Can a lawyer release disputed trust funds to a client after telling the other side the funds would be held until the dispute is resolved?

Plain-English summary

A lawyer asked about returning trust account funds to a former client where the lawyer had previously advised third parties that the funds would be maintained in the trust account until the dispute between the parties was resolved.

The committee was of the opinion that because of the lawyer's prior representation to the third parties, the lawyer cannot now return the funds to the former client without notifying the other side and providing it an opportunity to make a proper objection. The committee based the opinion on RPC 8.4(c), RPC 4.1, and Formal Opinion 185, and pointed the inquirer to In re Williams, 314 Or. 530, 840 P.2d 1280 (1992).

Currency note

This opinion was issued in 1994, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance.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 lawyer release held funds to the client once the lawyer wants to?

A: Not here. The committee said that because the lawyer had told third parties the funds would be held until the dispute resolved, the lawyer cannot return them to the client without notifying the other side and allowing a proper objection.

Q: What rules did the committee rely on?

A: The committee based the opinion on RPC 8.4(c), RPC 4.1, and Formal Opinion 185, and cited In re Williams, 314 Or. 530, 840 P.2d 1280 (1992).

Background and rules framework

The opinion applied RPC 8.4(c) (ABA Model Rule 8.4(c)), which prohibits conduct involving dishonesty, fraud, deceit, or misrepresentation, and RPC 4.1 (ABA Model Rule 4.1), which requires truthfulness in statements to others. The committee treated the lawyer's earlier assurance to the third parties as binding on how the trust funds could be released: notice and an opportunity to object were required before the funds could go back to the client.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 4.1 (truthfulness in statements to others); Washington RPC 4.1
• ABA Model Rule 8.4(c) (dishonesty, fraud, deceit, or misrepresentation); Washington RPC 8.4(c)

Cases:

• In re Williams, 314 Or. 530, 840 P.2d 1280 (1992), cited by the committee

Other opinions cited:

• WSBA Formal Opinion 185

See also

• WA Ethics Op. 1029: Trust Funds for Multiple Clients With No Distribution Instructions
• WA Ethics Op. 1128: Unclaimed Trust Funds; Missing Client

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=661

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 1580
Year Issued: 1994
RPC(s): RPC 4.1; 8.4(c); Formal Opinion 185
Subject: Lawyer wishes to distribute funds to client where previously advised third parties would retain funds until dispute resolved

The Committee reviewed your inquiry regarding return of trust account funds to a former client in a situation where you had previously advised third parties that funds would be maintained in your trust account until the dispute between the parties is resolved.

The Committee was of the opinion that because of your prior representation to the third parties, you cannot now return the funds to your former client without notifying the other side and providing them an opportunity to make a proper objection. The Committee based this opinion on RPC 8.4(c), RPC 4.1, Formal Opinion 185. You may also want to see In Re Williams 314 Or. 530, 840 P.2d 1280 (1992).