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A lawyer cannot hold a client's money in an IOLTA account for a long period of time.

I have $2,000 in my IOLTA account that I cannot account for any longer and it's been there many years. Can I take that money?

First, every lawyer should know that they are not allowed to hold clients' monies in their IOLTA account for long periods of time, particularly if the funds are a substantial amount, i.e., which means more than $1,000. Any such funds should have been placed in an interest-bearing escrow account long ago, see Pennsylvania Rules of Professional Conduct 1.15.

But, assuming that is the case, funds that can't be accounted for due to the passage of time happen at times to many lawyers who have been practicing for years. Lawyers who have busy practices, particularly volume-filled practices, at times discover monies that are left in the IOLTA or escrow account that can't be accounted for. Sometimes it is the lawyer's fault for not timely distributing the fees. Sometimes it's the failure to make timely costs reimbursement. Other times, funds being held for costs are forgotten over the years.

Obviously, a lawyer should never take clients' funds directly. Therefore, if monies are discovered after years and years, a lawyer should attempt to do everything possible to try to reconstruct where the monies came from and who they are owed to. They may be owed to doctors or monies that are owed to the client. If the lawyer can find the clients or medical providers, etc., then lawyers should pay the monies. If that cannot be done after reasonable efforts, there are several options.

One option that has been allowed at times is to let the monies be escheated to the commonwealth. The other option is to pay the monies to the client security fund or to the IOLTA funds so the funds can be used for legal service programs.

Unless the lawyer is convinced it is his monies and not a client's monies, the lawyer normally should not take the monies. If the lawyer does take the monies, then the lawyer should have a memo documenting the efforts the lawyer has made to ensure that it was the lawyer's funds or that the lawyer checked everywhere to make sure it was not a client's or a provider's funds.

Every lawyer should know they are not supposed to maintain their own funds in an escrow or IOLTA account, other than a nominal amount to ensure there is not overdrawing due to bank fees. Rule of Professional Conduct 1.15 allows a nominal amount but nothing more. Lawyers have gotten in trouble over the years by keeping fees in the account too long. For instance, if a lawyer receives a fee in one year but doesn't pull the fee out until the next year or the following year, the lawyer could be criticized or charged for tax avoidance or tax evasion. A lawyer cannot have fees earned being kept in an escrow account waiting for a better taxable year.

The bottom line is the lawyer always has to be careful when there's any suggestion of a client's funds being involved. Resolve it in the most cautious way. The lawyer has to maintain the funds or put it in the interest-bearing escrow account and if the proper source to pay the funds can be located, then do so. If the same cannot be located and the funds have been held for a long time and there is no reasonable possibility of finding out who the funds belong to, then the three options discussed above are probably the best way to resolve the issue.

A lawyer may be able to go outside attorney-client privilege to reveal fraudulent conduct.

I prepared a will for a long-standing client. The will left essentially everything to one of the client's children, who is also named as the executor/executrix. I learned later that the child who received the bulk of the estate in the will took advantage of my client resulting in the assets left to this child as opposed to equally all the children. It became very clear to me this was undue influence. Do I have any ethical obligations?

This answers starts with the fact that any involvement with the testator and perhaps the executor/executrix would fall in the confidentiality rules of Rule 1.6 of the Rules of Professional Conduct. The confidentiality rule is very broad and has a very strong confidentiality provision under 1.6(a). This is far broader than the traditional statutory and common attorney-client privilege which addresses primary confidences and secrets.

There is an exception to the confidentiality rules under Rule 1.6(c)(3). This is not a mandatory exception but is a discretionary one. This allows a lawyer to reveal confidences to mitigate or rectify the consequences of a client's criminal or fraudulent acts when the lawyer's services were used, even though the lawyer wasn't aware of the misconduct at the time.

In this case, from the limited information in the question, it appears that the lawyer had been brought in by the daughter to prepare a will for the decedent, who the lawyer knew and represented in the past. Both the daughter and the testator most likely would fall under the confidentiality provision. Apparently, the adult child of the decedent used undue influence for the changes to the will that the lawyer drafted. As a result of the misconduct by the adult child, the will was changed to give everything to the adult child. The lawyer was not aware of the undue influence at the time. Under those circumstances, the lawyer can break the confidentiality and rectify the situation since the lawyer has now learned his assistance in drafting the will was the result of criminal acts by the adult child when the lawyer's services were unwittingly utilized. The lawyer would be allowed to reveal the information to the other children on a very limited exception, if the lawyer chose to do so.

Any time this occurs, the lawyer should be very careful. Sometimes it might be a good idea to seek independent review or call the Pennsylvania Bar Association's Legal Ethics Committee or the Philadelphia Bar Association's Professional Guidance Committee or the Allegheny Bar Association's Ethics Committee. The lawyers who work with those organizations are very knowledgeable. A lawyer should also document their conclusions. But on the facts here, assuming they are correctly stated, this would appear to allow the lawyer the right to go outside the privilege to reveal the fraudulent conduct for which the lawyer's services had been utilized.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pennsylvania, 19381.