QUESTION: Attorney's client was treated by a chiropractor who claimed he was due a certain fee. The client disputed the amount owed. The chiropractor gave notice of a lien, but Attorney believes the lien notice to be defective. Attorney issued a check jointly payable to both parties. Attorney's client returned the check to Attorney. The chiropractor sued Attorney's client and obtained a judgment, which is now the subject of a request for trial de novo. What legal obligations does Attorney have to his client and the chiropractor with respect to this disputed amount?

ANSWER: If Attorney gave the chiropractor assurances that his interests would be protected or if the chiropractor would have reasonably believed Attorney made such an agreement, Attorney may not pay the funds to the client, without the chiropractor's consent. Under those circumstances, Attorney should hold the funds for a reasonable period of time for the chiropractor and client to reach an agreement. If an agreement is not reached after a reasonable period, Attorney should interplead the funds.

If Attorney did not participate in such arrangements and the chiropractor's lien is not valid, or Attorney is willing to take the risk, Attorney may pay the funds to the client or as the client directs. If the funds are paid to the client, Attorney must advise the client that this action does not affect the judgment obtained by the chiropractor.

QUESTION: Attorney represents individual clients in litigation that frequently involves medical records. After the conclusion of a case, attorney returns "the file," including medical records to the clients. Attorney keeps a copy of the contract of representation, settlement documents, and stipulations for dismissal filed with the court, sensitive material, written settlement offers, and negotiations. Attorney provides a final accounting and disbursement of any money received and gives the client a list of the file materials being returned. Is attorney's practice in accordance with Rule 4-1.15? Attorney does not keep paper copies other than this, although Attorney may have some of the records in electronic form.

ANSWER: Under the Rules of Professional Conduct, including Rule 4-1.15(h), an attorney is not required to keep any portion of a file, if the "original file" has been returned to the client or disposed of with the client's consent. However, under Rule 4-1.15(a), an attorney must keep records of funds and other property the attorney held for a period of five years after the end of the representation. Although Attorney and the client can alter the period of time Attorney will hold the file for the client, they cannot alter the minimum period of time Attorney must keep records of funds and other property under Rule 4-1.15(a). Attorney may keep paper or electronic copies of the file or portions of the file, at his own expense. Attorney may want to consult with his malpractice carrier for recommendations regarding keeping copies for the Attorney's own records.

QUESTION: In response to the new Rule 4-1.15(h) on file retention that takes effect January 1, 2005, Attorney asks if the following language in the letter closing the file is sufficient.

We will now be closing this file. We will be keeping the file contents in storage for two years, and then the file contents will be destroyed unless you instruct us to the contrary. If you want any portion of the file contents, please let us know now.

ANSWER: The proposed language is sufficient for implied consent. However, Attorney should cover this issue at the outset of the litigation, in the engagement letter, fee agreement, etc. The last sentence should be modified to indicate that the request should be made as soon as possible and no later than a certain time ahead of the anticipated destruction date. Otherwise, a client might conclude that failure to immediately request the file would result in loss of that option. It is recommended that Attorney modify "the file contents will be destroyed" to language that gives Attorney authority to destroy the file but not a statement that the file will be destroyed. There may be a number of reasons Attorney may not want to destroy the file promptly at the end of two years.

QUESTION: In 1989, client hired law firm and paid a retainer prior to execution of services by the firm. The services provided by the firm never exceeded the amount of the retainer, leaving a surplus of $163. The firm attempted to contact the client by mail in 1993, 1998, and 2000 but was unsuccessful. What is the procedure for forfeiting these funds?

ANSWER: Based upon the information provided, these funds should escheat to the Missouri Unclaimed Property Division of the State Treasurer's office.

QUESTION: If Attorney sends a client a courtesy copy of all pleadings at the time of filing and a copy of all pleadings filed by opposing counsel (with a notation that it is a courtesy copy for the client's information and safekeeping), is it necessary to copy the file and provide the documents again to the client? May attorney charge for copies of documents previously sent to client?

ANSWER: It is permissible for copies provided to the client during the course of the representation to serve as client's file, or a portion of the client's file, if two conditions are met. First, Attorney would have had to provide an explanation of this process prior to sending the copies. Second, the original of the file belongs to the client. Therefore, if there is an original in the file, a copy does not fulfill the obligation to the client unless the attorney and client have agreed that it will. If both conditions are not met, attorney should provide the file to the client and keep copies at Attorney's own expense.

QUESTION: Attorney is acting as a mediator. Attorney will ask for prepayment of fees. Attorney will be keeping the fees in a separate account until earned. Since attorney will not be providing legal representation or legal advice to the parties, is it proper for Attorney to hold the unearned funds in Attorney's lawyer's trust account? ANSWER: It is permissible for Attorney to put the prepaid fees for the mediation in Attorney's trust account, including an IOLTA account.

QUESTION: Attorney represents Client in a workers´ compensation matter. Client advised Attorney that Client obtained a loan against the proceeds of Client´s workers´ compensation claim. Attorney is frequently asked by clients that Attorney represents in contingency fee cases to loan them money or advance them money against the anticipated recovery of their claim. Attorney tells these clients that Attorney is ethically prohibited from loaning them money or advancing them money against their anticipated recovery. Would it be ethical to advise Attorney´s clients of the existence of the company that loaned Client money? ANSWER: It is permissible for Attorney to inform Attorney´s clients of the existence of this company. However, if Attorney is the one informing Attorney´s clients about this company, Attorney must be sure to consult with them about the implications of the waiver of confidentiality that is necessary. If Attorney participates, in any way, in the arrangement between the company and Attorney´s clients, it may change the duty to Attorney´s client, in the event that Attorney´s client would not want to pay the company out of the proceeds. Attorney should also be prepared to advise Attorney´s client about the application of any statutes specific to workers compensation, for example section 287.260, to this sort of arrangement.

