When a client dies leaving a fee deposit in the lawyer's trust account, to whom does the lawyer pay it, what fees can be taken, and what can the lawyer reveal?

Plain-English summary

A lawyer held an initial consultation with a client about a legal separation from her husband. The client retained the lawyer, signed a representation agreement, and paid a fee deposit from a bank account that appeared to be in her name only, then died shortly afterward. The lawyer asked to whom she should report holding the funds, to whom they should be paid, what she could tell the husband, what fees she could collect from the deposit, the mechanism for collecting them, and whether it would be easier simply to turn the funds over to the state as unclaimed property.

The committee explained that the lawyer has a duty under RPC 1.15A, Comment 6 to take reasonable steps to locate the person entitled to the funds and, under RPC 1.15A(f), to promptly deliver funds to which a client or third person is entitled, citing Informal Opinion 1313 (funds could go to a deceased client's mother if she was entitled). On the facts, it was unclear who was entitled, the husband, a friend, the estate (no probate found), or the lawyer for fees, and several questions were matters of law, not ethics, so the committee declined to say who should be paid. On disputed funds, RPC 1.15A(g) requires holding the property in trust until the dispute is resolved and taking reasonable steps to resolve it, including interpleader where appropriate, and only after those steps may the funds be treated as unclaimed property (Comment 6). On fees, the committee declined to approve specific charges (citing Informal Opinion 1398), noting fees must be reasonable under RPC 1.5(a)-(b) and the nine reasonableness factors and that what was understood as billable at engagement matters, while observing it is highly doubtful that services rendered after notice of the client's death can be billed. On confidentiality, the duty continues after death (citing Formal Opinion 175), but RPC 1.6(b)(6) lets the lawyer reveal information to facilitate a satisfactory conclusion, such as telling an interested person that she holds funds in trust, and a court may permit further disclosure in an interpleader or probate action.

In practice

Under the Washington rules as they stood at the time of the opinion, the committee mapped a deceased-client trust situation onto three rules. RPC 1.15A(f) and Comment 6 require reasonable steps to locate and pay the entitled recipient; RPC 1.15A(g) requires holding and, where needed, interpleading funds when there is a dispute, including a likely dispute between the lawyer and the estate over fees, before any resort to unclaimed-property treatment. RPC 1.5(a)-(b) limits collectible fees to reasonable charges understood as billable, with the committee doubting that post-death services can be billed and declining to pass on specific amounts. RPC 1.6 makes the confidentiality duty survive death, while RPC 1.6(b)(6) permits limited disclosure to facilitate resolving the matter, with broader disclosure if a court so orders.

Common questions

Q: A client died leaving a fee deposit in my trust account. Who do I pay it to?

A: The committee said you must take reasonable steps under RPC 1.15A(f) and Comment 6 to identify who is entitled, and it declined to name the recipient on the facts because several possibilities existed and some questions were legal, not ethical. If there is a dispute, hold the funds and, if needed, interplead them under RPC 1.15A(g).

Q: Can I take my fees out of the deposit?

A: Only reasonable fees that were understood as billable. The committee declined to approve specific charges, noted RPC 1.5(a)-(b) and the nine factors govern reasonableness, and said it is highly doubtful that services performed after notice of the client's death can be billed.

Q: Can I tell the client's husband anything about the representation?

A: The duty of confidentiality continues after death, but RPC 1.6(b)(6) lets the lawyer reveal information to facilitate a satisfactory conclusion, including that she holds funds in trust; a court may permit further disclosure in an interpleader or probate proceeding.

Q: Can I just send the money to the state as unclaimed property?

A: Only after taking reasonable steps to locate and pay the entitled person and to resolve any dispute, including interpleader where appropriate. Comment 6 allows unclaimed-property treatment only after those steps.

Background and rules framework

The opinion interpreted Washington RPC 1.15A(f) and (g) and Comment 6 (Model Rule 1.15, safekeeping property; prompt delivery, disputed funds, and unclaimed funds), RPC 1.5(a)-(b) and its nine reasonableness factors (Model Rule 1.5, reasonable fees and communication of the fee), and RPC 1.6(b)(6) (Model Rule 1.6, confidentiality and the exception for limited disclosure). It treated the confidentiality duty as continuing past the client's death.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.15 / Washington RPC 1.15A(f), 1.15A(g), Comment 6 (delivery; disputed funds; unclaimed funds)
• Model Rule 1.5 / Washington RPC 1.5(a), 1.5(b), 1.5(a)(1)-(9) (reasonable fees; reasonableness factors)
• Model Rule 1.6 / Washington RPC 1.6(b)(6) (confidentiality; limited disclosure exception)

Other opinions cited:

• WSBA Informal Opinion 1313 (delivery of a deceased client's funds to an entitled family member)
• WSBA Informal Opinion 1398 (committee will not comment on the reasonableness of a particular fee)
• WSBA Formal Opinion 175 (duty to preserve confidences continues after the client's death)

