Ohio Board Advisory Opinion Op 07-007

The Supreme Court of Ohio
BOARD OF COMMISSIONERS ON GRIEVANCES AND DISCIPLINE
65 SOUTH FRONT STREET, 5TH FLOOR, COLUMBUS, OH 43215-3431
(614) 387-9370 (888) 664-8345 FAX: (614) 387-9379
www.sconet.state.oh.us
OFFICE OF SECRETARY
OPINION 2007-7
Issued December 7, 2007
[Not current-subsequent rule amendments to Prof. Cond. Rule 1.15(d) and Comment [4] thereto
of the Ohio Rules of Professional Conduct, eff. 1/1/2010.]
SYLLABUS: A lawyer’s duty of safekeeping funds in the lawyer’s possession
extends not only to clients but also to third persons. A lawyer has an ethical duty
of safekeeping funds for a third person when the lawyer knows a third person has
a lawful claim to funds in the lawyer’s possession. Not every claim of a third
person triggers a lawyer’s safekeeping duty, only a lawful claim that a lawyer
knows of is an interest subject to protection under Rule 1.15. Examples of lawful
claims are provided in this opinion.
When there is no dispute as to funds in a lawyer’s possession, the lawyer’s
ethical duty under Rule 1.15(d) is to promptly notify and deliver the funds to
which a client or third person is entitled.
When a lawyer knows there is a dispute between a client and a third person who
has a lawful claim under applicable law to the funds in the lawyer’s possession,
the lawyer’s ethical duty under Rule 1.15(e) is to notify both the client and the
third person and to hold the disputed funds in a trust account until the dispute is
resolved. The lawyer must promptly deliver all portions of funds that are not
disputed.
When a lawyer is unclear whether a third person has a lawful claim and the client
is disputing the third person’s claim, the lawyer’s ethical duty is to notify both the
client and the third person and hold the disputed funds in a trust account until the
dispute is resolved. The lawyer must promptly deliver all portions of funds that
are not disputed.
When a lawyer knows a third person’s claim is not a lawful claim, a lawyer’s
ethical duty is to notify the client and to promptly deliver the funds to the client.
Ideally, a lawyer will try to resolve any known disputes between a client and a
third person before disputed funds come into the lawyer’s possession. But, when
a dispute arises as to funds in a lawyer’s possession, a lawyer should encourage
the client and the third person to resolve the dispute through discussion. If
appropriate, a lawyer may suggest to the client and the third person that they
mediate or arbitrate the dispute. A lawyer should not unilaterally assume to

Op. 2007-7 2
arbitrate a dispute between a client and a third person. If efforts among the
client, the third person, and the lawyer do not resolve the dispute and there are
substantial grounds for the dispute, a lawyer may file an interpleader action
asking a court to resolve the dispute.
OPINION: This opinion addresses a lawyer’s ethical duties as to safekeeping
funds in the lawyer’s possession when a third person claims an interest.
1. Under Rule 1.15(d) and (e), when does a lawyer have an ethical
duty of safekeeping funds in the lawyer’s possession for a third
person claiming interest in the funds?
2. Under Rule 1.15(d) and (e), when a dispute arises what are a
lawyer’s safekeeping duties to a client and a third person claiming
interest in funds in the lawyer’s possession and how should a
dispute be resolved?
Introduction
A lawyer’s duty of safekeeping funds in the lawyer’s possession extends not only
to clients but also to third persons. Upon adoption of Rule 1.15(d) and (e) of the
Ohio Rules of Professional Conduct, effective February 1, 2007, this duty is
axiomatic.
Ohio lawyers seek clarification of when the duty of safekeeping funds for third
persons arises and how disputes between clients and third persons regarding
funds in a lawyer’s possession should be resolved. Proceeds of a personal injury
settlement or judgment are a common example of funds that come into a
lawyer’s possession during representation of a client for which disputes may
arise.
Applicable Rules of Professional Conduct
Rule 1.15 Safekeeping Funds and Property
(d) Upon receiving funds or other property in which a
client or third person has an interest, a lawyer shall promptly notify
the client or third person. Except as stated in this rule or otherwise
permitted by law or by agreement with the client or a third person,
confirmed in writing, a lawyer shall promptly deliver to the client or
third person any funds or other property that the client or third
person is entitled to receive. Upon request by the client or third
person, the lawyer shall promptly render a full accounting regarding
such funds or other property.