QUESTION: Attorney handled a personal injury claim for Client. Client signed a Notice of Doctor´s Lien and a Authorization, Assignment and Release Form. Attorney did not sign either of these documents. Attorney did not withhold monies from Client´s settlement to pay the doctor bill and the doctor involved is threatening to file a complaint against Attorney. Did Attorney act in the appropriate manner and what should be done to rectify the situation? ANSWER: Attorney did not agree, orally or in writing, to protect the doctor´s interest. This office cannot give Attorney an opinion on past conduct. Under these circumstances, Attorney does not need to take any action to rectify the situation, from the standpoint of the Rules of Professional Conduct. This opinion does not address whether Attorney may have any liability to the doctor under other laws.

QUESTION: Attorney´s firm has several clients´ monies in the firm´s trust account dating back several years. The firm does not have a way of contacting the clients in order to disburse these funds. What should Attorney´s firm do? ANSWER: As long as Attorney continues to hold those funds, Attorney should make reasonable efforts to locate the former clients. What is reasonable depends on the circumstances, including the amount of the funds. After Attorney has held the funds for the period specified by the escheat statute, Attorney may follow the terms of that statute and turn the funds over to the state.

QUESTION: Attorney´s firm has a substantial number of closed files in storage. Attorney would like to minimize the cost and expense of file storage by either returning these files to the former clients or by destroying the file. Attorney understands that the files are the property of the former clients. Attorney would like to send a letter to Attorney´s former clients at the last known address as indicated in the file. The letter will inform the former client that, unless he or she contacts Attorney´s office and makes arrangements to pick up the file within thirty (30) days, Attorney will destroy the contents of the file. May Attorney rely upon the client´s oral response to the letter or do the ethical rules require the client to express his or her intention in writing? May Attorney ethically destroy the contents of the file if Attorney does not hear from the client within the thirty day period? May Attorney ethically destroy the contents of a file if the letter is returned to Attorney by the post office? ANSWER: Attorney´s proposal would not be acceptable. Attorney is proposing to destroy a client´s property in circumstances in which the client may not receive notice of Attorney´s proposed file destruction. Attorney would need to wait a substantially longer period of time before assuming silence to be consent. The exact amount of time that would be considered reasonable depends on various circumstances, including, among others, the currency of the address. Attorney may destroy files, at any time, if Attorney gets express oral or written consent from the clients. Attorney should provide a means for the client to easily respond to Attorney regarding whether the client wants the file or gives permission for Attorney to destroy the file. Once Attorney has determined that it is permissible to destroy the file because explicit authority has been received or because the former client has not responded, it will be necessary for Attorney to review the file to ensure that original documents or other items with inherent value are not destroyed. In the future, Attorney should address this topic at the beginning and end of the representation. It is best to agree with the client that Attorney will hold the file for a reasonable period of time, usually several years. The client should be informed that the client may claim the file at any time. The agreement should also provide that, at the end of the specified period, the client agrees that Attorney has permission to destroy the file, in Attorney´s discretion.

QUESTION: Attorney represented plaintiff in a personal injury action. Attorney promised to pay various health care providers from the settlement proceeds of the case while the case was pending. Attorney did this with the client´s knowledge and consent. When the matter settled, the client would not give Attorney permission to pay the client´s health care providers from the settlement proceeds. Attorney gave the client several months to work out a settlement with the health care providers, but when the client could not work out a settlement, Attorney filed an interpleader action. Is it ethical for Attorney to claim attorney´s fees for time incurred in the interpleader action? Is it ethical for Attorney to request reimbursement for funds used to file and serve the interpleader action on all parties? ANSWER: Attorney may claim attorney´s fees and expenses related to the interpleader action.

QUESTION: Attorney settled Client´s case. As part of the settlement, Attorney wrote a check to a medical facility for care Client received. The payment turned out to be an overpayment and Attorney received a refund from the medical facility several years after the payment was made. Attorney has tried repeatedly to contact Client by mail, but has had no luck. Attorney has been unable to locate an address or telephone number for Client. Attorney contacted a private detective, but the private detective indicated that they would charge more than the funds that they have to locate Client. How should Attorney proceed? ANSWER: Attorney must continue to make all reasonable efforts to locate Client. If Attorney has not been able to locate Client by the time the escheat statute takes effect, Attorney may follow that statute to dispose of the funds. In the meantime, Attorney must keep the funds in a trust account.

