What does an Ohio lawyer do with money in a client trust account when the client cannot be found or identified?
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This page answers the general question as of 2008. Ezel answers yours: whether it's allowed on your facts, under the current Ohio Rules of Professional Conduct, with citations.
Plain-English summary
The Board addressed what a lawyer should do with client funds held in an IOLTA or individual client trust account when either the identity or the whereabouts of the client who owns the funds is unknown. The Board treated both situations as rare: a lawyer should ordinarily know the identity of any client whose funds are held (the exception the Board gave is a lawyer winding up a deceased lawyer's estate whose records are inadequate), and should ordinarily know a client's whereabouts because the lawyer must communicate with the client during the representation.
The Board concluded that the proper disposition is the statutory procedure for unclaimed funds in R.C. Chapter 169. A lawyer who meets the statutory definition of a "holder" (R.C. 169.01(D)(1)) and who holds funds as a fiduciary for the benefit of another (R.C. 169.02(J)) falls under the statutory duty to report unclaimed funds to the Ohio Department of Commerce; the Board directed lawyers with legal questions about that statutory duty to the Department's Unclaimed Funds Division.
On the ethics duties, the Board concluded that reporting the funds does not violate the Rule 1.15 duty of safekeeping or the Rule 1.6 duty of confidentiality. As to confidentiality, the Board applied the Rule 1.6(b)(6) exception permitting disclosure "to comply with other law or a court order," and reasoned that a lawyer should provide the Division of Unclaimed Funds with the information needed to reunite the funds with the owner (for unknown whereabouts, the client's name and the amount due; for unknown identity, information such as the unmatched amount and the deceased attorney's name and the deposit date).
In practice
The opinion holds that, under Ohio Rules 1.15 and 1.6 as they stood at the time of the opinion, a lawyer who cannot identify or locate the owner of funds in an IOLTA or client trust account disposes of the funds through the R.C. Chapter 169 unclaimed-funds process rather than holding them indefinitely. Per the opinion, the lawyer who qualifies as a statutory "holder" of fiduciary funds reports to the Department of Commerce, and the disclosure of client information necessary to do so fits the Rule 1.6(b)(6) "comply with other law" exception, so it does not breach confidentiality. The opinion routes questions about the scope of the statutory reporting duty itself to the Department's Unclaimed Funds Division, not to the Board.
Common questions
Q: A former client's settlement money has sat in my trust account for years and I can't reach them. What do I do?
A: The opinion concluded the proper disposition is to follow Ohio's unclaimed-funds statute, R.C. Chapter 169, and report the funds to the state rather than continuing to hold them.
Q: Does reporting client funds to the state violate my duty of confidentiality?
A: No. The opinion concluded that providing the necessary information to the Division of Unclaimed Funds falls within the Rule 1.6(b)(6) exception for disclosures made to comply with other law.
Q: I am closing a deceased lawyer's practice and cannot tell whose money is in the trust account. Same answer?
A: Yes. The opinion treated unknown identity (giving the deceased-lawyer-estate situation as its example) the same as unknown whereabouts: report under R.C. Chapter 169, providing information such as the unmatched amount, the deceased attorney's name and address, and the deposit date.
Background and rules framework
The opinion interprets Ohio Prof. Cond. R. 1.15 (safekeeping of client and third-person funds and property, including the IOLTA and individual-trust-account requirements and the recordkeeping and prompt-delivery duties of Rule 1.15(a) and (d)) and Rule 1.6 (confidentiality, applying the Rule 1.6(b)(6) "comply with other law" exception) (Model Rules 1.15, 1.6). It situates those duties against Ohio's statutory framework for IOLTA accounts (R.C. 4705.09, 4705.10) and for the disposition of unclaimed funds (R.C. Chapter 169).
