Page 11 - JanuaryFebruary25 CBA Report

$500,000, belonging to a client, for
the not-so short time period of three
months, may not be subject to a profes-
sional misconduct charge in Ohio.4 But
does that attorney have any exposure to
a professional liability claim? Comment
7 to Prof. Cond. R. 1.15 states that “A
lawyer’s fiduciary duties are indepen-
dent of the lawyer’s employment at a
particular firm or the rendering of legal
services ...”
The Supreme Court of Georgia
addressed a lawyer’s fiduciary duties
regarding the handling of real estate
proceeds, although the question
presented arose in a slightly different
context. The Formal Advisory Board of
the State Bar of Georgia had rendered an
opinion on the following question: “May
a lawyer participate in a non-lawyer
entity created by the lawyer for the
purpose of conducting residential real
estate closings where the closing proceeds
received by the entity are deposited in a
non IOLTA interest bearing trust account
rather than an IOLTA account?” The
board concluded that because the closing
proceeds are not nominal in amount, but
are to be held for only a short period of
time, the funds must be deposited into an
IOLTA compliant account. The Supreme
Court of Georgia granted review of the
board’s proposed opinion.5
The Court adopted the board’s
opinion “to the extent it is in accord with
the rule that attorneys must place client
closing proceeds that are nominal or held
for a short period of time in an lOLTA
account. We clarify that closing proceeds
that are more than nominal in amount
or that will be deposited for more than
a short period of time must be placed in
a non-IOLTA interest-bearing account
with interest payable to the client.”6 This
holding has the force of law in Georgia.
During my first 20 years as counsel
to the CBA, I was fortunate to have trial
attorney Gates T. Richards as my mentor.
Gates, who is retired, was a longtime
member of both the Ethics and Griev-
ance Committees. We collaborated on
many CLE programs. When Gates
emphasized in his client trust account
lectures, “You could be sued for malprac-
tice! You could lose your law license! You
could face criminal charges!” even the
end-of-the-year CLE attendees, who were
sitting in the back row, looked up from
reading their newspapers!
Yes, safeguard your client’s funds.
Yes, maintain your IOLTA timely and
as required by the rules. No, don’t
commingle your funds with client funds.
But do consider, in each circumstance,
what your duty is regarding your handling
of those particular funds.
ETHICAL
QUANDARY?
Edwin W. Patterson III retired as General Counsel
for the CBA in 2021 and now serves on the Ethics
Committee.
1. Interest earned on funds deposited in an IOLTA, less
reasonable service charges, is remitted to the Treasurer
of State for a legal aid fund and does not benefit any
individual client. RC §4705.10 (A)(3) (a).
2. Prof. Cond. Rule 1.15 (h)(l ). (Emphasis added.)
3. Compare: Mann v. Skidmore, 2 Misc.3d 50, 774 N.Y.S.2d
252 (2003).
4. But see: In re Hilson, 448 Mass. 603,615, 863 N.E.2d
483,493 (2007): “Because the respondent had reason
to know that he would be holding the money in trust
for a significant period of time pending an appeal, he
should not have held the money in his IOLTA account,
but in an interest-bearing account.”
5. Formal Advisory Opinion 04-01, 280 Ga. 227,626 S.E.2d
480 (2006).
6. 280 Ga. at 229, 626 S.E.2d at 482. (Emphasis added.)
Advisory opinions which are approved or modified
by the Supreme Court of Georgia are “binding on all
members of the State Bar.” State Bar Rule 4-403 (e)
The CBA is proud to offer ethical
guidance to Greater Cincinnati
attorneys through our Ethics
Committee's hotline.
January
Richard A. Magnus 513-731-2889
Michael R. Schmidt 513-708-3900
Theresa Bryans 614-906-5551
February
Samuel M. Duran 513-357-9378 (O)
513-484-2594 (C)
Jon Sinclair 513-621-3200
The members of the CBA Ethics & Professional
Responsibility Committee listed above are available
to help you interpret your obligations under the Ohio
Rules of Professional Conduct. Questions posed
should be framed hypothetically and should relate
to your own prospective conduct. The committee
also accepts requests for written opinions.
THE REPORT | January/February 2025 | CincyBar.org 11