QUESTION: Client would like to enter into an agreement with a company that essentially makes a loan against the potential recovery on Client´s personal injury case. The company will agree not to seek payment from Client for the loan if no recovery is made. Before the company will loan Client the money they require information concerning Client´s medical bills, medical records, police reports, liens,an estimated amount of recovery on the claim and Attorney´s estimated value of the claim. Client has directed Attorney to provide the information to the company. Question 1. Are there any ethical problems with divulging this information to a third party? Is it necessary to get a written waiver of the privilege from Client? Question 2. Is there any ethical problem with Attorney signing an agreement with the loan company to pay that company directly from Attorney´s trust account after the recovery is made? Question 3. If Client changes his or her mind and refuses to allow payment from Attorney´s trust, would Attorney violate Attorney´s fiduciary duty to Client by disbursing the payment when there is not a valid lien and only the signed agreement? ANSWER: Answer 1. This opinion only addresses Attorney´s responsibilities under Supreme Court Rule 4. It does not address the advantages and disadvantages of the arrangement nor the application of any other laws to the arrangement. If Attorney participates in this type of arrangement, Attorney must advise Client about all aspects of the arrangement and make sure that Client understands all of the implications. One aspect that Client must understand and agree to is that they cannot ensure that the other party would or could maintain confidentiality of the information Attorney provides. Attorney may not participate in the arrangement and then withhold information required by the arrangement, even if Client so requests, without disclosing that Attorney is withholding information. That conduct could involve assisting Client with a fraud or dishonest conduct under Rule 4-8.4(c). Answer 2. This is permissible, if Client consents. Answer 3. If Attorney enters into the agreement described in Question 2 and Client changes his or her mind, Attorney would not be able to disburse the funds to Client or the company, until the dispute is resolved. Under those circumstances, Attorney would hold the funds in Attorney´s trust account for a reasonable period of time to allow them to resolve the dispute. If they did not resolve the dispute in a reasonable period of time, Attorney would interplead the disputed funds.

QUESTION: Attorney has several client files that are closed because the case has been finalized. How long is Attorney required to keep the files? ANSWER: Supreme Court Rule 4 does not specify the length of time Attorney is required to keep files. The original file belongs to the client. Therefore, if the files are original files, Attorney needs the client´s consent prior to destroying the files. Attorney may return the files to the client, at any time. If the files are photocopies Attorney has maintained for Attorney´s own records, Attorney may destroy them at any time. Attorney must maintain the confidentiality of the files in the destruction process. Attorney may want to consult Attorney´s malpractice carrier regarding its recommendations on file retention.

QUESTION: Attorney is a shareholder in XYZ law firm, which is in the process of dissolving. After accounting for all known client claims to funds in the trust account, a sum still remains. An audit of the trust fund for the last five years reveals no outstanding sums due to clients. The supposition is that clients may have been paid amounts out of the firm´s regular account without reimbursement to the regular account from the trust account. What steps does the firm need to take before closing the trust account? ANSWER: Unless Attorney can show where the funds were paid out of the firm´s operating account, it will be necessary for one or more of the attorneys who were in the firm to maintain the funds in a trust account. If the funds cannot be traced to a client or to the firm before the escheat statute becomes applicable, the funds will escheat to the state.

QUESTION: Attorney´s office has thousands of closed files. Many of the files are over five years old. If Attorney sends a letter to the last known address of the former client, based upon information in the closed file, notifying the former client of Attorney´s intent to destroy the file within ten days absent a reply indicating the former client wishes to pick up the old file, may Attorney destroy the file if Attorney receives no reply by the deadline or if the letter comes back as undeliverable? ANSWER: The time frame Attorney proposes and the options Attorney has suggested are not sufficient. The files are Attorney´s clients" property and Attorney should develop procedures that take into consideration the best interests of the clients. Attorney should allow a substantial period of time after notice is sent to the last known address. Attorney should also allow the clients the option of arranging with Attorney for the client to pay to have the file mailed or shipped to the client. It is not reasonable to expect every client to come to Attorney´s office. The best time to address the issue of file disposition is during the representation and at the conclusion of the representation.

QUESTION: Attorney has a contingency fee contract with a client. The client paid a retainer towards attorney´s fees. According to the contract with the client, if Attorney received fees which exceeded that retainer, Attorney would refund the retainer to the client. The contract also provided that the client would pay all out-of-pocket litigation expenses as they were incurred. The defendant ended up paying attorney´s fees of more than the retainer amount. The client received a separate check for the client´s portion of the settlement proceeds. At the time of the settlement, the client owed more than the retainer amount for out-of-pocket expenses advanced on the client´s behalf. The client does not dispute that Attorney paid the expenses, but disputes the legitimacy of some of the expenses. Attorney still holds the retainer. Must Attorney refund the retainer to the client or may Attorney apply the retainer toward the client´s outstanding expense bill? ANSWER: Under Rule 4-1.15(c), Attorney must repay the retainer, unless the express language of Attorney´s contract permits Attorney to apply it against expenses. If the contract expressly permits Attorney to keep these funds and apply them to expenses and the client disputes Attorney´s position, Attorney must hold the funds in a trust account pending resolution of the dispute. The funds must be held in a separate, interest bearing account, with the recipient of the interest determined as a part of the resolution of the dispute. Attorney may attempt to resolve the dispute without litigation for a reasonable period of time, including participating in a fee dispute program. However, if the dispute is not resolved within a reasonable period of time, Attorney must initiate litigation or disburse the retainer plus interest to the client.