Op. 2007-7 3
(e) When in the course of representation a lawyer is in
possession of funds or other property in which two or more
persons, one of whom may be the lawyer, claim interests, the
lawyer shall hold the funds or other property pursuant to division (a)
of this rule until the dispute is resolved. The lawyer shall promptly
distribute all portions of the funds or other property as to which the
interests are not in dispute.
Comment [4] to Rule 1.5 is also pertinent to this opinion.
Division(e) also recognizes that third parties may have lawful claims
against specific funds or other property in a lawyer’s custody, such
as a client’s creditor who has a lien on funds recovered in a
personal injury action. A lawyer may have a duty under applicable
law to protect such third-party claims against wrongful interference
by the client. In such cases, when the third-party claim is not
frivolous under applicable law, the lawyer must refuse to surrender
the property to the client until the claims are resolved. A lawyer
should not unilaterally assume to arbitrate a dispute between the
client and the third party, but, when there are substantial grounds
for dispute as to the person entitled to the funds, the lawyer may file
an action to have a court resolve the dispute.
A lawyer’s safekeeping duties under Rule 1.15(d) and (e)
A lawyer is required by Rule 1.15(d) to do the following: (1) to promptly notify a
client or third person claiming an interest in the funds, upon receiving the funds;
2) to promptly deliver the funds which a client or third person is entitled to
receive; and 3) to render a full accounting when requested by a client or third
person. A lawyer is required by Rule 1.15(e) to hold disputed funds in a trust
account until entitlement to the funds is resolved.
Under Rule 1.15(a) there are three exceptions to the duty to promptly deliver the
funds in a lawyer’s possession to a client or a third person: 1) the exceptions
stated in the rule; 2) the exceptions permitted by law; and 3) the exceptions
permitted by agreement with the client or third person, confirmed in writing.
A determinative issue for a lawyer is what constitutes an “interest” that triggers a
lawyer’s safekeeping duties to a third person.
The rule does not define “interest,” but Comment [4] to Rule 1.15 provides insight
into the meaning of “interest” and the application of the rule. “[T]hird parties may
have lawful claims against specific funds or other property in a lawyer’s custody,
such as a client’s creditor who has a lien on funds recovered in a personal injury
action. A lawyer may have a duty under applicable law to protect such third
party-claims against a wrongful interference by the client. In such cases, when

Op. 2007-7 4
the third-party claim is not frivolous under applicable law, the lawyer must refuse
to surrender the property to the client until the claims are resolved.” [Emphasis
added].
ABA Comment [4] to ABA Rule 1.15 is identical to Ohio’s Comment [4] to Rule
1.15. Professors Hazard and Hodes state that use of the phrases “lawful claims”
and “duty under applicable law” “suggest that the third party must have a
matured legal or equitable claim, such as a lien on specific funds, in order to
trigger the lawyer’s duty to hold the funds apart from either claimant, pending
resolution of the dispute.” Geoffrey C. Hazard, Jr. & W. William Hodes, The Law
of Lawyering, §19.6 (3d ed. Supp. 2005-2).
This Board’s view of the meaning of an “interest” sufficient to trigger safekeeping
duties under Ohio’s Rule 1.15 is guided by Comment [4]. A lawful claim of a third
person against specific funds in a lawyer’s custody that is not frivolous under
applicable law is an interest subject to a lawyer’s ethical duty of safekeeping for
which a lawyer may have a duty under applicable law to protect. In short, a
lawful claim of a third person to specific funds in a lawyer’s possession is an
“interest” for purposes of Rule 1.15.
A third person’s lawful claim is an “interest” subject to safekeeping
Not every claim of a third person triggers a lawyer’s safekeeping duty, only a
lawful claim that a lawyer knows of is an interest subject to protection under Rule
1.15. “ ‘[K]nows’ denotes actual knowledge of the fact in question. A person’s
knowledge may be inferred from circumstances.” Rule 1.0(g): Terminology.
What constitutes a lawful claim is a matter of substantive law. Examples of
lawful claims of third persons subject to safekeeping by a lawyer are as follows.
 A lawful claim includes a valid statutory subrogation right as to the specific
funds in the lawyer’s possession.
 A lawful claim includes a valid judgment lien or other order of a court
regarding the specific funds in the lawyer’s possession.
A lawyer as an officer of the court is required to comply with court
orders. As required by Rule 3.4(c), a lawyer shall not ”knowingly
disobey an obligation under the rules of a tribunal, except for an open
refusal based on a good faith assertion that no valid obligation exists.”
 A lawful claim includes a written agreement signed by a client promising
payment or authorizing the lawyer to make payment to the medical
provider from the proceeds of a settlement or judgment. These
agreements are known by various names, such as assignments, security
agreements, or a doctor’s lien.

