Concept

Why Safekeeping Rules Are Strict

Safekeeping funds and other property of clients

Safekeeping Client Funds and Property

Why Safekeeping Rules Are Strict

Model Rule 1.15(a) tells a lawyer what to do with other people's money: hold property of clients or third persons that is in the lawyer's possession in connection with a representation separate from the lawyer's own property.¹ The command is one of a lawyer's core fiduciary duties, and a fiduciary is someone who holds another person's money or interests in trust and must put them ahead of the holder's own. The property a lawyer receives for a client takes many forms: funds to be applied to a transaction, a payment in satisfaction of a judgment or settlement, an advance deposit against attorney's fees, valuable documents to be analyzed, or property of evidentiary value.²

Possession is what makes the duty hard to keep. A lawyer holding a client's settlement check has rent to pay and a payroll to meet, and the client's money sits within reach. The duty of loyalty speaks to exactly that conflict between the client's interests and the lawyer's own.³ Rule 1.15 settles the conflict ahead of time by taking away the choice: the lawyer must keep the property in a secure location and segregate those assets from the lawyer's own property.⁴

The rule's opening sentence also marks its boundaries. It protects property of clients or third persons, so funds held for someone other than the client, such as a lender awaiting payoff at a closing, must be kept apart as surely as a client's funds. It reaches only property held in connection with a representation, so the lawyer's own earnings and personal assets fall outside it.⁵

The duty is not confined to cash. Documents and other physical property of a client should be identified, cataloged, and held in a secure location physically separated from the lawyer's own property, and securities or other valuable or negotiable documents ordinarily belong in a bank safe deposit box maintained separately for client property.⁶

The rule's text names no intent and no harm. It asks one thing, whether the lawyer kept entrusted property apart from the lawyer's own, so the handling itself completes the violation, whatever the lawyer meant and whatever the client lost.⁷ A good motive therefore buys little. A lawyer who misappropriates unearned funds from the trust account, even meaning to replenish it and calling the withdrawal a 'loan,' meets one of the more severe disciplinary sanctions, presumptively disbarment, and improper withdrawal from a trust account is one of the shortest paths toward it.⁸ Carelessness without gain and the absence of client loss may still bear on which sanction fits, but they cannot undo a violation that the handling established.

Hypothetical Illustration

Alvarez receives a $40,000 settlement check payable to a client and, to save a trip to the bank, deposits it in the firm's operating account. Three days later Alvarez pays the client in full, and the client never notices the delay. Okafor, at the same firm, sends a client a bill for finished work; the client pays the undisputed invoice, and Okafor deposits the payment in the same operating account. Alvarez has violated the safekeeping rule even though no one lost a dollar and no one meant to take any, because the settlement money belonged to the client and sat in the lawyer's own account. Okafor has violated nothing, because the fee was earned and already belonged to the firm. Both checks went into the same account; ownership of the money alone decides whether the rule applies.

Strict separation does two jobs at once. It keeps the client's property identifiable as the client's, and it removes the occasion for the rationalization that the 'loan' label reveals: a lawyer whose own money and the client's never share an account never reaches the moment when borrowing from the client looks harmless.

The rest of Rule 1.15 builds on this opening command, and the sections that follow take its parts in turn: the trust account and what may go into it, other client property, record keeping, and the duties of notice, delivery, and accounting, then disputed property and the consequences of conversion.⁹

Safekeeping Client Funds and Property

Why Safekeeping Rules Are Strict

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