Must a lawyer who works only as an arbitrator or mediator deposit advance fees in a lawyer trust account, even though no client relationship exists?

Plain-English summary

A lawyer's work is limited to serving as an arbitrator or mediator (or a related role such as court-appointed special master) while retaining active Oregon State Bar membership. The lawyer receives fees in advance of the proceeding and holds the funds until it is completed. The opinion asks whether those advance fees must be deposited in a Lawyer Trust Account, and answers yes.

The opinion applies Oregon RPC 1.15-1(a), which requires a lawyer to hold the property of clients or third persons separate from the lawyer's own property, in a separate Lawyer Trust Account, including escrow and other funds held for another. It reasons that funds received by an arbitrator or mediator are not client property, because no lawyer-client relationship exists, citing OSB Op. 2005-101. Nevertheless, the opinion concludes those funds are "property of third persons," so by the plain language of Oregon RPC 1.15-1(a), the rule applies to advance fees received by a lawyer acting as an arbitrator, even though a nonlawyer arbitrator or mediator would not be required to hold such fees separately.

A footnote contrasts ABA Model RPC 1.15(a), which requires separate handling only of funds received "in connection with a representation," and notes that courts have applied the duty to lawyers functioning in other roles, while citing In re Gallagher on the scope of the former Oregon disciplinary rule.

In practice

The opinion holds that, under the Oregon rules as they stood at the time, the trust-account duty follows the lawyer's status, not the existence of a client: a bar member acting as a neutral still holds advance fees as third-person property subject to Oregon RPC 1.15-1(a). Per the opinion, the analysis turns on the rule's "property of third persons" language, which reaches funds held by the lawyer-neutral even without a representation. Verify the current text of Oregon RPC 1.15-1 before relying on any specific point.

Common questions

Q: Does a lawyer acting as an arbitrator or mediator have to use a trust account for advance fees?

A: Yes. The opinion concludes the advance fees are property of third persons that Oregon RPC 1.15-1(a) requires the lawyer to hold in a separate Lawyer Trust Account.

Q: Are the arbitrator's advance fees client property?

A: No. Per the opinion, there is no lawyer-client relationship, so the funds are not client property, but they are still property of third persons subject to the trust-account rule.

Q: Would a nonlawyer arbitrator have the same obligation?

A: No. The opinion notes a nonlawyer arbitrator or mediator would not be required to hold such fees in a separate account; the duty attaches because the neutral is a bar member subject to Oregon RPC 1.15-1(a).

Background and rules framework

The opinion interprets Oregon RPC 1.15-1(a) (safekeeping the property of clients and third persons; Lawyer Trust Account), corresponding to Model Rule 1.15, as applied to a lawyer serving as an arbitrator, mediator, or other neutral.

Citations and references

Rules of Professional Conduct:

• Oregon RPC 1.15-1(a) / Model Rule 1.15 (safekeeping property; trust accounts)

Cases:

• In re Gallagher, 332 Or 173, 26 P3d 131 (2001)

Other opinions cited:

• OSB Formal Ethics Op. No. 2005-101 (rev 2015) (lawyer as mediator; no client relationship)

See also

• OSB Ethics Op. 2005-101: Lawyer as Mediator, Trade Names, and Fee Division With a Nonlawyer
• OSB Ethics Op. 2005-117: IOLTA vs. Interest-Bearing Trust Account
• OSB Ethics Op. 2005-55: Lawyer as Escrow Agent

Source

• Landing page: https://www.osbar.org/ethics/toc.html
• Original PDF: https://www.osbar.org/_docs/ethics/2005-135.pdf