QUESTION: Attorney´s client was previously represented by another attorney. After taking over the case, Attorney immediately filed suit in the matter. The case was then settled. The settlement check did not include the name of the previous attorney. Attorney is aware that the previous attorney was claiming a lien on the file, but is unsure if the previous attorney sent this claim to the insurance company. The draft has been executed and is in Attorney´s trust account. The client disputes the claim for attorney´s fees by the previous attorney. The client has given Attorney authority to pay the previous attorney for out-of-pocket expenses and is demanding payment of the remaining proceeds, after Attorney´s fees. Attorney contacted the previous attorney with the client´s offer, but the offer was refused. Attorney is hesitant to release the funds from Attorney´s trust account. It is Attorney´s position that legally, Attorney can honor the client´s request and pay the client the proceeds of the settlement. What are Attorney´s ethical obligations? ANSWER: Attorney has not indicated whether Attorney has engaged in any communication with the previous attorney, which indicated that Attorney would honor his lien. If Attorney engaged in any such communications, Attorney may not disburse the disputed funds to Attorney´s client. If Attorney did not engage in such communications, Attorney may disburse the funds to Attorney´s client. However, even in the absence of such communications, Attorney is not required to disburse the funds to Attorney´s client, if Attorney believes that Attorney or Attorney´s firm would be exposed to civil liability for such actions. If Attorney does not disburse the funds to Attorney´s client, Attorney should hold the funds in Attorney´s trust account to provide a reasonable opportunity for Attorney´s client and the previous attorney to resolve the dispute. If the dispute is not resolved in a reasonable period of time, it will be necessary for Attorney to interplead the funds.

QUESTION: Attorney´s client was involved in an automobile accident and was treated by a doctor. The doctor required the client to sign forms attempting to create a lien. Attorney and client both signed the forms, because the doctor would not send the client records without having the forms signed first. The insurance carrier made a small offer which the client would like to accept, but there would not be sufficient funds to pay the doctor´s bill. Must Attorney honor the doctor´s lien if the client directs Attorney to disregard it? ANSWER: In light of the fact that Attorney participated in the arrangements with the doctor, Attorney may not disregard those arrangements, even if Attorney´s client directs Attorney to disregard them. When the settlement funds are received, Attorney must keep them in Attorney´s trust account until Attorney´s client and the doctor have reached an agreement regarding disbursement. Attorney may assist Attorney´s client in those efforts. If they don´t reach an agreement within a reasonable period of time, it will be necessary for Attorney to interplead the funds.

QUESTION: Attorney has been in practice for many years and has files dating back to Attorney´s first client. Attorney understands that Attorney needs to keep something concerning the identity of all prior clients for possible conflicts checks. How long should a file be retained? ANSWER: If the files Attorney has are copies of files after the original has been provided to the client, Attorney may destroy the copies. If the files are originals, they belong to the clients and Attorney has a duty of safekeeping. Before destroying the files the clients must be given reasonable notice of Attorney´s intent to do so and a reasonable opportunity to inform Attorney if they want their files. Destruction must be done in a manner which assures that client confidences are not revealed. In the future, it is advisable to address this topic with the client during the representation, at the time Attorney completes the representation, or both. Attorney may also want to consult with Attorney´s malpractice insurance carrier about the length of time they advise that Attorney maintain a copy of a file for Attorney´s own records.

QUESTION: In the process of closing files, Attorney discovered a few cases having small trust account balances. Attorney has attempted to contact the clients in each case, but has been unable to locate the clients. What should Attorney do with the remaining funds? ANSWER: Attorney must continue to make efforts to contact the clients. If Attorney has been unable to locate the clients by the time the escheat statute takes effect, Attorney may follow that statute to dispose of the funds. In the meantime, the funds must be kept in a trust account.

QUESTION: Attorney represented a client in a civil matter and the client was awarded a judgment. Attorney took the matter on a contingency fee contract basis, plus expenses. The client has failed to come in and endorse the check despite several phone calls and letters. Attorney is still in possession of the unendorsed check. How can Attorney collect the fee and expenses? May Attorney have the defendant pay the amount into court and then petition the court for Attorney´s fee? ANSWER: The only way Attorney can collect the fee and expenses is through a court proceeding. The method Attorney has proposed would not violate Supreme Court Rule 4. There may also be other procedures which would be acceptable. If Attorney believes that the client is being uncooperative because the client disputes the amount of Attorney´s fee, it may be helpful to inform the client of the availability of the fee dispute committee.

QUESTION: Are there any ethical considerations concerning how long Attorney should keep closed files? ANSWER: The original of the file belongs to the client. Therefore, Attorney should keep original files until Attorney returns them to the client or obtains the client´s consent to destroy them. Formal Opinion 115, as amended, addresses the client´s ownership of the file. Attorney should also review In re Cupples, 952 S.W.2d 226, 234 (Mo. banc 1997). Attorney may wish to contact Attorney´s malpractice carrier for advice regarding the length of time to keep copies of files.

QUESTION: Attorney handles a number of personal injury cases on a contingent fee basis. Recently, insurance companies have required Attorney to give a tax ID number before a settlement check is issued, even though the checks are payable to Attorney´s clients and Attorney. The insurance companies will be reporting the entire amount of the settlement checks to the IRS. Attorney only receives a fraction of that money. Attorney´s accountant has suggested Attorney report the entire amount as fee income and the disbursements for the share of the settlements as expenses. Attorney suggested to the accountant that Attorney report as gross receipts only the amount of the funds from settlement checks that were actually paid as fees to Attorney and attach an explanation of why it is less than the 1099 amounts. Would this be ethical? ANSWER: The approach Attorney has suggested will not violate Rule 4-1.15. The approach suggested by the accountant could be used by a creditor to argue that all of the funds in the trust account are funds belonging to Attorney, since Attorney will have reported them that way. To the extent that any approach Attorney chooses causes client or third party funds held in a trust account to be available to Attorney´s creditors, Attorney would violate Rule 4-1.15. Regardless of the approach Attorney takes, as always, it will be important for Attorney to keep clear records in case any questions arise regarding the appropriateness of disbursements.

