What must a lawyer or legal services corporation do with client trust funds that cannot be returned because the client cannot be located?
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This page answers the general question as of 1979. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-79-6 addressed a non-profit legal services corporation holding a "Client Trust Reserve" of roughly $7,400 in unreturnable advances, some from clients and some from the corporation itself, that it could not return because the owners could not be found. It asked what procedure to follow in liquidating the present accumulation, and whether it could transfer unclaimed client funds to its general account two years after a file closed, with prior notice.
On the present accumulation, the committee separated corporation funds from client funds. Corporation funds intermingled with client deposits violated Wis. Stat. § 757.293(1) and DR 9-102(A), but the corporation could withdraw its own funds, and the interest attributable to them, to the extent it could document their identity; because those are not held in a fiduciary capacity, Chapter 177 of the Wisconsin Statutes did not apply to them. For client funds, the committee said § 757.293 and DR 9-102 contain no provision for disposition when a client's whereabouts cannot be determined; to the contrary, they require preserving the identity of the funds indefinitely. The lawyer or firm must comply with all fiduciary duties and with the Uniform Disposition of Unclaimed Property Act (Chapter 177). To the extent this conflicted with the committee's October 1975 Informal Opinion (which had required depositing unreturnable funds in an interest-bearing account for six years before returning them to the general trust fund), that informal opinion was overruled. The committee noted its conclusion was consistent with Oregon Bar Ethics Opinion 270.
On future unreturnable funds, the committee held that a non-profit legal services corporation stands in the same shoes as a private lawyer or firm. Although its client population may be more transient, that was not a compelling reason to let the corporation contract with clients for disposition of funds if the client could not be found; the potential for abuse and overreaching was real enough to disallow the proposed plan. The committee expressly disagreed with ABA Informal Opinion 1392, which had reached the opposite conclusion, limiting its disagreement to the fact situation before it.
Currency note
This opinion was issued in 1979, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it applies the former DR 9-102 together with Wis. Stat. § 757.293 and Chapter 177 (Uniform Disposition of Unclaimed Property Act). The trust-account rule's current counterpart is SCR 20:1.15 / Model Rule 1.15, and the handling of unclaimed funds is governed by current Wisconsin unclaimed-property law. 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 move unclaimed client trust funds into the firm's general account?
A: No. The committee concluded that unclaimed client funds must be preserved and disposed of under the Uniform Disposition of Unclaimed Property Act, and that a firm may not contract with clients to transfer such funds to a general account.
Q: Can a legal services corporation withdraw its own money mixed into the trust account?
A: Yes, but only to the extent the corporation can document the identity of its own funds and the interest attributable to them; the commingling itself violated the trust-account rules.
Q: Did this opinion change earlier guidance?
A: Yes. It overruled the committee's October 1975 Informal Opinion, which had required holding unreturnable funds in an interest-bearing account for six years before returning them to the general trust fund.
Background and rules framework
The opinion interpreted the former trust-account rule, DR 9-102, and Wis. Stat. § 757.293, in light of the Uniform Disposition of Unclaimed Property Act (Chapter 177). The current counterpart is SCR 20:1.15 / Model Rule 1.15 on safekeeping client property and trust accounts.
Citations and references
Rules of Professional Conduct:
- Model Rule 1.15 / SCR 20:1.15 (safekeeping property; trust accounts); former Code DR 9-102
Statutes:
- Wis. Stat. § 757.293 (lawyer trust accounts)
- Wis. Stat. ch. 177 (Uniform Disposition of Unclaimed Property Act)
Other opinions cited:
- ABA Informal Opinion 1392 (disagreed with on these facts)
- Oregon Bar Ethics Opinion 270 (Nov. 9, 1974)
- Wisconsin Informal Opinion of October 1975 (overruled in part)
See also
- WI Ethics Op. E-88-5: Client Trust Funds and Property
- WI Ethics Op. E-86-9: Retainers and Advances in Trust Accounts
- WI Ethics Op. E-81-4: Computer Trust Accounts
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-79-6.pdf
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