Citations and references
Rules of Professional Conduct:
- Ohio Prof. Cond. R. 1.15(a), (d) (safekeeping; Model Rule 1.15)
- Ohio Prof. Cond. R. 1.6(b)(6) (confidentiality; disclosure to comply with other law; Model Rule 1.6)
Statutes:
- Ohio Rev. Code Chapter 169, including R.C. 169.01(B)(1), 169.01(D)(1), 169.02(J), 169.03(A)(1) (disposition of unclaimed funds)
- Ohio Rev. Code 4705.09, 4705.10 (IOLTA); R.C. 120.52 (Ohio Legal Assistance Foundation IOLTA rules)
See also
- Ohio BPC Op. 2007-007: Safekeeping Funds in Which a Third Person Claims an Interest (Rule 1.15)
- Ohio BPC Op. 1995-012: Letters of Protection and Disputed Settlement Funds
- Ohio BPC Op. 1989-007: Interest-Bearing Client Retainer Trust Account
Source
- Landing page: https://ohioadvop.org/advisory-opinion-index/
- Original PDF: https://www.ohioadvop.org/wp-content/uploads/2017/04/Op_08-003.pdf
Original opinion text
Reproduced from the official source for research purposes. The linked source is authoritative.
The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
(614) 387-9370 (888) 664-8345 FAX: (614) 387-9379
www.sconet.state.oh.us
OFFICE OF SECRETARY
OPINION 2008-3
Issued August 15, 2008
SYLLABUS: The proper disposition of client funds in a lawyer’s IOLTA or
individual client trust account, when either the identity or the whereabouts of the
client who is the owner of the funds is unknown, is for a lawyer to follow the
statutory procedure for the disposition of unclaimed funds to the state set forth in
Chapter 169 of the Ohio Revised Code. A lawyer’s reporting of unclaimed funds
of a client whose identity or whereabouts are unknown does not violate either the
ethical duty of safekeeping a client’s funds under Rule 1.15 or the ethical duty to
protect a client’s confidentiality under Rule 1.6.
OPINION: This opinion addresses a question regarding the proper disposition of
client funds in a lawyer’s IOLTA (Interest on Lawyer’s Trust Account) or individual
client trust account if either the identity or the whereabouts of the owner of the
funds is unknown.
What is the proper disposition of client funds in a lawyer’s IOLTA or
individual client trust account if either the identity or the
whereabouts of the client who is the owner of the funds is
unknown?
Introduction
The inquiry raises two possible problems that may arise in the distribution of
client funds from an IOLTA or from an individual client trust account, the
unknown identity or unknown whereabouts of a client whose funds are held in the
trust account. Both problems should be rare occurrences.
The identity of a client whose funds are held by a lawyer in a trust account should
always be known, unless a lawyer’s records are inadequate, misplaced, or
destroyed, or unbeknownst to the lawyer the client did not reveal his or her true
identity during the representation. A lawyer for a deceased lawyer’s estate may
face the quandary of unknown identity when the records of a deceased lawyer
are inadequate to determine whose funds are held in the deceased lawyer’s trust
account.
Op. 2008-3 2
The whereabouts of a client whose funds are being held by a lawyer in a trust
account should always be known because the lawyer must communicate with the
client during the representation. Yet, through no inadvertence of the lawyer the
whereabouts of a client may become unknown, if the client unexpectedly or
mysteriously moves without informing the lawyer.
Before addressing the proper distribution of funds when a client’s identity or
whereabouts are unknown, it is pertinent to review a lawyer’s duties as to
safekeeping funds in a trust account.
Ethical duty of safekeeping funds and property
Ohio lawyers have an affirmative duty of safekeeping funds and property of a
client under Rule 1.15 of the Ohio Rules of Professional Conduct. Rule 1.15(a)
specifically requires a lawyer to hold a client’s funds separate from the lawyer’s
funds in an interest-bearing account (an IOLTA or an individual client trust
account) and to keep meticulous records.
Rule 1.15
(a) A lawyer shall hold property of clients or third persons that is in
a lawyer’s possession in connection with a representation separate
from the lawyer’s own property. Funds shall be kept in a separate
interest-bearing account in a financial institution authorized to do
business in Ohio and maintained in the state where the lawyer’s
office is situated. The account shall be designated as a “client trust
account,” “IOLTA account,” or with a clearly identifiable fiduciary
title. Other property shall be identified as such and appropriately
safeguarded. Records of such account funds and other property
shall be kept by the lawyer and shall be preserved for a period of
seven years after termination of the representation or the
appropriate disbursement of such funds or property, whichever
comes first. For other property, the lawyer shall maintain a record
that identifies the property, the date received, the person on whose
behalf the property was held, and the date of distribution. For funds,
the lawyer shall do all of the following:
(1) maintain a copy of any fee agreement with each client;
(2) maintain a record for each client on whose behalf funds
are held that sets forth all of the following:
i. the name of the client;
Op. 2008-3 3
ii. the date, amount, and source of all funds received
on behalf of such client;
iii. the date, amount, payee, and purpose of each
disbursement made on behalf of such client;
iv. the current balance for such client;
(3) maintain a record for each bank account that sets forth
all of the following:
i. the name of such account;
ii. the date, amount, and client affected by each
credit and debit;
iii. the balance of the account;
(4) maintain all bank statements, deposit slips, and
cancelled checks, if provided by the bank, for each bank
account;
(5) perform and retain a monthly reconciliation of the items
contained in divisions (a)(2), (3), and (4) of this rule.