See also

• WA Ethics Op. 2176: keeping uncashed trust-account funds
• WA Ethics Op. 1029: trust funds held where the lawyer cannot obtain client instructions
• WA Ethics Op. 2185: disclosing dependency-case results to a funding agency

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1632

Original opinion text

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

Advisory Opinion: 2188
Year Issued: 2008
RPC(s): RPC 1.15A(g) and (f), 1.5(a) and (b), 1.6(b)(6), IO 1313, 1398, FO 175
Subject: funds held in trust for deceased client

I. QUESTION PRESENTED

This inquiry concerns whether and to whom a lawyer may deliver funds held for a deceased client; and also the duty of confidentiality owed to the deceased client. The lawyer held an initial consultation with the client to discuss representation in a legal separation from her husband. The client agreed to retain the lawyer, signed a representation agreement, and paid a fee deposit out of a bank account that appeared to be in the client’s name only. Shortly thereafter, the client died.

The attorney posed the following questions: (1) To whom should the lawyer report that she holds the client’s funds in her trust account? (2) To whom should the funds be paid? (3) If obligated to talk to the client’s husband, what, if anything, can the lawyer reveal about the nature of the representation? (4) What fees may be collected from the client’s fee deposit in the lawyer’s trust account? (5) What mechanism is there for collecting fees from the client’s fee deposit? (6) Would it just be easier to turn the funds over to the state as unclaimed property?

II. RESPONSE

The lawyer has a duty to take reasonable steps to locate a client or third person for whom the lawyer is holding funds or property. See RPC 1.15A, Cmt. 6. Then, the lawyer must promptly pay or deliver the funds to which the client or third person is entitled. See RPC 1.15A(f); see also Informal Opinion 1313 (lawyer could deliver deceased client funds to client’s mother if she was entitled).

Based on the facts provided, it is unclear who is entitled to receive the funds. The lawyer mentions several possible recipients of the funds: the client’s husband, the client’s friend, the client’s estate (though no will filing or probate has been found), the lawyer herself (for fees incurred in the representation), and the unclaimed property fund. Without more facts, it would premature for the RPC committee to comment on to whom the lawyer should pay the funds. Moreover, several of the questions present matters of law and not ethics. However, the RPCs may offer guidance on the following issues:

A. Disputed funds

If there is a dispute between two or more persons (including the lawyer) over who is entitled to the funds, the rules require her to maintain the property in trust until the dispute is resolved. See RPC 1.15A(g). Based on the facts provided, there may be at least a dispute between the lawyer and the client’s estate over the extent of the lawyer’s fees, and possibly other disputes. The rules require that the lawyer take reasonable steps to resolve the dispute, including, when appropriate, interpleading the funds. See RPC 1.15A(g). Accordingly, if the lawyer is unable to ascertain who is entitled to the money after taking reasonable steps, she may have to interplead the fund. Finally, Comment 6 to RPC 1.15A states that the lawyer may treat the funds as unclaimed property, but only after taking the above steps to try to return the money to the client (or third person).

B. Reasonableness of fees

It is beyond the responsibility of this committee to approve or disapprove specific fees, especially when the fees may become the subject to litigation. See, e.g. Informal Opinion 1398 (committee cannot comment on the reasonableness of the total fee in any particular case nor any particular division of fees in a case). Generally, fees must be reasonable and may depend on what is communicated to the client. See RPC 1.5(a)-(b). In this case, the lawyer is seeking compensation for a pre-engagement call from the client’s friend and for preparing the engagement letter. She is also seeking compensation for preparing her letter to this committee. Whether those particular claims are consistent with the rules will depend on whether they are consistent with the nine factors determining reasonableness, and to what extent they were understood as billable services by the client at the time of the engagement. See RPC 1.5(a)(1) - (9). It is, however, highly doubtful that services rendered after the lawyer was notified of the client’s death can be billed.

C. Duty of confidentiality

In general, the lawyer’s duty of confidentiality continues beyond the client’s death. See Formal Opinion 175 (an attorney’s duty to preserve confidences continues after the client’s death). see footnote 1. Although limited in what she can reveal, the lawyer can disclose information that would facilitate a satisfactory conclusion to the matter and thus potentially revealing to the husband or another person found to have an interest that she holds funds in trust would not be prohibited. See RPC 1.6(b)(6). In the event the lawyer decides to file an interpleader or join in a probate action, she would be permitted to reveal client confidences to the extent determined by the court.

III. CONCLUSION

For the reasons discussed above, the lawyer should continue her efforts to identify the estate or individual who is entitled to receive the deceased client’s funds, including, if necessary, interpleading the funds. She should protect client confidentiality to the extent possible, but may be permitted to reveal confidences in order to facilitate a resolution of the matter, particularly if ordered to do so by a court.

footnote 1: The Restatement takes the position that the duty of confidentiality extends beyond the death of the client. Restatement of the Law Governing Lawyers, Sec. 60, Cmt. e. Additionally, the American College of Trusts and Estate Counsel (ACTEC) comments on Model Rule 1.6 state that the lawyer's duty of confidentiality continues after the death of the client. See http://www.actec.org/pubinfoark/comm/toc.html.