Op. 2007-7 5
See Hsu v. Parker (1996), 116 Ohio App.3d 629, 633; Roselawn
Chiropractic Ctr., Inc. v. Allstate Ins. Co., 160 Ohio App.3d 297, 301,
2005-Ohio-1327.
 A lawful claim includes a letter from a lawyer to a medical provider
promising to uphold the client’s agreement to pay the medical provider for
services from proceeds of a settlement or judgment. These letters are
known as letters of protection. These letters in essence promise to honor
an assignment made by a client, or as sometimes stated are said to honor
a doctor’s lien.
See Solon Family Physicians, Inc. v. Buckles (1994), 96 Ohio App.3d
460, 462-63. See also, OhioSupCt., Bd Commr’s on Grievances &
Discipline, CPR Op. 95-12 (1995).
 A lawful claim includes a written agreement between an insured individual
and a health-benefits provider, entered into prior to the payment of
medical benefits, to reimburse the health benefits provider for any amount
recovered through settlement or satisfaction of judgment upon claims
arising from a third party’s act.
See Northern Buckeye Educ. Council Group Health Benefits Plan v.
Lawson, 103 Ohio St.3d 188, 192, 2004-Ohio-4886.
 A lawful claim includes a secured claim by a creditor that is specific to the
funds in a lawyer’s possession. It is not a lawyer’s responsibility to pay
general unsecured creditors of a client, including judgment creditors who
have not attached or garnisheed the funds.
See Comment [4] to Rule 1.15 which provides as an example of a
lawful claim, a lien by a creditor on funds recovered in a personal injury
action.
This Board’s view is that a claim by a creditor must be a secured claim
and it must be specific to the funds in the lawyer’s possession in order
to be subject to a lawyer’s safekeeping under Rule 1.15. It is
implausible that a lawyer would be required to protect all claims of all
creditors of a client. A claim by an unsecured creditor that is not
specific to the funds in the lawyer’s possession is not a Rule 1.15
“interest” in the funds in the lawyer’s possession.
Advice offered by other states as to the application of Rule 1.15
For purposes of understanding how other states approach application of the duty
of safekeeping funds of third persons, the views of other states are reviewed.

Op. 2007-7 6
The Connecticut Bar Association advises there are four exceptions to the
principle that a lawyer has a constitutional obligation to deliver property of the
client to the client, on demand, despite third-party claims: (a) If the lawyer knows
of a valid judgment concerning disposition of the property; (b) If the lawyer knows
of a valid statutory or judgment lien against the property; or (c) If the lawyer
knows of a letter of protection or similar obligation that is both: (i) directly related
to the property held by the lawyer; and (ii) an obligation specifically entered into
to aid the lawyer in obtaining the property; (d) The lawyer knows of a written
assignment, signed by the client, conveying an interest in the funds or other
property to another person or entity. Connecticut Bar Assn., Informal Op. 01-08
(2001) (Revising Informal Opinions 95-20 and 99-6).
The District of Columbia Bar advises that “[i]n general, a ‘just claim’ that the
lawyer must honor pursuant to Rule 1.15 is one that relates to the particular
funds in the lawyer’s possession, as opposed to merely being (or alleged to be) a
general unsecured obligation of the client.” District of Columbia Bar, Op. 293
(Revised) (adopted 1999, revised 2000). The committee notes that problems
most commonly arise in the context of disbursement of settlement funds or
proceeds of a transaction. Several types of claims that are illustrative of “just
claims” that require the lawyer to give notice, make disbursements promptly
when there is no dispute, and safeguard funds in the event of a dispute until the
dispute is resolved are: 1) an attachment or garnishment arising out of a money
judgment against the client (or ordered judicially prior to judgment) and duly
served upon the lawyer, regardless of whether the attachment or garnishment is
related to the matter being handled by the lawyer; 2) a statutory lien that applies
to the proceeds of the suit being handled by the lawyer; 3) a court order relating
to the specific funds in the lawyer’s possession; 4) a contractual agreement
made by the client and joined in or ratified by the lawyer to pay certain funds in
the possession of the lawyer to a third party, regardless of whether such an
agreement arises from the matter being handled by the lawyer. Id.
The State Bar of Nevada notes that their rule does not create third party interests
in funds, but requires the lawyer to honor the interests that the law recognizes.
State Bar of Nevada, Formal Op. 31. The opinion does not list or identify all of
the claims that give rise to an “interest” but provides examples: a common law
assignment of such funds; an attachment or garnishment upon the specific funds,
a statutory attorney’s lien, and a court order relating to specific funds. The
opinion notes that a medical provider may have an interest when there has been
no formal assignment of the funds to the medical provider, such as obligations
created by a letter of protection. Other examples provided are medical liens,
hospital liens, and subrogation liens. Id.
The Utah State Bar renders the following advice in Op. 00-04 as to a lawyer’s
ethical duties to a third person who claims an interest in the proceeds of a
personal injury settlement or award received by the lawyer.

