging to his client and his client's ex-spouse pending disbursement in accordance with a subsequent order of the Chancery Court. The client's ex-spouse was represented by Attorney B. At the direction of the Court, Attorney A delivered to Attorney B and his client by check, payable jointly to Attorney B and his client, the funds as directed by the Court. Attorney B returned the check indicating he no longer represented the ex-spouse and directed the monies be sent directly to his former client, which was done. Attorney A has subsequently merged with another firm, closed the trust account on which the check was drawn, and deposited the funds on deposit in a new trust account. Attorney B's former client was notified of the account closure and advised that a replacement check would be issued. The original check was mailed approximately four years ago and has not been returned and the funds remain in the successor law firm's account.

The questions presented to the Ethics Committee are: (1) What actions should be taken by the lawyer responsible for the safekeeping of non-client funds? (2) How long must an attorney wait for checks to clients and/or non-clients to be negotiated before taking action? and (3) Is the action the attorney should take different if the funds are payable to a client as opposed to a non-client?

An attorney's duties with respect to safekeeping the property of both clients and third persons are set forth in MRPC Rule 1.15 which generally provides that the lawyer must maintain funds in a separate account and identify and appropriately safeguard other property. in addition, the lawyer must keep complete records and promptly notify a client or third person of receipt of such funds or property and, in the absence of competing claims to the property, promptly deliver the same to the client or third person entitled to receive the funds or property and, upon request, promptly render a full accounting regarding the funds or property.

The comment to Rule 1.15 notes that any lawyer holding property or monies belonging to clients with whom he has lost contact must retain and account for said funds, subject to the Mississippi Uniform Disposition of Unclaimed Property Act, § 89-12-1, et seq., of the Mississippi Code of 1972, as amended. It is the opinion of the Committee that the attorney's obligations are governed by statute and, further, that it makes no difference whether the funds or property belong to a client or third party. The obligations are the same in both cases (See prior Ethics Opinions No. 98 rendered October 5, 1984; No. 104 rendered June 6, 1985, and No. 178 rendered December 7, 1990). The length of time property must be retained is governed by statute and may vary according to the nature of the property.