QUESTION: Based on the recent IOLTA decision, Attorney is concerned that Attorney may have a conflict of interest that needs to be disclosed to all of Attorney's clients, if not at the initial stage of representation, certainly at the time of the disbursement of any funds. Does Attorney have a conflict of interest in this situation? ANSWER: Attorney does not have a conflict of interest in this situation. At this point, Rule 4-1.15 (relating to IOLTA) is still valid. Because Attorney did not opt out of the program for this year, Attorney must continue to participate in the program for the remainder of this year. It would be advisable to disclose Attorney's participation in the IOLTA program to Attorney's clients who will have funds in Attorney's IOLTA trust account. Under Rule 4-1.15(d)(2), Attorney's IOLTA trust account should only contain "funds of clients that are nominal in amount or are expected to be held for a short period of time" such that there would not be a benefit to placing the funds in a separate interest bearing account when compared with the costs of such an account. The cost/benefit analysis, for this purpose, includes not only bank fees but the administrative costs associated with Attorney's record keeping on a separate, interest bearing account. If the benefit of maintaining a separate, interest bearing account would be expected to exceed the costs, Attorney should place the funds in a separate, interest bearing account with the interest, which exceeds the costs, going to the client.

QUESTION: May Attorney remove notes from the file before it is turned over to a former client? The information consists of Attorney´s impressions about the case, as well as Attorney´s comments and thoughts made during telephone calls about the case and during meetings with Attorney´s staff and clients. A separate research file was maintained for Attorney´s research notes regarding the case. ANSWER: Based upon the information Attorney has provided and the nature of the material in question in this case, the notes are part of the file which must be provided to the client. Please see Formal Opinion 115, as amended.

QUESTION: Attorney and Attorney's partner are licensed in Missouri and Kansas. They have recently moved their offices to Missouri. Attorney currently has Attorney's trust account in a Kansas bank that does not have any branch offices in Missouri. Does Attorney have to open a trust account in Missouri? Does Attorney need to obtain consent of each person to deposit funds into the Kansas trust account? Do funds need to be kept in separate states based upon the location of the client? ANSWER: Under Rule 4-1.15(a) if Attorney's sole office is in Missouri, Attorney must have a trust account in Missouri, unless Attorney obtains the consent of each client to keep the funds in Kansas. The provisions of Rule 1.15(e)(3) provide an exception to the requirement to maintain an IOLTA account in Missouri. This exception would apply if Attorney had an office in Kansas as well as Missouri. If Attorney continues to maintain a trust account in Kansas for the funds related to Kansas clients, Attorney will need to get the consent of those clients to comply with Missouri's Rule 1.15(a).

QUESTION: Does Attorney, who is not licensed in Missouri, commit the unauthorized practice of law in Missouri when Attorney maintains an office and represents and advises clients in Missouri solely in the area of immigration law? ANSWER: Attorney may not maintain an office in Missouri for the purpose of representing and advising clients solely on immigration law. In order for Attorney to do so, it would be necessary for Attorney to become licensed in Missouri.

QUESTION: Attorney represents a client who had a fire at the client´s home. Attorney was retained on an hourly basis. The client paid a portion of the attorney´s fees, but has not made payments to Attorney for some time. The insurance company has issued a check payable to the client, Attorney, and some third parties. The client has asked Attorney to sign the check without payment. May Attorney refuse to sign the check unless Attorney is paid? ANSWER: Attorney may not refuse to sign the check without payment, if Attorney´s client will agree to placement of any DISPUTED funds in escrow. Attorney may not withhold Attorney´s signature in a manner which will prevent Attorney´s client from receiving UNDISPUTED funds.

QUESTION: Attorney obtained a verdict in favor of Attorney´s client and began collection efforts. Attorney has learned that a portion of the judgment has been paid to the Clerk´s office pursuant to garnishments. The money is being held in a non-interest bearing account pending an appeal. Attorney would like to have the money transferred into an interest bearing trust account. Is this ethical? ANSWER: Under Rule 4-1.15 it would be appropriate for Attorney to place these funds in a separate, interest bearing trust account. Such an account would be a non-IOLTA trust account, and the interest would go to Attorney´s client. Any time Attorney will hold funds, belonging to one client, of any significant amount for an extended period or substantial funds for a shorter period, this approach should be used. The amount of income to be generated, in relation to the costs (bank charges, legal fees, etc.) of maintaining a separate account will be a major factor in determining whether a separate account is appropriate.

QUESTION: Attorney represents a client in a workers" compensation case. Attorney has received a settlement offer, but is unable to locate the client. Attorney has hired a skip tracer, but efforts to find the client have so far been unsuccessful. Attorney would like to agree to the settlement in writing, get the check and the release from the defendant in the case and then hold on to them until Attorney can find the client. May Attorney do this? ANSWER: Attorney may not settle the case unless Attorney´s client agrees to the settlement or has previously given Attorney authorization which would include settlement on the proposed terms. If Attorney does settle the case for Attorney´s client, the settlement funds should be placed in a separate interest bearing trust account, with the interest going to the client, until the client is located.

QUESTION: Attorney represents a client in a slip and fall matter. During the course of representation, the client contacted Attorney about an unrelated loan that was delinquent. At the client´s request the Attorney sent a letter to the credit company agreeing to pay off the loan out of any settlement that may be obtained on behalf of the client. The client´s claim was settled and the amount of the loan is in Attorney´s trust account. The client has asked Attorney not to pay the credit company. What is Attorney´s ethical duty? ANSWER: Under the circumstances which Attorney has described, including Attorney´s letter to the credit company, Attorney may not disburse the disputed funds to the client, without the credit company´s consent. Attorney may hold the funds in Attorney´s trust account for a reasonable period of time to allow for the client and the credit company to come to a settlement. Attorney should notify Attorney´s client and the credit company that, if the client does not consent to full disbursement or if the client and the financial institution cannot come to some other agreement regarding disbursement, Attorney will file an interpleader action. Attorney should file the interpleader action within a reasonable period of time unless good faith efforts toward a resolution are in progress.