Op. 2007-7 7
When a lawyer receives funds or property and knows a third person
claims an interest in the funds or property, the lawyer must first
determine whether the third person has a sufficient interest to
trigger the duties stated in Rule 1.15(b). Only a matured legal or
equitable claim-such as a valid assignment, a judgment lien, or a
statutory lien-constitutes an interest within the meaning of Rule
1.15 so as to trigger duties to third persons under Rule 1.15. If no
such interest exists, the lawyer may disburse the funds or property
to the client. If such an interest exists, the lawyer must comply with
the duties stated in Rule 1.15. Where the client does not have a
good-faith basis to dispute the third person’s interest, the lawyer
must promptly notify the third person, promptly disburse any funds
or property to the third person to which that person is entitled, and
render a full accounting when requested. If the client has a good-
faith basis to dispute the third person’s interest, and instructs the
lawyer not to disburse the funds or property to the third person, the
lawyer must promptly notify the third person that the lawyer has
received the funds or property and then must protect the funds or
property until the dispute is resolved.
Utah State Bar, Op. 00-04 (2000).
Conclusion to Question One
In summary, the Board’s advice as to Question One is as follows.
A lawyer’s duty of safekeeping funds in the lawyer’s possession extends not only
to clients but also to third persons. A lawyer has an ethical duty of safekeeping
funds for a third person when the lawyer knows a third person has a lawful claim
to funds in the lawyer’s possession. Not every claim of a third person triggers a
lawyer’s safekeeping duty, only a lawful claim that a lawyer knows of is an
interest subject to protection under Rule 1.15. Examples of lawful claims are
provided in this opinion.
Safekeeping duties when a dispute arises
Comment [4] to Rule 1.15 explains a lawyer’s duties when a dispute arises
regarding a lawful claim of a third person. Although Comment 4 is set forth
earlier in this opinion, Comment [4] is set forth again to assist the reader of this
opinion.
Division (e) also recognizes that third parties may have lawful
claims against specific funds or other property in a lawyer’s
custody, such as a client’s creditor who has a lien on funds
recovered in a personal injury action. A lawyer may have a duty

