Ezel / Ethics Opinions / OSB
OSB April 2014

Can a lawyer serve as the escrow agent in a deal where the lawyer also represents one of the parties?

Short answer: No. The opinion concludes a lawyer may be a neutral escrow agent only when the lawyer represents none of the parties; a lawyer for a party cannot also be the neutral escrow, though the lawyer may still hold the client's funds or documents if not labeled or misrepresented as an escrow agent.

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This page answers the general question as of 2014. Ezel answers yours: whether it's allowed on your facts, under the current Oregon Rules of Professional Conduct, with citations.

Currency note: this opinion is from 2014
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
View original ethics opinion (PDF)

Plain-English summary

A lawyer with a substantial business practice asks whether the lawyer may act as escrow agent in three situations: when the lawyer represents none of the parties, when the lawyer represents one of the parties, and, if not, whether the lawyer may still hold funds or property under an agreement between the lawyer's client and the other party.

The opinion concludes the lawyer may serve as escrow agent when representing none of the parties. Escrow by definition means neutral and independent from the parties, and the statute exempts a lawyer rendering services as an attorney at law (ORS 696.520(2)); the opinion compares a lawyer's permitted role as mediator under Oregon RPC 2.4.

The opinion concludes the lawyer may not be both counsel to a party and the neutral escrow agent for the same transaction. The duty of neutrality directly contradicts the duties owed to a client, creating a significant risk that the representation will be materially limited by the lawyer's escrow responsibilities under Oregon RPC 1.7(a)(2); that self-interest conflict can be waived only with the client's informed consent under RPC 1.7(b). The opinion adds that failing to disclose the dual role to the other party would be tantamount to dishonesty under Oregon RPC 8.4(a)(3).

On the third question, the opinion concludes the lawyer may hold client funds, documents, or other property as part of a transaction involving the client, as long as the lawyer is not described as an "escrow agent" and the role is not otherwise misdescribed, and points to the trust-account duties addressed in OSB Formal Ethics Opinion 2005-48.

In practice

The opinion holds that, under the Oregon rules as they stood at the time of the opinion, the neutral escrow role and the role of counsel to a party are incompatible in one transaction: a lawyer for a party cannot serve as the neutral escrow, and even a permissible arrangement to hold the client's property must not be labeled or presented as a neutral escrow. Verify the current text of Oregon RPC 1.7, RPC 8.4, and the escrow statutes before relying on any specific point.

Common questions

Q: Can I be the escrow agent for a deal if I represent one of the parties?

A: No. The opinion concludes a lawyer for a party cannot also be the neutral escrow agent, because the duty of neutrality conflicts with the lawyer's duties to the client under RPC 1.7(a)(2).

Q: Can I be the escrow agent if I represent nobody in the transaction?

A: Yes. The opinion concludes a lawyer who represents none of the parties may serve as a neutral escrow agent.

Q: If I can't be the escrow agent, can I still hold my client's money or papers for the deal?

A: Yes, qualified. The opinion concludes the lawyer may hold the client's funds or property as part of the transaction, provided the lawyer is not described or misrepresented as an escrow agent.

Background and rules framework

The opinion interprets Oregon RPC 1.7(a)(2) (material-limitation conflict from the lawyer's own responsibilities) and RPC 8.4(a)(3) (dishonesty), and compares the mediator role under RPC 2.4. These correspond to Model Rules 1.7, 8.4, and 2.4. The escrow analysis also draws on Oregon's escrow statutes (ORS chapter 696) and the duty to hold client property in trust.

Citations and references

Rules of Professional Conduct:

  • Oregon RPC 1.7(a)(2), 1.7(b) / Model Rule 1.7 (material-limitation conflict; consent)
  • Oregon RPC 8.4(a)(3) / Model Rule 8.4 (dishonesty)
  • Oregon RPC 2.4 / Model Rule 2.4 (lawyer as third-party neutral)

Statutes:

  • ORS 696.505(3) (definition of escrow)
  • ORS 696.520(2) (exemption for lawyer rendering services as attorney)

Cases:

  • Banif Corp. v. Black, 12 Or App 385, 507 P2d 49 (1973)
  • In re Phelps, 306 Or 508, 760 P2d 1331 (1988)
  • In re Benjamin, 312 Or 515, 823 P2d 413 (1991)

Other opinions cited:

  • OSB Formal Ethics Op. No. 2005-48: holding client funds in trust

See also

Source

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