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ER 1.15. Safekeeping Property

Arizona Revised Statutes AnnotatedRules of the Supreme Court of ArizonaEffective: September 1, 2019

Arizona Revised Statutes Annotated
Rules of the Supreme Court of Arizona (Refs & Annos)
V. Regulation of the Practice of Law
D. Lawyer Obligations
Rule 42. Arizona Rules of Professional Conduct
Client-Lawyer Relationship
Effective: September 1, 2019
A.R.S. Sup.Ct.Rules, Rule 42, Rules of Prof.Conduct, ER 1.15
ER 1.15. Safekeeping Property
Currentness
(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of five years after termination of the representation.
(b) A lawyer may deposit the lawyer's own funds in a client trust account only for the following purposes and only in an amount reasonably estimated to be necessary to fulfill the stated purposes:
(1) to pay service or other charges or fees imposed by the financial institution that are related to operation of the trust account; or
(2) to pay any merchant fees or credit card transaction fees or to offset debits for credit card chargebacks.
(3) Earned fees and funds for reimbursement of costs or expenses may be deposited into a trust account if they are part of a single credit card transaction that also includes the payment of advance fees, costs or expenses and the lawyer does not use a credit card processing service that permits the lawyer to direct such funds to the lawyer's separate business account. Any such earned fees and funds for reimbursement of costs or expenses must be withdrawn from the trust account within a reasonable time after deposit.
(c) A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.
(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 between the client and the third person, 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 and, upon request by the client or third person, shall promptly render a full accounting regarding such property.
(e) When in the course of representation a lawyer possesses property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer. The lawyer shall promptly distribute any portions of the property as to which there are no competing claims. Any other property shall be kept separate until one of the following occurs:
(1) the parties reach an agreement on the distribution of the property;
(2) a court order resolves the competing claims; or
(3) distribution is allowed under section (f) below.
(f) Where the competing claims are between a client and a third party, the lawyer may provide written notice to the third party of the lawyer's intent to distribute the property to the client, as follows:
(1) The notice shall be served on the third party in the manner provided under Rules 4.1 or 4.2 of the Arizona Rules of Civil Procedure, and must inform the third party that the lawyer may distribute the property to the client unless the third party initiates legal action and provides the lawyer with written notice of such action within 90 calendar days of the date of service of the lawyer's notice.
(2) If the lawyer does not receive such written notice from the third party within the 90-day period, and provided that the disbursement is not prohibited by law or court order, the lawyer may distribute the funds to the client after consulting with the client regarding the advantages and disadvantages of disbursement of the disputed funds and obtaining the client's informed consent to the distribution, confirmed in writing.
(3) If the lawyer is notified in writing of an action filed within the 90-day period, the lawyer shall continue to hold the property separate unless and until the parties reach an agreement on distribution of the property, or a court resolves the matter.
(4) Nothing in this rule is intended to alter a third party's substantive rights.

Credits

Amended June 9, 2003, effective Dec. 1, 2003; June 8, 2004, effective Dec. 1, 2004. Amended on emergency basis effective Jan. 1, 2009. Adopted on a permanent basis and amended effective Sept. 3, 2009. Amended Sept. 2, 2010, effective Jan. 1, 2011; Aug. 28, 2013, effective Jan. 1, 2014.
17A Pt. 2 A. R. S. Sup. Ct. Rules, Rule 42, Rules of Prof. Conduct, ER 1.15, AZ ST S CT RULE 42 RPC ER 1.15
The Code of Judicial Administration is current with amendments received through 1/1/21. All other State Court Rules are current with amendments received through 2/1/21.
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