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Prof Responsibility • Administrative
PR#049
Legal Definition
Under Rule 1.15(d), once there is no dispute as to where funds go, undisputed funds or property that the client or third person is entitled to receive must be paid out promptly.
Plain English Explanation
Imagine you've just sold your house, and your real estate agent is holding the money in a special escrow account. Once all the paperwork is done and everyone agrees on who gets what, you'd expect the agent to hand over your share right away. You wouldn't want them sitting on your money for weeks or months. This is exactly what Rule 1.15(d) requires of lawyers.
When a lawyer holds money or property for a client or someone else, it's not just a favor - it's a serious responsibility. The lawyer is like a temporary guardian of these assets. But unlike a dragon hoarding treasure, lawyers aren't supposed to keep this money or property any longer than necessary.
The key word in this rule is "promptly." Once there's no question about who should receive the funds or property, the lawyer needs to act quickly to distribute them. It's not okay for a lawyer to drag their feet or come up with excuses for delay. This rule is all about respecting other people's property rights and maintaining trust in the legal profession.
But what does "promptly" really mean? It doesn't necessarily mean "immediately," but it does mean without unnecessary delay. A lawyer might need a little time to process paperwork or make sure all the i's are dotted and t's are crossed. But they can't just let things sit because they're busy with other cases or because it's inconvenient.
This rule applies not just to clients, but to any third person who has a right to the money or property. For example, if a lawyer is holding settlement funds and part of that money is supposed to go to the client's medical provider, the lawyer needs to promptly pay the provider once the amount is no longer in dispute.
It's important to note that this rule kicks in when there's no longer any dispute. If there's still a disagreement about who gets what, other rules apply to keep the disputed portion safe until the disagreement is resolved.
When a lawyer holds money or property for a client or someone else, it's not just a favor - it's a serious responsibility. The lawyer is like a temporary guardian of these assets. But unlike a dragon hoarding treasure, lawyers aren't supposed to keep this money or property any longer than necessary.
The key word in this rule is "promptly." Once there's no question about who should receive the funds or property, the lawyer needs to act quickly to distribute them. It's not okay for a lawyer to drag their feet or come up with excuses for delay. This rule is all about respecting other people's property rights and maintaining trust in the legal profession.
But what does "promptly" really mean? It doesn't necessarily mean "immediately," but it does mean without unnecessary delay. A lawyer might need a little time to process paperwork or make sure all the i's are dotted and t's are crossed. But they can't just let things sit because they're busy with other cases or because it's inconvenient.
This rule applies not just to clients, but to any third person who has a right to the money or property. For example, if a lawyer is holding settlement funds and part of that money is supposed to go to the client's medical provider, the lawyer needs to promptly pay the provider once the amount is no longer in dispute.
It's important to note that this rule kicks in when there's no longer any dispute. If there's still a disagreement about who gets what, other rules apply to keep the disputed portion safe until the disagreement is resolved.
Hypothetical
Hypo 1: Bob, an attorney, settles a case for his client Sam for $100,000. After deducting his agreed-upon 30% fee, Bob is supposed to send Sam $70,000. Bob deposits the settlement check into his trust account but waits three months to send Sam the money, claiming he's too busy with other cases. Result: Bob has violated Rule 1.15(d). Once the fee was no longer in dispute, Bob should have promptly sent Sam the $70,000. Waiting three months due to being busy is not considered prompt distribution.
Hypo 2: Bob receives a $50,000 settlement for Sam. $20,000 is owed to Sam's doctor, which Sam doesn't dispute. Bob immediately sends Sam $30,000 but waits two weeks to send the doctor's payment because he misplaced the doctor's mailing address. Result: Bob properly handled Sam's portion but violated Rule 1.15(d) regarding the doctor's payment. Bob should have made more effort to promptly locate the doctor's address and send the payment.
Hypo 3: Bob holds $10,000 in his trust account from a real estate transaction. The funds are to be split equally between Sam and Tim, but they initially disagree on the split. After a week, Sam and Tim reach an agreement. Bob sends out the $5,000 checks to each party the next day. Result: Bob has complied with Rule 1.15(d). He held the funds while there was a dispute, and once the dispute was resolved, he promptly distributed the money.
Hypo 2: Bob receives a $50,000 settlement for Sam. $20,000 is owed to Sam's doctor, which Sam doesn't dispute. Bob immediately sends Sam $30,000 but waits two weeks to send the doctor's payment because he misplaced the doctor's mailing address. Result: Bob properly handled Sam's portion but violated Rule 1.15(d) regarding the doctor's payment. Bob should have made more effort to promptly locate the doctor's address and send the payment.
Hypo 3: Bob holds $10,000 in his trust account from a real estate transaction. The funds are to be split equally between Sam and Tim, but they initially disagree on the split. After a week, Sam and Tim reach an agreement. Bob sends out the $5,000 checks to each party the next day. Result: Bob has complied with Rule 1.15(d). He held the funds while there was a dispute, and once the dispute was resolved, he promptly distributed the money.
Visual Aids
Related Concepts
In California, can an attorney hold a client's materials hostage as leverage to get paid?
In California, how long must a lawyer preserve records of client funds or other property?
What is a lawyer's Duty to Keep Client Property and Records?
What must a lawyer do if some of the property or funds they possess are in dispute with a client?