QUESTION: X was seeking representation for pending litigation involving a personal injury claim. X gave Attorney the file to review. Attorney reviewed the file and decided not to take X´s case. Attorney notified X that Attorney was not interested and requested that X make arrangements to pick up the file. X failed to respond to Attorney´s request. It has been more than a month and the file is still at Attorney´s office while the litigation is ongoing. What may Attorney do with the file? ANSWER: Attorney may return X´s file by personal delivery or by a mail or delivery service which has a tracking system. Attorney may not destroy X´s file. Attorney may make a copy at Attorney´s own expense for Attorney´s protection.

QUESTION: In 1983, Attorney received a $165 refund from a nursing home due to the death of a former client of Attorney´s firm. Attorney has been holding the funds in the trust account and all efforts to find any heirs have been totally exhausted. What should Attorney do? ANSWER: Attorney must continue to make any reasonable efforts to find the appropriate heir(s), if further leads arise. Otherwise, Attorney must hold the funds in a trust account until they escheat to the state under the statutes.

QUESTION: Attorney is holding settlement funds that are disputed between the client and a third party asserting a lien. The non-disputed funds have been distributed. May Attorney hold these funds in an interest bearing account. ANSWER: Attorney may hold the funds for a reasonable period of time. While Attorney holds the funds, they may be in a non-IOLTA interest bearing account as long as the interest goes to the person to whom the funds belong. However, Attorney should not continue to hold the funds if progress toward settlement is not being made. Under those circumstances, it will be necessary for Attorney to file an interpleader action. Attorney should advise both parties of Attorney´s intent to file such an action far enough in advance that they will still be able to settle and avoid the expenses of that action.

QUESTION: Attorney is a prosecuting attorney. Attorney´s office maintains several bank accounts. Account #1 is used for office expenses such as notary license and vehicle licenses. Account #2 is the account in which monies collected on restitution, bad checks (excluding fees) and taxes are deposited. This is an interest bearing account. Account #3 is the account in which fees collected from other attorneys for discovery, fees collected from the courts, reimbursements for depositions, fire investigation reports, etc. are deposited. Account #4 is the account in which all fees collected on bad checks and bad check cases are deposited. Do these accounts need to be IOLTA accounts? ANSWER: It appears that Accounts 1, 3 and 4 do not need to be IOLTA accounts. Account #2 should, under Rule 1.15, be an IOLTA account, assuming that there is no statutory provision which requires the interest from such an account to be deposited into the General Revenue Account.

QUESTION: Attorney is holding funds in the trust account which Client deposited with Attorney to pay off Client´s bills once they are compromised. Client now refuses to respond to Attorney. Attorney does not have authority to actually make payments. ANSWER: In the absence of an apparently legitimate claim against the specific funds Attorney holds, Attorney must hold the funds until Attorney receives instructions from Client or returns the funds to Client. Attorney must make all reasonable efforts to locate and obtain instructions from Client. If Attorney is ultimately unable to locate Client, Attorney must hold the funds until they escheat to the state. If it appears that the funds will be held for an indefinite period of time, they should be kept in a separate, non-IOLTA interest bearing trust account, with the interest accruing to the benefit of the Client. If there is an apparently legitimate claim against the specific funds Attorney holds, once Attorney believes Attorney has held the funds a reasonable period of time and has made reasonable efforts to communicate with Client, without success, Attorney should file an interpleader action and pay the disputed funds into court. Prior to taking that action, Attorney should attempt to notify Client of Attorney´s plans and any possible impact that such action might have on funds that would probably come to Client if it is resolved without an interpleader action.

QUESTION: Attorney received funds from the State Abandoned Property Division indicating that the funds were garnishment proceeds from a collection action Attorney handled. Attorney´s client is a corporation which has since dissolved and no successors can be located. Part of the funds would be payable to Attorney under the contingent fee contract. ANSWER: Attorney´s firm must hold the client´s funds in a trust account until a representative of the client, or other person with a legal claim to the funds, can be found. If no such person is found, the funds will eventually, once again, escheat to the state. The portion of the funds which represent Attorney´s fee may be disbursed to the firm if it is clear under a written contingent fee contract that Attorney´s firm is entitled to the funds. Because it is anticipated that Attorney will hold the funds for an extended period of time, Attorney should hold them in a separate, interest bearing account. The account should not be an IOLTA account. The interest should go to the person or people who ultimately receive the funds or it should escheat with the remainder of the funds. Attorney has an ongoing duty to make reasonable efforts to distribute the funds to the appropriate person or people.

QUESTION: Attorney represented a client in a workers compensation case. The client indicated an intent to pay a doctor out of the proceeds and the doctor sent Attorney an assignment, signed by the client. Attorney was not involved in the assignment and has made no assurances to the doctor. Now Attorney´s client is instructing Attorney not to pay any of the proceeds to the doctor. To whom should Attorney pay the funds? ANSWER: Attorney may pay the amount claimed by the doctor to Attorney´s client, but such payment is not required. The doctor may or may not have a legitimate claim under the assignment; that is a legal rather than ethical issue. The rules do not require Attorney to take action which may subject Attorney to personal liability. However, Attorney should not pay the disputed amount to the doctor, unless Attorney´s client consents. If Attorney does not pay the disputed amount to Attorney´s client, Attorney may allow a reasonable period of time for the two to come to an agreement and Attorney may attempt to facilitate such an agreement. If they have not reached an agreement after a reasonable period of time, Attorney should interplead the disputed amount. In the interim, Attorney should pay all undisputed amounts to Attorney´s client.