As part of the safekeeping duty, Ohio lawyers have an affirmative duty under
Rule 1.15(d) to promptly pay or deliver to a client the funds the client is entitled to
receive.
Rule 1.15
(d) Upon receiving funds or other property in which a client or third
person has an interest, a lawyer shall promptly notify the client or
third person. Except as stated in this rule or otherwise permitted by
law or by agreement with the client or a third person, confirmed in
writing, a lawyer shall promptly deliver to the client or third person
any funds or other property that the client or third person is entitled
to receive. Upon request by the client or third person, the lawyer
shall promptly render a full accounting regarding such funds or
other property.
Interest on Lawyer’s Trust Account or individual client trust account
Ohio law requires a lawyer to deposit client funds nominal in amount or client
funds to be held for a short period of time into an interest-bearing trust account
identified as an IOLTA (Interest on Lawyer’s Trust Account). The IOLTA is
established in the name of the lawyer or law firm, but the interest or dividends are
remitted to the treasurer of the state for deposit in the legal aid fund. Laws
related to the establishment of an IOLTA are set forth in Section 4705.09 and
Op. 2008-3 4
4705.10 of the Ohio Revised Code. Rules related to IOLTA, adopted by the Ohio
Legal Assistance Foundation pursuant to R.C. 120.52, are available at
www.olaf.org.
Funds that are more than nominal in amount or funds to be held for a long period
of time are deposited into an individual client trust account established by a
lawyer or law firm on behalf of an individual client. The interest on the individual
client trust account is for the benefit of the client and not remitted to the state.
All clients’ funds, whether the funds are nominal or more than nominal or to be
held for a short period or a long period, are subject to a lawyer’s duty of
safekeeping under Rule 1.15 of the Ohio Rules of Professional Conduct.
In the normal course of a representation, an attorney, pursuant to Rule 1.15, will
release to a client the funds held in a trust account that the client is entitled to
receive. But, if a client’s identity or whereabouts are unknown, a lawyer will be
unable to release the money to the client.
Disposition of unclaimed funds
Ohio lawyers are subject to Ohio law regarding the disposition of unclaimed
funds. When either the identity or whereabouts of a client who is the owner of
funds in an IOLTA or individual client trust account is unknown, the disposition of
the funds should follow the statutory procedure for unclaimed funds as set forth
in R.C. Chapter 169 which governs the disposition of unclaimed funds.
“Unclaimed funds” are defined in Sections 169.01(B)(1).
R.C. 169.01
(B)(1) “Unclaimed funds” means any moneys, rights to moneys, or
intangible property, described in section 169.02 of the Revised
Code, when, as shown by the records of the holder, the owner has
not, within the times provided in section 169.02 of the Revised
Code, done any of the following:
(a) Increased, decreased, or adjusted the amount of such funds;
(b) Assigned, paid premiums, or encumbered such funds;
(c) Presented an appropriate record for the crediting of such
funds or received payment of such funds by check, draft, or
otherwise;
(d) Corresponded with the holder concerning such funds;
Op. 2008-3 5
(e) Otherwise indicated an interest in or knowledge of such
funds;
(f) Transacted business with the holder.
Ohio Rev. Code Ann. §169.01(B)(1) (West Supp. 2008).
Pursuant to R.C. Section 169.03(A)(1), a “holder” of unclaimed funds must report
to the director of commerce. Ohio Rev. Code Ann. §169.03(A)(1) (West Supp.
2008).
A “holder” is defined in R.C. Section 169.01(D)(1).
