What must a law firm do with client funds in trust when the client, a now-dissolved corporation, cannot be located?

Plain-English summary

A law firm obtained a judgment for a foreign corporation, and the defendant tendered several payments that the firm forwarded to the client. The corporation was then dissolved, after which additional payments arrived. Unable to locate any representative of the dissolved corporation, the firm held a sum belonging to it and asked the committee about its obligations.

The committee anchored the answer in Rule 9-102. Subsection (a) requires all client funds to be deposited in a separate, identifiable trust account in the state where the office is located; subsection (c) requires the firm to promptly notify the client of receipt of funds, keep complete records, and render appropriate accounts (citing Opinion 703). The firm should deposit the judgment payments in trust and make reasonable efforts to notify the officers or directors of the dissolved corporation.

The committee described efforts that, depending on the amount involved, reasonable diligence would likely include: a certified letter (return receipt requested, forwarding instructed) to a known individual at the last available address; asking the Post Office for a forwarding address; contacting the Secretary of State of the state of incorporation for officer and director names; and hiring a skip-tracing service or private detective. If no officer or director can be located after every reasonable effort consonant with the amount, the firm should continue to preserve the funds in trust and then comply with the Uniform Disposition of Unclaimed Property Act (Ill. Rev. Stat. ch. 141, Section 101 et seq. (1981)), which presumes abandonment of property held in a fiduciary capacity after seven years, with a specific provision for non-residents' property. Doing so, the committee concluded, fulfills the firm's duties to its client under the Code.

Currency note

This opinion was issued in 1983, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 2010 Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in July 2010 as generally consistent with the 2010 Rules (Rules 1.4(b) and 1.15(a)), noting Opinion 88-4, while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis, including the unclaimed-property statute and its time periods. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a firm keep or write off funds belonging to a client it cannot find?

A: No. The opinion concluded the firm must continue to preserve the funds in its trust account and, if the client cannot be located after reasonable efforts, proceed under the Uniform Disposition of Unclaimed Property Act.

Q: What counts as reasonable efforts to locate a missing corporate client?

A: Per the opinion, depending on the amount, efforts may include a certified letter to the last known address, a Post Office forwarding-address request, contacting the state of incorporation's Secretary of State for officer and director names, and using a skip-tracing service or private detective.

Q: How long must the funds be held before the unclaimed-property act applies?

A: The opinion noted that the 1981 Act presumed abandonment of property held in a fiduciary capacity after seven years; because statutes change, verify the current abandonment period before acting.

Background and rules framework

The opinion applied former Illinois Code Rule 9-102 (depositing client funds in a separate trust account, prompt notice, recordkeeping, and accounting), against the backdrop of the Uniform Disposition of Unclaimed Property Act. The Board's 2010 affirmation maps the analysis to current Illinois Rules of Professional Conduct 1.15(a) (safekeeping property) and 1.4(b) (keeping the client informed), corresponding to ABA Model Rules 1.15 and 1.4.

Citations and references

Rules of Professional Conduct:

• Illinois Code Rule 9-102 (applied in the opinion)
• Illinois RPC 1.4(b), 1.15(a) (2010 equivalents per the Board's affirmation)
• MR 1.15 (safekeeping client property); MR 1.4 (communication)

Statutes:

• Uniform Disposition of Unclaimed Property Act, Ill. Rev. Stat. ch. 141, Section 101 et seq. (1981)

Other opinions cited:

• ISBA Opinion 703: a lawyer's trust-account notice, recordkeeping, and accounting duties for client funds

See also

• ISBA Ethics Op. 02-02: Fees From a Dissolved Client's Trust
• ISBA Ethics Op. 12-06: Client File Retention Periods
• ABA Formal Op. 471: Surrendering the Client File

Source

• Landing page: https://www.isba.org/ethics/opinions/845