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Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.

Oregon Legal Ethics

1.15   Rule 1.15 Safekeeping Property

1.15:100   Comparative Analysis of Oregon Rule

Primary OR References: DR 9-101
Background References: ABA Model Rule 1.15, Other Jurisdictions
OR Commentary: EOL § 15.4

1.15:101      Model Rule Comparison

DR 9-101 is substantively similar to MR 1.15. MR 1.15(a) extends the requirements of DR 9-101(A) to property of a third person that is in the lawyer’s possession in connection with the representation, and MR 1.15(c) extends the requirements of DR 9-101(A)(2) regarding disputes to property concerning which an interest is claimed by a third person as well as by a client. DR 9-101(C) is substantively similar to MR 1.15(b) but also specifies that the lawyer should retain records of the accounts for at least five years and identifies which records should be kept.

1.15:102      Model Code Comparison

DR 9-101 is similar to MC DR 9-102.

1.15:110      Oregon IOLTA Plan

As provided in DR 9-101(D)(2)(c), interest earned on the cumulative small amounts or short-term amounts held in client trust accounts is paid directly to the Oregon Law Foundation by the depository institutions. The funds are then used by the Oregon Law Foundation to provide legal aid to the poor, improve the administration of justice, and promote the study of law, research in law, legal education, and the diffusion of legal knowledge. All attorneys in Oregon must participate in the Interest on Lawyers’ Trust Accounts (IOLTA) program.

All client funds must be deposited in the IOLTA account unless they are deposited in either (1) a separate interest-bearing account for a specific and individual matter for a particular client or (2) in a pooled interest-bearing account with “subaccounting which will provide for computation of interest earned by each client’s funds and the payment thereof, net of any transaction costs, to each client.” DR 9-101(D)(3)(b). Interest earned on such accounts is held in trust for and is the property of the clients.

1.15:120      Oregon Client Security Fund

[The discussion of this topic has not yet been written.]

1.15:200   Safeguarding and Safekeeping Property

Primary OR References: DR 9-101
Background References: ABA Model Rule 1.15(a), Other Jurisdictions
Commentary: ABA/BNA § 45:101, ALI-LGL §§ 44-46, Wolfram § 4.8
OR Commentary: EOL §§ 5.6, 15.6, 15.11, 15.15-.16

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

Any sums paid by or on behalf of the client to the attorney that are paid on account of work to be performed in the future by the attorney and are not yet earned by the attorney must be placed in a client trust account. DR 9-101(A); In re Miller, 303 Or 253, 735 P2d 591 (1987); OSB Legal Ethics Op No 1991-88.

The OSB has taken the position that advance fees paid to the attorney via credit card should be deposited directly into the lawyer’s trust account. Then the lawyer or law firm must promptly write a check in the amount of the fee advance, minus any handling or service charge, from the trust account for deposit to the general or office account.

On the other hand, nonrefundable “flat” fees paid at the outset of a representation, and nonrefundable monthly retainers paid to a law firm to do any legal business that the client may have, must not be deposited in a client trust account. This money belongs to the law firm as and when paid. But see DR 2-106(A) regarding the potential duty to refund even nonrefundable fees if they prove to be clearly excessive.

1.15:220      Surrendering Possession of Property

(A) Generally

DR 9-101(C)(4) requires that the attorney “[p]romptly . . . deliver to a client as requested by the client the . . . securities or other properties in the possession of the lawyer which the client is entitled to receive.” See, e.g., In re Arbuckle, 308 Or 135, 775 P2d 832 (1989) (failure to return client’s documents).

(B) Duties to Client Who Cannot Be Located

If the law firm has property or funds belonging to a client who cannot be located, the law firm has no duty to retain this property or money indefinitely. (Exception: Any original wills must be held in accordance with ORS 112.800, et seq. OSB Legal Ethics Op No 1991-43.) It is the duty of the lawyer to diligently attempt to locate the client and, if unsuccessful, to deliver the unclaimed funds or property to the state in accordance with the Uniform Disposition of Unclaimed Property Act, ORS 98.302-.436. Thereafter, the lawyer’s primary liability for the funds ends. The lawyer should, however, continue to try to locate the client (to the extent that it is reasonable to do so) and should in any event retain evidence sufficient to allow the client to claim funds from the state if the client later reappears. OSB Legal Ethics Op No 1991-48.

1.15:230      Documents Relating to Representation

As a general proposition, and absent a valid and enforceable attorney lien, clients are entitled to their files or to have their files forwarded to subsequent counsel. See, e.g., In re Chandler, 306 Or 422, 760 P2d 243 (1988) (discipline for failure to turn over file to new attorney); see also DR 2-110(A)(2).

OSB Legal Ethics Op No 1991-125 explains that all documents that reasonably may be of assistance to the client must be provided; certain personal notes and other materials may, under limited circumstances, be withheld. If the attorney wishes to keep a copy of part or all of the file (for example, to protect against later malpractice claims or accusations), who is responsible for payment of the cost of photocopies depends on factors such as whether the documents to be copied are the client’s originals (in which case the attorney pays), whether the attorney has previously provided copies of the documents to the client (in which case the client pays), and the nature of the underlying agreement between attorney and client (e.g., if the agreement provided for payment of photocopy charges while the attorney-client relationship was in existence, it will generally be appropriate to charge a fee after the relationship ends).

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

Primary OR References: DR 9-101, 1-102(A)(3)
Background References: ABA Model Rule 1.15(b), Other Jurisdictions
Commentary: ABA/BNA § 45:101, ALI-LGL § 44, Wolfram § 4.8
OR Commentary: EOL § 15.1

Though the DRs do not speak directly to the issue of the lawyer as a fiduciary in this respect, DR 9-101 and 1-102(A)(3) combine to mete out discipline ranging from probation to disbarment to attorneys who mishandle or misappropriate client funds or property. The Oregon Supreme Court has stated that “it is important to distinguish between a charge of dishonesty by misappropriation under DR 1-102(A)(3) and a charge of failing to maintain funds in a trust account under DR 9-101(A).” In re Phelps, 306 Or 508, 512, 760 P2d 1331 (1988). As the Phelps court recognized, failing to maintain funds in a trust account often precedes misappropriation, but the key in determining discipline is the attorney’s intent. Id.; see also In re Holman, 297 Or 36, 60, 682 P2d 243 (1984) (intent to appropriate client funds is not required to establish violation of DR 9-101(A)). It is no defense that a client was not actually injured by the attorney’s failures regarding the handling of the client’s money or property. See In re Whipple, 1 DB Rptr 205 (1986) (attorney disciplined for placing personal funds in client trust account to keep them from being discovered by attorney’s creditors).

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

Primary OR References: DR 9-101(A)(2)
Background References: ABA Model Rule 1.15(c), Other Jurisdictions
Commentary: ABA/BNA § 45:101, ALI-LGL §§ 44-45, Wolfram § 4.8
OR Commentary: EOL § 15.8

If there is a dispute between an attorney and client as to who is entitled to funds being held by the attorney, the disputed funds must be kept in a client trust account. DR 9-101(A)(2); In re Spies, 316 Or 530, 852 P2d 831 (1993) (disciplining attorney for withdrawing from trust account amount representing fees known to be disputed by client).