Bar Rules

Formal Advisory Opinion No. 98-2

Ethics & Discipline / Advisory Opinions / Formal Advisory Opinions / Formal Advisory Opinion No. 98-2

State Bar of Georgia
Issued by the Supreme Court of Georgia
On June 1, 1998
Formal Advisory Opinion No. 98-2


This opinion relies on Standards of Conduct 61, 62, 63, and 65 that bear upon matters directly addressed by Rule 1.15(I).

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QUESTION PRESENTED:

When a lawyer holding client funds and/or other funds in a fiduciary capacity is unable to locate the rightful recipient of such funds after exhausting all reasonable efforts, may that lawyer remove the unclaimed funds from the lawyer's escrow trust account and deliver the funds to the custody of the State of Georgia in accordance with the Disposition of Unclaimed Property Act?

SUMMARY ANSWER:

A lawyer holding client funds and/or other funds in a fiduciary capacity may remove unclaimed funds from the lawyer's escrow trust account and deliver the funds to the custody of the State of Georgia in accordance with the Disposition of Unclaimed Property Act only if the lawyer, prior to delivery, has exhausted all reasonable efforts to locate the rightful recipient.

OPINION:

Many members of the Bar have contacted the State Bar of Georgia for guidance on how to manage client funds and/or other funds held in a fiduciary capacity in the lawyer's escrow trust account when the lawyer is unable to locate the rightful recipient of the funds and the rightful recipient fails to claim the funds. More specifically, the lawyers have asked whether they could ethically remove the unclaimed funds from the lawyer's escrow trust account and disburse the funds in accordance with O.C.G.A. §§ 44-12-190 et seq., the Disposition of Unclaimed Property Act.

In those cases where a lawyer is holding client funds and/or other funds in a fiduciary capacity, the lawyer must do so in compliance with Standards 61, 62, 63 and 65. When the funds become payable or distributable, Standard 61 speaks to the lawyer's duty to deliver funds: "A lawyer shall promptly notify a client of the receipt of his funds, securities or other properties and shall promptly deliver such funds, securities or other properties to the client." Implicit both in this Standard, and the lawyer's responsibility to zealously represent the client, is the lawyer's duty to exhaust all reasonable efforts to locate the rightful recipient in order to ensure delivery.

When a lawyer holding funds attempts to deliver those funds in compliance with Standard 61 but is unable to locate the rightful recipient, the lawyer has a duty to exhaust all reasonable efforts to locate the rightful recipient. After exhausting all reasonable efforts and the expiration of the five year period discussed in the Act, if the lawyer is still unable to locate the rightful recipient and the rightful recipient fails to claim the funds, the funds are no longer considered client funds or funds held in a fiduciary capacity, but rather, the funds are presumed to be abandoned as a matter of law, except as otherwise provided by the Act, and the lawyer may then deliver the unclaimed funds to the State of Georgia in accordance with O.C.G.A. §§ 44-12-190 et seq., the Disposition of Unclaimed Property Act. A lawyer who disburses the unclaimed funds as discussed above shall not be in violation of the Standards.



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