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Rule1.15. Safekeeping property.

(a) A licensed paralegalpractitioner shall hold property of clients or third persons that is in alicensed paralegal practitioner?s possession in connection with arepresentation separate from the licensed paralegal practitioner?s ownproperty.  Funds shall be kept in a separate account maintained in thestate where the licensed paralegal practitioner?s office is situated orelsewhere with the consent of the client or third person.  The account mayonly be maintained in a financial institution that agrees to report to theOffice of Professional Conduct in the event any instrument in properly payableform is presented against an attorney or licensed paralegal practitioner trustaccount containing insufficient funds, irrespective of whether or not theinstrument is honored.  Other property shall be identified as such andappropriately safeguarded.  Complete records of such account funds andother property shall be kept by the licensed paralegal practitioner and shallbe preserved for a period of five years after termination of therepresentation.

(b) A licensed paralegalpractitioner may deposit the licensed paralegal practitioner?s own funds in aclient trust account for the sole purpose of paying bank service charges on thataccount, but only in an amount necessary for that purpose.

(c) A licensed paralegalpractitioner shall deposit into a client trust account legal fees and expensesthat have been paid in advance, to be withdrawn by the licensed paralegalpractitioner only as fees are earned or expenses incurred.

(d) Uponreceiving funds or other property in which a client or third person has aninterest, a licensed paralegal practitioner shall promptly notify the client orthird person. Except as stated in this Rule or otherwise permitted by law or byagreement with the client, a licensed paralegal practitioner shall promptlydeliver to the client or third person any funds or other property that theclient or third person is entitled to receive and, upon request by the clientor third person, shall promptly render a full accounting regarding suchproperty.

(e) When in the course ofrepresentation a licensed paralegal practitioner is in possession of propertyin which two or more persons (one of whom may be the licensed paralegalpractitioner) claim interests, the property shall be kept separate by thelicensed paralegal practitioner until the dispute is resolved.  Thelicensed paralegal practitioner shall promptly distribute all portions of theproperty as to which the interests are not in dispute.

 

Comment

[1] A licensed paralegal practitioner shouldhold property of others with the care required of a professional fiduciary.Securities should be kept in a safe deposit box, except when some other form ofsafekeeping is warranted by special circumstances. All property which is theproperty of clients or third persons, including prospective clients, must bekept separate from the licensed paralegal practitioner's business and personalproperty and, if monies, in one or more trust accounts. In addition to normalmonthly maintenance fees on each account, licensed paralegal practitioners cananticipate that financial institutions may charge additional fees for reportingoverdrafts in accordance with this Rule. A licensed paralegal practitionershould maintain on a current basis books and records in accordance withgenerally accepted accounting practice and comply with any recordkeeping rulesestablished by law or court order.

[2] While normally it isimpermissible to commingle the licensed paralegal practitioner?s own funds withclient funds, paragraph (b) provides that it is permissible when necessary topay bank service charges on that account. Accurate records must be keptregarding which part of the funds arethe licensed paralegal practitioner?s.

[3] Licensed paralegal practitioners oftenreceive funds from third parties from which the licensed paralegalpractitioner's fee will be paid. The licensed paralegal practitioner is notrequired to remit to the client funds that the licensed paralegal practitionerreasonably believes represent fees owed. However, a licensed paralegalpractitioner may not hold funds to coerce a client into accepting the licensedparalegal practitioner's contention. The disputed portion of the funds must bekept in a trust account, and the licensed paralegal practitioner should suggestmeans for prompt resolution of the dispute, such as arbitration. The undisputedportion of the funds shall be promptly distributed.

[4] Paragraph (e) also recognizes that thirdparties may have lawful claims against specific funds or other property in alicensed paralegal practitioner's custody. A licensed paralegal practitionermay have a duty under applicable law to protect such third-party claims againstwrongful interference by the client. In such cases, when the third-party claimis not frivolous under applicable law, the licensed paralegal practitioner mustrefuse to surrender the property to the client until the claims are resolved. Alicensed paralegal practitioner should not unilaterally assume to arbitrate adispute between the client and the third party.

[5] The obligations of a licensed paralegalpractitioner under this Rule are independent of those arising from activityother than rendering legal services. For example, a licensed paralegalpractitioner who serves as an escrow agent is governed by the applicable lawrelating to fiduciaries even though the licensed paralegal practitioner doesnot render legal services in the transaction and is not governed by this Rule.

[6] A licensed paralegal practitioners? fund for client protectionprovides a means through the collective efforts of the Bar to reimburse personswho have lost money or property as a result of dishonest conduct of a licensedparalegal practitioner. Where such a fund has been established, a licensedparalegal practitioner must participate where it is mandatory, and, even whenit is voluntary, the licensed paralegal practitioner should participate.

 

Effective November 1, 2018