QUESTION: Attorney is the trustee in bankruptcy for a law firm that has dissolved. The trust account of the law firm still contains a significant sum of money. The owners of the funds are unknown and no one has claimed them. What should Attorney do with these funds? ANSWER: The funds must be held in a trust account until they are claimed or they escheat to the state under the Missouri unclaimed property law. Formal Opinion 118 generally addresses this topic. Under these circumstances, the funds should be held in an IOLTA account until they are cliamed or escheat.

QUESTION: Attorney settled a case for Client. Attorney distributed some of the funds but is holding the remaining funds. Client´s health insurer has notified Attorney that it will provide information regarding its position on subrogation. Attorney has not heard from the insurer for some time. The health insurer has no lien to the best of Attorney´s knowledge. May Attorney distribute the funds according to Client´s instructions? ANSWER: If Attorney was not involved in any arrangement between Client and the health insurer regarding reimbursement, Attorney may disburse the funds in accordance with Client´s directions at any time without violating the Rules of Professional Conduct.

QUESTION: Attorney was hired by a woman to represent her in a modification action. The woman´s current husband also signed the contract with Attorney. The woman and her husband obtained the advance fee payment from her husband´s relatives. The representation is over. The client has asked that the unused funds be refunded to her. The relatives have requested that the unused funds be refunded to them. ANSWER: Attorney may not refund the fee to Attorney´s client or her in-laws as long as both are claiming an interest in those funds. Attorney should notify both that Attorney can pay out the funds in the manner they jointly authorize if they reach an agreement. Attorney may not represent either of them in the process of reaching an agreement, but Attorney may facilitate communications. If they do not reach an agreement within a reasonable time, Attorney must file an interpleader action regarding the funds. Attorney should notify Attorney´s client and her in-laws of Attorney´s intention to do this in advance and of the possibility that the costs of the interpleader action will diminish the eventual refund.

QUESTION: Attorney is holding funds which a financial institution claims but which the client will apparently not authorize Attorney to disburse directly to the financial institution. Attorney was involved in making the arrangement with the financial institution under which the financial institution asserts its claim to the funds. What should Attorney do? ANSWER: Attorney should seek to obtain consent from Attorney´s client. Attorney should notify Attorney´s client that, if the client does not consent to full disbursement or if the client and the financial institution cannot come to some other agreement regarding disbursement, Attorney will file an interpleader action. Attorney should file the interpleader action within a reasonable period of time unless good faith efforts toward a resolution are in progress.

QUESTION: Attorney´s practice exclusively involves matters in which Attorney will be paid after the services are performed, except criminal matters in which a flat fee will be paid in advance. Attorney does not anticipate receiving settlement funds which Attorney will hold prior to disbursement. Must Attorney establish a trust account? ANSWER: If Attorney´s practice will not involve receiving fees in advance except in flat fee criminal cases, Attorney will not be required to establish a trust account under Rule 4-1.15. Attorney will have to provide annual notice at the time Attorney pays Attorney´s annual enrollment fee that Attorney believes Attorney is exempt under Rule 4-1.15(e)(1).

QUESTION: Attorney represented a plaintiff in a personal injury case. The case was settled and the defendant agreed to pay court costs. Attorney has received a costs refund check and mailed it to Attorney´s client. The check has been returned with no forwarding address information. What should Attorney do with the refund? ANSWER: Attorney must make all reasonable efforts to locate Attorney´s client. If Attorney is unable to locate Attorney´s client, Attorney must deposit and maintain the funds in Attorney´s trust account. If the check is made out to Attorney´s client and Attorney does not have authority to endorse it, Attorney should notify the clerk´s office of the information after Attorney has made all reasonable efforts to locate Attorney´s client.

QUESTION: Attorney is a prosecuting attorney and asks about the applicability of Rule 4-1.15 to funds received by the prosecutor´s office. The funds include restitution and payment of delinquent taxes. ANSWER: Under Rule 4-1.15 , Attorney must maintain one or more separate trust accounts as prosecuting attorney for the funds of third persons. This account would include any payments Attorney receives as restitution. This account should be an IOLTA account pursuant to Rule 1.15(d) unless the cost of the account would outweigh the interest produced by the account. However, funds Attorney receives on behalf of the Department of Revenue or any other state agency should be kept in a separate trust account with interest payable to the appropriate state entity. The state monies may be commingled as long as the interest will all ultimately be deposited into the same state fund. Attorney may wish to contact the IOLTA office if Attorney needs further information about the IOLTA program. The address is: P.O. Box 63, Jefferson City, MO 65102. The telephone number is: 573-634-8117.

