What is a lawyer’s duty with regard to safekeeping property and funds?

On Behalf of | Feb 22, 2017 | Professional Malpractice Law

For consumers of legal services, one of the biggest areas of concern is money. How much will it cost to retain an attorney? Are the fees reasonable? How much money will the attorney take at the end of the case? How do I know that the attorney is taking good care of the money or property I leave in his or her care?

These are important questions, and ones to which consumers of legal services deserve answers and reassurance. The New Jersey Rules of Professional Conduct provide very clear principles regarding a lawyer’s duty to manage property and funds left in an attorney’s care. When an attorney fails to do so, it can mean significant financial loss for the client, and serious trouble for the lawyer.

Under Rule 1.15, attorneys are required to hold the property of clients and third parties separate from their own property. This is typically done by means of trust accounts maintained by a financial institution. Other property is supposed to be properly identified as belonging to a client or third party and appropriately safeguarded. Regardless of the property involved, attorneys are required to keep complete records to account for their safekeeping of the property.

Lawyers also have a duty to promptly notify those who have an interest in funds or other property they receive and hold in their care. Prompt delivery of funds and property to which a client or third person is entitled is required under Rule 1.15, though there may be certain exceptions.

One important aspect of the rule is that lawyers are bound to keep property separate from their own personal property when both the lawyer and another person claim interests in the property or when a dispute arises regarding these interests. The property is to be kept separate until a full accounting is made and the interests are severed or the dispute is resolved. Attorneys are also bound to abide by certain recordkeeping rules required by the courts.

In our next post, we’ll continue looking at this topic, and how an experienced legal malpractice attorney can help those who are financially harmed by an attorney who has mismanaged their funds or property.

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