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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


Alabama Legal Ethics

1.15 Rule 1.15 Safekeeping Property

1.15:100 Comparative Analysis of Alabama Rule

  • Primary Alabama References: AL Rule 1.15
  • Background References: ABA Model Rule 1.15, Other Jurisdictions
  • Commentary:
  • Alabama Commentary:

1.15:101   Model Rule Comparison

ARPC Rule 1.15 maintains the general principles of the model rule but adds more detail to its application. ARPC Rule 1.15(a) lists two exceptions to the rule that no personal funds of a lawyer should be deposited in a trust account which are (1) unearned attorney's fees that are being held until earned and (2) funds sufficient to cover maintenance fees such as service charges on the account. The rule specifies that the lawyer has no right to claim any interest which shall belong to the client or third person except with respect to IOLTA accounts. ARPC 1.15(d) provides further responsibilities regarding disbursement procedures which section (e) places a duty upon the lawyer to insure that the bank that maintains the account agrees to file certain reports with the State Bar including notifying the State Bar when an account has insufficient funds.

1.15:102   Model Code Comparison

Inapplicable.

1.15:110   Alabama IOLTA Plan

The Alabama State Bar has a well established plan for IOLTA accounts.

1.15:120   Alabama Client Security Fund

The Alabama State Bar has adopted Client Security Fund Rules to govern the processing of claims for losses from clients of lawyers due to certain dishonest conduct and meeting various requirements.

1.15:200 Safeguarding and Safekeeping Property

  • Primary Alabama References: AL Rule 1.15(a)
  • Background References: ABA Model Rule 1.15(a), Other Jurisdictions
  • Commentary: ABA/BNA § 45:101, ALI-LGL §§ 44-46, Wolfram § 4.8
  • Alabama Commentary:

ARPC Rule 1.15 discusses the requirements a lawyer must follow when holding a client's property or funds. Generally, a lawyer has an ethical duty to act as a professional fiduciary when safekeeping a client's property. The main fiduciary duties of the lawyer are: "segregation, notification, record keeping, delivery, and accounting." ABA/BNA Law. Manual of Prof. Conduct, 45:105 (1993).

1.15:210   Status of Fee Advances [see also 1.5:420]

See Section 1.5:420.

1.15:220   Surrendering Possession of Property

ARPC Rule 1.15 requirements also include: "The necessity for prompt distribution, prompt and complete accounting for funds received for the client and complete disclosure to the client regarding fiduciary funds." RO-90-97. The rule requires a lawyer to promptly notify a client or third person when a lawyer receives property from an outside source in which the client or third person has an interest. At the request of the client the lawyer must immediately deliver the property to the client or third person and present a full accounting of the property if requested.

With respect to funds or property in which both the client and lawyer claim an interest, the disputed portion should be maintained in a separate account and the undisputed portion should be dispensed to the client. When a lawyer's fee is to paid from funds received from a third party and there is a risk that the client may not pay the fee, the lawyer does not have to remit to the client the portion of the funds from which the fee will be paid. A lawyer cannot hold funds in order to coerce a client into accepting a lawyer's position with respect to his claim of an interest in property. When there is such a dispute the lawyer should resolve the issue expediently, and should propose dispute resolution alternatives such as arbitration.

When a third party claims an interest in the client's property in the possession of the lawyer, the lawyer may have a duty to protect the third party's interest. Thus, the lawyer may not be able to distribute the contested property to the client. However, the lawyer should not individually decide to arbitrate the dispute between the client and the third party.

A lawyer should not disburse client funds from segregated accounts which contain the funds of more than one client unless the client's funds are collected funds. The lawyer, at his own risk, may dispense uncollected client funds if the lawyer reasonably and prudently believes the funds will be collected immediately. If the collection does not occur the lawyer must replace the funds in the segregated account within five (5) days of notice of non-collection.

1.15:230   Documents Relating to Representation

The client file is the property of the client and is not the property of the firm. The lawyer may not charge a client for a copy of the file if the client directs that the file be returned to the client or delivered to another law firm. Absent agreement to the contrary, the lawyer may not charge for the time he expends in forwarding a client's file to a new lawyer. The lawyer may have a lien on the file for fees and portions of the file may constitute the lawyer's work product. See Section 1.5:230.

1.15:300 Holding Money as a Fiduciary for the Benefit of Clients or Third Parties

  • Primary Alabama References: AL Rule 1.15(b)
  • Background References: ABA Model Rule 1.15(b), Other Jurisdictions
  • Commentary: ABA/BNA § 45:101, ALI-LGL § 44, Wolfram § 4.8
  • Alabama Commentary:

ARPC Rule 1.5 requires that a lawyer treat a client's property with the care of a professional fiduciary.

1.15:400 Dispute Over Lawyer's Entitlement to Funds Held in Trust

  • Primary Alabama References: AL Rule 1.15(c)
  • Background References: ABA Model Rule 1.15(c), Other Jurisdictions
  • Commentary: ABA/BNA § 45:101, ALI-LGL §§ 44-45, Wolfram § 4.8
  • Alabama Commentary:

See Section 1.15:220 above.