85-F-90 - Interest on separate Client Trust Accounts

FORMAL ETHICS OPINION 85-F-90


Inquiry is made concerning the ethical responsibilities of an attorney in the
settlement of a matter on behalf of his client, and the handling of
settlement proceeds, when the attorney is unable to communicate with the
client and the client's whereabouts is unknown.


The client was injured as a result of a slip and fall at a public business establishment and
admitted to the hospital for treatment of his injuries. The client employed the attorney to
assert his claim for damages. The client executed a general power of attorney authorizing
the attorney to negotiate a settlement, execute any necessary documents or releases, to
execute or negotiate any draft or check paid in his behalf and to act as his attorney in the
matter. The attorney is now unable to locate the client. All efforts, including hiring an
investigator, have been fruitless.
The statute of limitations on the client's claim is about to run and the attorney inquires as
to his ethical responsibilities, specifically concerning (i) settlement of the case without
communication from the client; (ii) payment of medical bills and attorney's fees; and (iii)
disposition of the client's funds.
Canon 7 of the Code of Professional Responsibility provides:
A Lawyer Should Represent a Client Zealously Within the
Bounds of Law
In this instance, there is no prohibition against the inquiring attorney asserting the lawful
claim of his client to a conclusion by settlement of the matter. In fact, the attorney is
ethically obligated to pursue the matter to a conclusion.
In the event there is no reasonable expectation of objection by the client, the attorney,
under the general power of attorney and as agent of the client, may pay reasonable and
necessary medical and legal contractual obligations of the client arising from the legal
matter. In the event of a reasonable expectation of objection by the client, then the
attorney is ethically prohibited from disbursement of such funds from the settlement
proceeds.
Formal Ethics Opinion 84-F-68, citing 2 Scott, The Law of Trusts, Sections 180.3, 181
(3d ed. 1967 and Supp. 1981) states:
85-F-90 Page 2
... where the amount of funds held for a specific client and
the expected holding period make it obvious that the
interest which would be earned would exceed the lawyer's
administrative costs and the bank charges, the lawyer
should consult the client and follow the client's instructions
as to investing.
In this instance, the lawyer is unable to consult with the client and, therefore, in the event
it appears that the interest would exceed the costs, the attorney is ethically obligated to
deposit the funds in an interest-bearing account on behalf of the client.
This 13th day of March , 1985.
ETHICS COMMITTEE:
W. J. Flippin, Chairman
Henry H. Hancock
Edwin C. Townsend
APPROVED AND ADOPTED BY THE BOARD