What should a Nebraska lawyer do with trust-account funds belonging to a client who cannot be located?

Plain-English summary

A lawyer received client money intended to pay a third-party debt. The third party had no record of the debt, so the lawyer retained the money in trust. After several years, attempts to locate the client and return the money had failed.

DR 9-102 required the lawyer to preserve the funds' identity, maintain complete records, account to the client, and promptly deliver property the client was entitled to receive. EC 9-5 also prohibited commingling.

The committee directed the lawyer to applicable state law, identifying Nebraska's Uniform Disposition of Unclaimed Property Act. Because the committee did not give legal advice, it left the lawyer to determine whether the statute covered the particular funds and what statutory waiting period applied.

Before transferring property, the lawyer had to take appropriate steps to find the client. Sister-state opinions cited measures ranging from mail and forwarding-address checks to contacting relatives, employers, neighbors, and friends, publishing notice, hiring an investigator, or checking government records, depending on the circumstances and amount involved.

If the statutory scheme applied and its waiting period elapsed, transfer to the state treasurer ended the former-Code safekeeping duties described in the opinion, with the treasurer then responsible for the property.

Currency note

This opinion was issued in 1993, before Nebraska's adoption of the 2005 Rules of Professional Conduct. Unclaimed-property statutes, reporting procedures, trust-account rules, and later opinions may have changed the analysis or required steps. Treat this page as historical context, not current guidance. The 2005 adoption date is stated in Nebraska Ethics Advisory Opinion 06-12.

Common questions

Q: Could the lawyer treat the unlocated client's money as the lawyer's own?

A: No. The opinion required preservation, records, accounting, and delivery under the former trust-account rule until lawful disposition.

Q: How much effort was required to locate the client?

A: Appropriate measures depended on the facts and amount involved; the opinion cited increasingly extensive searches for larger sums.

Q: Did the committee decide that the cited statute definitely applied?

A: No. It said the lawyer had to evaluate the facts and statute because the committee could not give legal advice.

Q: When could funds be delivered to the state?

A: When applicable state unclaimed-property law permitted or required it after the statutory period.

Background and rules framework

The former trust-account rule governed custody and accounting while the lawyer held the money. State unclaimed-property law supplied the disposition process, but the opinion did not interpret that law for the requesting lawyer.

Citations and references

Former Nebraska Code of Professional Responsibility:

• DR 9-102(B) and EC 9-5

Nebraska statutes cited:

• Uniform Disposition of Unclaimed Property Act, Neb. Rev. Stat. §§ 69-1301 to 69-1329
• Neb. Rev. Stat. § 69-1313

Other opinions cited:

• Nebraska Opinion 68-1
• Michigan Formal Opinion RI-38
• New Hampshire Formal Advisory Opinion 1988-9/16
• Maryland Formal Advisory Opinion 87-18
• Idaho Formal Advisory Opinion 122

See also

• Louisiana Ethics Op. 06-RPCC-009: Property of a missing client
• New Mexico Ethics Op. 1983-3: Unclaimed client trust funds
• Utah Ethics Op. 97-01: Trust funds of a missing client

Source

• Landing page: Nebraska lawyer ethics opinions archive
• Original PDF: Nebraska Ethics Advisory Opinion 93-3

Original opinion text

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

Nebraska Ethics Advisory Opinion for Lawyers No. 93-3

AN ATTORNEY WHO IS HOLDING FUNDS IN TRUST FOR A CLIENT WHO CANNOT BE LOCATED, SHOULD DISTRIBUTE THOSE FUNDS ACCORDING TO STATE LAW, AFTER WAITING THE STATUTORILY PRESCRIBED AMOUNT OF TIME.

FACTS

Attorney A is holding in trust money which was paid to him by a client. The money was received by the attorney to pay a debt the client owed a third party. When the attorney attempted to pay the debt he was advised by the third party that they had no record of such debt. The attorney therefore retained the money in a trust account. The client has not been heard from for several years and attempts by the attorney to locate the client and return the money have been unsuccessful.

