Client Cannot Waive Escrow Obligations

The Iowa Supreme Court “respectfully” rejected the public censure recommendation of its Attorney Disciplinary Board and suspended a lawyer with no possibility of reinstatement for six months. The charges involved the lawyer’s operation of his escrow account and dealings with his law partner. In defense of charges relating to his handling of settlement proceeds, the lawyer offered an affidavit of his client averring that the client preferred to receive the proceeds in cash. Nonetheless:

[The client’s] preference to receive his funds in cash did not vitiate [the lawyer’s] duty under the [escrow] rules to deposit the settlement check in a trust account and properly account for them.

The court concluded that the violation was more than technical and that the lawyer had failed to maintain required records. The lawyer had also engaged in dishonest conduct vis-a-vis his law partner by depositing fees into his personal account.

The legal conclusion that duties to safeguard client property cannot be waived or forgiven by the client is a sound one. We had a case in the District of Columbia that (correctly, in my view) held that a client’s retroactive approval of an unauthorized use of client funds did not defeat a charge of misappropriation. (Mike Frisch)