You have presented a hypothetical situation in which an attorney
performs approximately 700 real estate closings a year.  From time
to time, funds remain in the attorney's trust account for various
reasons.  The attorney is uncertain about what to do with unclaimed
funds held in trust when the parties to whom such funds are due are
missing, cannot be found or have failed to cash their checks drawn
on the attorney's trust account.  Typically, the attorney or his
bookkeeper discover uncashed checks for small amounts of money,
often less than $50.00.  In addition, the attorney has a collection
practice in which a debtor sometimes overpays or miscalculates the
interest when paying off an account.  The amount of overpayment is
often less than $2.00.  When the attorney issues a refund check
from the trust account, the check is never cashed and the funds
remain in the attorney's trust account.

You have asked the Committee to opine on the degree of diligence
and expense required of the attorney to locate and properly
disburse such funds to their owner; the extent to which, if at all,
the attorney may deduct reasonable fees or costs incurred in
locating the owner of such funds; and, whether the attorney may
obtain, in advance, written authorization from such parties to keep
such unclaimed funds after exercising reasonable diligence to
locate them. 

The appropriate and controlling Disciplinary Rules related to your
inquiry are DR 9-102(B)(4) which requires an attorney to promptly
pay or deliver to the client or another as requested by such person
the funds, securities, or other properties in the possession of the
lawyer which such person is entitled to receive; and, DR 2-105(A)
which requires that a lawyer's fee shall be reasonable and
adequately explained to the client. 

In Legal Ethics Opinion 832, the Committee opined that it was
proper for an attorney to dispose of unclaimed trust funds in
accordance with Title 55, Chapter 11.1 of the Code of Virginia,
1950, as amended (Uniform Disposition of Unclaimed Property Act,
55-210.1, et. seq.).  See also, Legal Ethics Opinion 818.  The
Code of Professional Responsibility makes no provision for the
disposition of funds belonging to a client or another, other than
delivery to the person legally entitled to received them as
required by DR 9-102(B)(4).  The issue of whether there are other
acceptable, lawful alternatives to the Uniform Disposition of
Unclaimed Property Act are questions of law beyond the purview of
the Committee.  Once the attorney determines that property is
either "unclaimed" or "abandoned" as defined by the Uniform
Disposition of Unclaimed Property Act, the attorney must dispose of
the funds in accordance with the directives of this statute.

The Committee is of the opinion that an attorney must exercise
reasonable diligence in attempting to contact and disburse trust
funds to persons entitled to receive them.  The legal definition of
due diligence under 55-210.2 includes a first class mailing to the
last known address of the owner of property or funds, but it is not
limited to that.  The Committee believes that an attorney owes an
ethical duty to use whatever means are reasonable under the
circumstances, which will include in almost all instances first
class mail to the last known address of the owner.  In many
instances involving very small payments or refunds, first class
mail to the last known address of the owner will be the only
reasonable effort required.  However, if the attorney knows in
which city the person resides, it would be reasonable for the
attorney to call information or have a postal records check done to
discover a current address or telephone number, if the amount of
money involved justified the cost. 

The Committee believes that it would not be improper to deduct from
the funds held in trust reasonable costs incurred by the attorney
in attempting to locate the party to whom trust funds are owed, but
this does not include an attorney's fee.  However, the Committee is
of the opinion that it is improper for an attorney to agree with a
client or owner in advance that the attorney can keep the unclaimed
funds under any circumstances.

[DRs 2-105(A), 9-102(B)(4); LEOs #818, 832; Title 55, Chapter 11.1,
Code of Virginia, 1950, as amended (Uniform Disposition of
Unclaimed Property Act,  55-210.1, et. seq.)]

Committee Opinion
June 9, 1995