Can a lawyer write a check from the attorney escrow account against a bank or certified check that has been delivered but not yet deposited or cleared?
NY State Bar Ethics Opinion 737: Escrow checks against uncleared funds
Short answer: A lawyer may not issue an attorney escrow check drawn against a bank or certified check that has been delivered but not yet deposited or cleared, because that uses other clients' cleared funds to cover one client's obligation.
Disclaimer: This is an advisory ethics opinion. Advisory opinions are not binding; they interpret the New York State Bar Association's rules of professional conduct and are persuasive authority. This summary is for research purposes only and is not legal advice. Verify current rules before acting on any specific guidance.
About this page: The plain-English summary and Q&A below were written by Ezel based on the official opinion. We do not reproduce the opinion text on this page; follow the linked source for the official text, which controls.
Plain-English summary
The committee addressed whether a lawyer, in paying a client's obligation to a third party, may issue an escrow check against a bank or certified check that the lawyer has received but not yet deposited or cleared. The practice arises most often at residential real estate closings, where unexpected liens or title objections require funds beyond the cleared down payment and the seller's lawyer issues an escrow check covered by bank or certified checks tendered at the table but not yet cleared.
The committee explained that DR 9-102 makes the lawyer a fiduciary for client funds and forbids using funds belonging to Client A for the benefit of Client B. Where multiple clients' funds sit in one unsegregated escrow account, issuing a check for Client B's obligation before Client B's bank or certified check clears means Client A's cleared funds are, in effect, lent to Client B without Client A's knowledge or consent. The committee reviewed and rejected the arguments for relaxing the rule: a certified or bank check can still be subject to a stop-payment order, forgery, or a payer's default, so the risk is not zero; commercial acceptability does not address the use of a stranger's funds; the small size of typical closing expenses does not change the principle; and Client A's deposit into an unsegregated account is not implied consent to the practice.
The committee found no conditions that could "ethically purify" the practice. It pointed out that a lawyer willing to bear the risk can simply advance the closing disbursements from the lawyer's own operating account and await reimbursement when the bank or certified check clears, which keeps the risk on the lawyer rather than on an uninvolved client. The committee noted its conclusion accorded with recent Appellate Division, Second Department disciplinary decisions sanctioning lawyers who issued escrow checks against funds not yet deposited.
Currency note
This opinion was issued in 2001, under New York's former Code of Professional Responsibility, which New York replaced with the Rules of Professional Conduct in 2009. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.
Common questions
Q: Can a lawyer issue an escrow check against a certified or bank check that hasn't cleared?
A: The opinion concluded no. Doing so covers one client's obligation with other clients' cleared funds, which DR 9-102 forbids, regardless of how small the risk or amount.
Q: Does it matter that certified and bank checks almost always clear?
A: No. The committee noted such checks can still be subject to stop-payment, forgery, or a payer default, and that even a small risk falls on an uninvolved client whose funds were used.
Q: What is the lawyer supposed to do at a closing instead?
A: The opinion concluded the lawyer who wants to avoid an adjournment may advance the disbursements from the lawyer's own operating account and seek reimbursement once the bank or certified check clears.
Background and rules framework
The opinion interpreted DR 9-102 of New York's former Code of Professional Responsibility, which governs the safekeeping of client funds, the prohibition on commingling, the requirement of a separate escrow account, prompt payment of funds the client is entitled to receive, and required bookkeeping records. The Model Rule analogue is Rule 1.15 (safekeeping property). New York replaced the Code with the Rules of Professional Conduct in 2009; the DR number cited here is historical.
Citations and references
Rules of Professional Conduct:
- MR 1.15 (safekeeping property; client trust accounts)
- NY DR 9-102
Cases:
- Matter of Abbatine, 263 A.D.2d 228, 700 N.Y.S.2d 211 (2d Dep't 1999), suspension for issuing an escrow check against a later deposit
- Matter of Joyce, 236 A.D.2d 116, 665 N.Y.S.2d 430 (2d Dep't 1997), discipline for checks clearing against other clients' funds
See also
- NY State Bar Op. 759: Using an ATM to deposit into a trust account
- NY State Bar Op. 1127: Settlement funds in the attorney trust account
- NY State Bar Op. 1060: Delegating escrow sub-account tasks to nonlawyer staff
Source
- Landing page: https://nysba.org/opinion-737/