QUESTION PRESENTED

How should an attorney properly dispose of money being held in trust for a client whose whereabouts are unknown?

DISCUSSION

An attorney, who is holding funds in trust for a client who cannot be located, should distribute those funds according to state law, after waiting the statutorily prescribed amount of time. The Uniform Disposition of Unclaimed Property Act, Neb. Rev. Stat. § 69-1301 to § 69-1329, clearly sets forth the procedure for disposing of unclaimed property. The Advisory Committee may not give legal advice as set forth in Advisory Opinion 68-1, and cannot reach any opinion concerning the applicability of the statutes cited to the situation presented. Therefore, the attorney must evaluate the specific factual circumstances of his or her situation to determine whether the statutes apply in his or her individual case.

Compliance with DR 9-102 requires that an attorney preserve the identity of funds and property of a client. DR 9-102(B) states:

A lawyer shall:

(1) Promptly notify a client of the receipt of his funds, securities, or other properties.
(2) Identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable.
(3) Maintain complete records of all funds, securities, and other properties of a client coming into the possession of the lawyer and render appropriate accounts to his client regarding them.
(4) Promptly pay or deliver to the client as requested by client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive.

EC 9-5 provides that the separation of the funds of a client from those of his lawyer not only serves to protect the client, but also avoids even the appearance of impropriety, and therefore commingling of such funds should be avoided.

An attorney, whose specific circumstances are within the scope of the Uniform Disposition of Unclaimed Property Act, is relieved of the duties set forth in DR 9-102 once the statutorily required time has passed, and unclaimed property is turned over to the state treasurer. Neb. Rev. Stat. § 69-1313 then makes the state treasurer responsible for the safekeeping of the property.

An attorney should make sure that he or she has taken appropriate measures to attempt to locate the missing client. Examples of such measures have been set forth in advisory opinions from other states. The Michigan State Bar Association, in Formal Opinion RI-38, determined:

At a minimum, reasonable steps the lawyer must take to locate the client include checking with the post office to see if the client left a forwarding address and sending a letter to the client's last known address by regular mail and by certified return receipt.
Steps reasonably indicated by the facts will vary in the circumstances of each case but, in cases where a great deal of money is involved, the lawyer may have to contact the client's relatives, employers, neighbors, and friends, publish notice in places the client might frequent, use an investigator, or check with the Social Security
Administration.

The New Hampshire State Bar Association, in Formal Advisory Opinion 1988-9/16, determined that:

The lawyer must make a genuine and diligent attempt to locate the client through addresses and telephone numbers available to him, through leads, through other letters and telephone calls, or by publication.

Formal advisory opinions from other states provide further support for the position that funds held in trust for a client who cannot be located should be distributed according to state law. The Maryland State Bar Association, in Formal Advisory Opinion 87-18, advised that:

A lawyer who has held funds in a trust account for six to seven years for clients who cannot be located may transfer the funds to the State's abandoned property office. Once the funds are transferred to that office, the lawyer is relieved of any further accountability for the funds.
A similar conclusion was reached by the Idaho State Bar Association, in Formal Advisory Opinion 122, where they determined:

A lawyer who makes a reasonable effort to return unclaimed funds in his client trust account to the appropriate client but is unable to locate the client may discharge his fiduciary duty to the client by treating the funds as unclaimed property under the state's unclaimed property statute.

Therefore, an attorney who is holding funds in trust for a client who cannot be located, should distribute those funds according to state law. An attorney must evaluate the specific factual circumstances of his or her case to determine whether the Uniform Disposition of Unclaimed Property Act is applicable to their situation.

CONCLUSION

An attorney, who is holding funds in trust for a client who cannot be located, should distribute those funds according to state law, after waiting the statutorily prescribed amount of time.

Nebraska Ethics Advisory Opinion for Lawyers No. 93-3