Can a lawyer treat cashier's checks and certified checks drawn on credit unions and other non-bank institutions as 'collected funds' under Rule 1.15(f), which by its terms refers only to a 'bank'?

Plain-English summary

The inquiry asked whether a lawyer may accept cashier's checks and certified checks from non-bank depository institutions, such as credit unions, and treat them as "collected funds" under Rule 1.15(f), even though the rule uses only the word "bank."

The committee answered yes. Subject to future clarification from the South Carolina Supreme Court, it concluded the term "bank" in Rule 1.15(f) should be read to include credit unions and other financial institutions as defined in IOLTA Rule 412(a)(4). The committee grounded this reading in the Scope section of the Rules of Professional Conduct, which states that the Rules are rules of reason to be interpreted with reference to the purposes of legal representation and of the law itself.

In practice

Under this opinion, a lawyer may treat cashier's and certified checks drawn on credit unions and other financial institutions defined in IOLTA Rule 412(a)(4) as collected funds for purposes of Rule 1.15(f), despite the rule's use of the single word "bank." The committee framed this as an interpretation of "bank" consistent with the Rules' Scope section, and expressly made it subject to any future clarification from the South Carolina Supreme Court.

Common questions

Q: Does Rule 1.15(f) limit collected funds to checks drawn on banks?

A: The committee concluded no. It read "bank" to include credit unions and other financial institutions as defined in IOLTA Rule 412(a)(4), so cashier's and certified checks from those institutions may be treated as collected funds.

Q: What supports reading "bank" broadly?

A: The committee relied on the Scope section of the Rules, which provides that the Rules are rules of reason interpreted with reference to the purposes of legal representation and of the law itself, and it noted the reading is subject to future clarification from the South Carolina Supreme Court.

Background and rules framework

The opinion interprets South Carolina Rule 1.15(f), the provision on collected funds in connection with lawyer trust accounts (Model Rule 1.15 addresses safekeeping property). It reads the rule's reference to "bank" together with the definition of financial institutions in IOLTA Rule 412(a)(4) and the interpretive guidance in the Rules' Scope section.

Citations and references

Rules of Professional Conduct:

• MR 1.15 / SC Rule 1.15(f) (collected funds in lawyer trust accounts)
• SC Rule 412(a)(4) (IOLTA; definition of financial institutions, read into "bank")
• Scope section of the South Carolina Rules of Professional Conduct (rules of reason)

See also

• SC Bar Ethics Op. 06-03: 'Table Funding' a Closing
• SC Bar Ethics Op. 06-02: Recording-Fee Markups
• SC Bar Ethics Op. 18-05: Trust Funds via PayPal

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-07-10/

Original opinion text

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

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 07-10

SC Rules of Professional Conduct: 1.15(f)

Question
May a lawyer accept cashiers checks and certified checks from non-bank depository institutions such as credit unions and treat them as “collected funds” under Rule 1.15(f), although the Rule uses only the word “bank”?

Opinion
Yes. Subject to future clarification from the Supreme Court, the Committee believes the term “bank” in Rule 1.15(f) should be read to include credit unions and other financial institutions as defined in IOLTA Rule 412(a)(4). The “Scope” of the Rules of Professional Conduct state: “The Rules of Professional Conduct are rules of reason. They should be interpreted with reference to the purposes of legal representation and of the law itself.”