QUESTION: Attorney asks for clarification of opinion 950071 regarding payments to a third party from the proceeds of a case. ANSWER: Rule 1.15(c) of Supreme Court Rule 4, the Rules of Professional Conduct, governs the conduct of an attorney who is in possession of funds in which the client and a third party claim an interest. If a third party claims an interest, Attorney must comply with that rule. Informal advisory opinion 950071, and others rendered before and since, involve situations where either the attorney has been involved in an agreement made or ratified by the client for the third party to be paid from any settlement or recovery, or where the third party has perfected a lien or demonstrated an apparently valid claim on the proceeds such that the attorney may be held personally liable to the third party. Under these circumstances the attorney is not committing an ethical violation by withholding the disputed amount from the client. In other circumstances, an attorney is not ethically prohibited from paying the money to the client and accepting the legal consequences including the possibility of being held personally liable to the third party.

QUESTION: Attorney represented a client in a workers compensation case. The client obtained medical treatment without authorization from the employer or insurer. The employer is denying liability for these bills. The client has since died leaving a minor child who is the sole beneficiary. ANSWER: If Attorney did not participate in the formation of an agreement that the medical providers would be paid from the proceeds of the workers compensation case and there are no valid liens or assignments which would make Attorney liable for the claims of the medical providers if they are not paid from the proceeds, Attorney may distribute the proceeds directly to the current client or according to the client´s directions. However, if Attorney did participate in the formation of an agreement, Attorney may not pay the proceeds to the client. If the client and the medical providers cannot come to an agreement within a reasonable period, Attorney will have to interplead the disputed funds. If did not participate in formation of an agreement but there is a lien or assignment that Attorney believes is arguably valid that would subject Attorney to personal liability for payment of the funds, Attorney may pay out the funds according to the client´s direction or Attorney may interplead the funds.

QUESTION: Attorney represented a client in a personal injury case. Attorney assisted the client in arrangements with health care providers that they would be paid out of the settlement or judgment. Now, the case has been settled and the client does not want to pay the health care providers. ANSWER: In light of Attorney´s involvement in representing to the health care providers that they would be paid out of the proceeds of the settlement, Attorney may not disburse the disputed funds to Attorney´s client. However, Attorney may not pay the disputed funds to the health care providers contrary to the client´s instructions. Attorney may hold the funds in Attorney´s trust account for a reasonable period of time to allow for the client and health care providers to resolve this dispute. If the dispute is not resolved within a reasonable period of time, Attorney must file an interpleader action to present the legal issue to the court for determination.

QUESTION: Attorney represents a client in a case that has been resolved through arbitration. A company claims that a portion of the award was for that company. Attorney is holding the disputed amount in Attorney´s trust account. What should Attorney do? ANSWER: Once a reasonable time for the various parties to resolve their dispute over the money has passed, Attorney has no option other than to interplead the funds. Perhaps when the disputing parties are advised of this fact and that the costs associated with the interpleader will use a significant portion of the funds, they will be able to resolve the dispute.

QUESTION: Attorney proposes to pay the treating physician out of the settlement. This physician would have been an expert witness if the case had gone to trial. The physician accepted the patient on Attorney´s recommendation. A judgment has been entered in small claims court against the client/patient and the lawyer´s trust account is about to be garnished. The client has not consented to payment to the physician. ANSWER: Under Rules 4-1.5(d) and 4-1.15(a)-(c), Attorney may only pay the treating physician out of settlement funds if the client consents. If the client does not consent and the physician continues to assert a claim, Attorney must interplead the funds. Attorney must not allow funds to be removed from the trust account without the consent of the client unless it is pursuant to a court order in a matter in which the client´s interests were represented or in which the client chose not to be represented.

QUESTION: Attorney does not have a trust account. Attorney has taken a case that will involve payment of a retainer. Attorney will bill against the retainer. Attorney anticipates billing the full amount of the retainer in a very short time. Must Attorney set up an IOLTA account? ANSWER: Attorney must establish a trust account. If it is interest bearing, it must be an IOLTA account unless the funds of the individual client can be segregated so that the interest can be paid to that client. Even for a short period of time, the funds may not be in the operating account or any account other than a trust account. Once Attorney has earned the fee and billed the client and the client has had sufficient time to notify Attorney of any objection to the fee, Attorney may transfer the funds into the operating account.

QUESTION: Attorney has a trust account which has been in existence for a large number of years. The trust account contains a significant amount of money for which the firm cannot account. Some of the funds cannot be attributed to a particular file, although there are some records which indicate that they do belong to a particular file. For the remainder of the funds, there is no record at all and it is possible that the money relates to amounts that should have been disbursed to the firm. What should the firm do with these funds? ANSWER: The amount which can be attributed to files, must be placed in a separate, interest bearing trust account and Attorney must continue to attempt to make appropriate disbursement of those funds. Attorney should maintain an accounting of the interest attributable to each file so that it can be disbursed once the client is identified and the funds are disbursed. The funds which are not attributable to a file, may not be disbursed to the firm unless the firm can establish that they are firm funds. In the absence of clear evidence to the contrary, funds in the trust account are presumed to be client funds. These funds should also be placed in a separate, trust account. The funds may not be distributed to the firm unless it is established that they are firm funds. The firm should maintain clear documentation to explain all of the steps taken, including the steps involved in the ultimate disbursement.

QUESTION: Attorney´s client has failed to respond to correspondence over several years. Attorney´s accountant says Attorney must now open a separate account for the funds held or report the money as Attorney´s own income. What should Attorney do? ANSWER: Under Rule 4-1.15, Attorney must not treat the funds as income. The funds must be held in a trust account. From the perspective of Rule 4-1.15, it does not matter whether the funds are held in a general office trust account such as an IOLTA account, or a separate trust account unless the funds are a substantial amount. However, the funds should not be held in a separate account if the expenses associated with maintaining the separate account will reduce the funds available to the client.