NOTE: The applicable statute has changed since the original publication date of this opinion. See Uniform Unclaimed Property Act, MCL 567.221, et sec, which creates a presumption that property is abandoned after three years. See the statute for exceptions. Additionally, the statue no longer requires that the beneficial owner is missing, therefore, property held beyond the statutory period may be remitted as unclaimed property.

RI-222

November 21, 1994

SYLLABUS

A lawyer who has sought to disburse funds to a client and has been unsuccessful in doing so because the client has failed or refused to cash the checks sent by the lawyer, must hold the funds for the client in an interest-bearing account.

The lawyer may be reimbursed from the funds held for the costs of contacting the client and seeking to disburse the funds, but the lawyer has the burden of demonstrating the reasonableness of the costs incurred.

References: MRPC 1.15(a); R-7; RI-38.

TEXT

A lawyer has sought to disburse settlement funds to a client in a multi-claimant lawsuit. With respect to previous fund distributions, the client received and cashed checks. As to the funds in question, the checks were not cashed. Eventually, owing to the age of the checks, they were no longer valid and the lawyer replaced them with a single check in the amount of the total of the stale checks. The single check along with an explanatory cover letter was mailed to the client by certified mail and the lawyer received the return receipt signed by the client. The client has not negotiated the check or communicated with the lawyer, and the check is stale. The lawyer inquires as to the ethical obligations under these circumstances.

MRPC 1.15(a) requires a lawyer to hold funds received on behalf of a client separate from the lawyer's own funds and to deposit them in an interest bearing account. See R-7.

RI-38 provides that funds being held for a missing client may be treated as abandoned property, and that if the client fails to make contact with the lawyer for a seven year period, the lawyer may turn the funds over to the State Board of Escheat. However, since the lawyer had received the signed return receipt form the client, the client cannot be considered missing and the lawyer is required to continue to carry out the fiduciary responsibilities to the client and to hold the funds in question for the client until the client's wishes with respect to the funds are conveyed to the lawyer. The lawyer might wish to write to the client one more time, by certified mail, and indicate that the funds are being held by the lawyer until the client advises what is to be done with the funds.

The lawyer may be reimbursed for the cost of contacting the client and seeking to disburse the funds but the lawyer has the burden of demonstrating the reasonableness of the costs incurred. RI-38.