Op. 2007-7 8
under applicable law to protect such third-party claims against
wrongful interference by the client. In such cases, when the third-
party claim is not frivolous under applicable law, the lawyer must
refuse to surrender the property to the client until the claims are
resolved. A lawyer should not unilaterally assume to arbitrate a
dispute between the client and the third party, but, when there are
substantial grounds for dispute as to the person entitled to the
funds, the lawyer may file an action to have a court resolve the
dispute.
Under Rule 1.15(d) and (e) a lawyer has an ethical duty not to give in to a client’s
demands for delivery of all of the funds to the client when a lawyer knows of a
third person’s lawful claim to the funds. This ethical duty respects the legal
duties a lawyer may have under applicable law to protect a third person’s interest
in funds.
Likewise, under Rule 1.15(d) and (e), a lawyer has an ethical duty not to give in
to a third person’s demands for delivery of funds when the lawyer knows that the
client disputes the lawful claim. This ethical duty respects the lawyer’s duty of
loyalty to a client.
A lawyer’s safekeeping duties under Rule 1.15 are summarized in these
guidelines. These guidelines arise from Rule 1.15(d) and (e) and Comment [4].
 When there is no dispute as to funds in a lawyer’s possession, the
lawyer’s ethical duty under Rule 1.15(d) is to promptly notify and deliver
the funds to which a client or third person is entitled.
 When a lawyer knows there is a dispute between a client and a third
person who has a lawful claim under applicable law to the funds in the
lawyer’s possession, the lawyer’s ethical duty under Rule 1.15(e) is to
notify both the client and the third person and to hold the disputed funds in
a trust account until the dispute is resolved. The lawyer must promptly
deliver all portions of funds that are not disputed.
 When a lawyer is unclear whether a third person has a lawful claim and
the client is disputing the third person’s claim, the lawyer’s ethical duty is
to notify both the client and the third person and hold the disputed funds in
a trust account until the dispute is resolved. The lawyer must promptly
deliver all portions of funds that are not disputed.
 When a lawyer knows a third person’s claim is not a lawful claim, a
lawyer’s ethical duty is to notify the client and to promptly deliver the funds
to the client.
Resolving disputes

Op. 2007-7 9
Resolution of a dispute is guided by both Rule 1.15(e) and Comment [4].
A lawyer’s duties as to resolution of a dispute require a lawyer to hold disputed
funds to which a third party has a lawful claim in a trust account until resolution of
the dispute, but a lawyer must disburse promptly the portion of the funds not in
dispute.
Ideally, a lawyer will try to resolve any known disputes between a client and a
third person before disputed funds come into the lawyer’s possession.
When a dispute arises as to funds in the lawyer’s possession, a lawyer should
encourage the client and the third person to resolve the dispute through
discussion. If appropriate, a lawyer may suggest to the client and the third
person that they mediate or arbitrate the dispute. A lawyer should not unilaterally
assume to arbitrate a dispute between a client and a third person.
If such efforts among the client, the third person, and the lawyer do not resolve
the dispute and there are substantial grounds for the dispute, a lawyer may file
an interpleader action asking a court to resolve the dispute.
Conclusion to Question Two
In summary, the Board’s advice as to Question Two is as follows.
When there is no dispute as to funds in a lawyer’s possession, the lawyer’s
ethical duty under Rule 1.15(d) is to promptly notify and deliver the funds to
which a client or third person is entitled.
When a lawyer knows there is a dispute between a client and a third person who
has a lawful claim under applicable law to the funds in the lawyer’s possession,
the lawyer’s ethical duty under Rule 1.15(e) is to notify both the client and the
third person and to hold the disputed funds in a trust account until the dispute is
resolved. The lawyer must promptly deliver all portions of funds that are not
disputed.
When a lawyer is unclear as to whether a third person has a lawful claim and the
client is disputing the third person’s claim, the lawyer’s ethical duty is to notify
both the client and the third person and hold the disputed funds in a trust account
until the dispute is resolved. The lawyer must promptly deliver all portions of
funds that are not disputed.
When a lawyer knows a third person’s claim is not a lawful claim, a lawyer’s
ethical duty is to notify the client and to promptly deliver the funds to the client.

Op. 2007-7 10
Ideally, a lawyer will try to resolve any known disputes between a client and a
third person before disputed funds come into the lawyer’s possession. But, when
a dispute arises as to funds in a lawyer’s possession, a lawyer should encourage
the client and the third person to resolve the dispute through discussion. If
appropriate, a lawyer may suggest to the client and the third person that they
mediate or arbitrate the dispute. A lawyer should not unilaterally assume to
arbitrate a dispute between a client and a third person. If efforts among the
client, the third person, and the lawyer do not resolve the dispute and there are
substantial grounds for the dispute, a lawyer may file an interpleader action
asking a court to resolve the dispute.
Advisory Opinions of the Board of Commissioners on Grievances and
Discipline are informal, nonbinding opinions in response to prospective
or hypothetical questions regarding the application of the Supreme Court
Rules for the Government of the Bar of Ohio, the Supreme Court Rules for
the Government of the Judiciary, the Ohio Rules of Professional Conduct,
the Ohio Code of Judicial Conduct, and the Attorney’s Oath of Office.