R.C. 169.01
(D)(1) “Holder” means any person that has possession, custody, or
control of moneys, rights to moneys, or other intangible property, or
that is indebted to another, if any of the following applies:
(a) Such person resides in this state;
(b) Such person is formed under the laws of this state;
(c) Such person is formed under the laws of the United States
and has an office or principal place of business in this state;
(d) The records of such person indicate that the last known
address of the owner of such moneys, rights to moneys, or
other intangible property is in this state;
(e) The records of such person do not indicate the last known
address of the owner of the moneys, rights to moneys, or
other intangible property and the entity originating or issuing
the moneys, rights to moneys, or other intangible property is
this state or any political subdivision of this state, or is
incorporated, organized, created, or otherwise located in this
state. Division (D)(1)(e) of this section applies to all moneys,
rights to moneys, or other intangible property that is in the
possession, custody, or control of such person on or after
July 22, 1994, whether the moneys, rights to moneys, or
other intangible property becomes unclaimed funds prior to
or on or after that date.
Ohio Rev. Code Ann. §169.01(D)(1) (West Supp. 2008).
Op. 2008-3 6
Pursuant to R.C. 169.02(J) funds held by a “holder” as a fiduciary for the benefit
of another are considered unclaimed funds.
R.C. 169.02
Subject to division (B) of section 169.01 of the Revised Code, the
following constitute unclaimed funds:
(J) Subject to division (M)(2) of this section, all moneys,
rights to moneys, or other intangible property, and any
income or increment on them, held or owed by a holder
which is a fiduciary for the benefit of another, or a fiduciary
or custodian of a qualified retirement plan or individual
retirement arrangement under section 401 or 408 of the
Internal Revenue Code, unclaimed for three years after the
final date for distribution.
Ohio Rev. Code Ann. §169.02(J) (West Supp. 2008).
An Ohio lawyer who meets the statutory definition of “holder” under R.C.
169.01(D)(1) and who holds funds as a fiduciary for the benefit of another under
169.02(J) falls under the statutory duty to report “unclaimed funds.” If an Ohio
lawyer has legal questions regarding a lawyer’s statutory duty to report
unclaimed funds those questions should be directed to legal counsel in the
Department of Commerce, Unclaimed Funds Division.
Duty of confidentiality
If after careful consideration of all records and diligent efforts, the client’s
whereabouts are unknown, the lawyer should provide the Division of Unclaimed
Funds with the necessary information such as the client’s name along with the
amount due to the client. Providing such information will not violate the lawyer’s
duties as to confidentiality under Rule 1.6 because the disclosure falls within the
authorized by law exception under Rule 1.6(b)(6): “A lawyer may reveal
information relating to the representation of a client, including information
protected by the attorney-client privilege under applicable law, to the extent the
lawyer reasonably believes necessary for any of the following purposes: to
comply with other law or a court order.”
If after careful consideration of all records and diligent efforts, a client’s identity is
unknown, a lawyer, such as a lawyer for an estate of a deceased attorney,
should provide as much information as necessary to the Division of Unclaimed
Funds to assist in reuniting the funds with the owner. The information may
include the exact dollar amount unable to be matched, the deceased attorney’s
Op. 2008-3 7
name and address, the date of deposit, or other necessary information known
about the unclaimed funds. The reporting of unclaimed funds of a client whose
identity or whereabouts are unknown does not violate either the ethical duty of
safekeeping a client’s funds under Rule 1.15 or the ethical duty to protect
confidentiality under Rule 1.6.
Conclusion
In conclusion, the Board advises that the proper disposition of client funds in a
lawyer’s IOLTA or individual client trust account, when either the identity or the
whereabouts of the client who is the owner of the funds is unknown, is for a
lawyer to follow the statutory procedure for the disposition of unclaimed funds to
the state set forth in Chapter 169 of the Ohio Revised Code. A lawyer’s reporting
of unclaimed funds of a client whose identity or whereabouts are unknown does
not violate either the ethical duty of safekeeping a client’s funds under Rule 1.15
or the ethical duty to protect a client’s confidentiality under Rule 1.6.
Advisory Opinions of the Board of Commissioners on Grievances and
Discipline are informal, nonbinding opinions in response to prospective or
hypothetical questions regarding the application of the Supreme Court
Rules for the Government of the Bar of Ohio, the Supreme Court Rules for
the Government of the Judiciary, the Code of Professional Responsibility,
the Code of Judicial Conduct, and the Attorney’s Oath of Office.
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