Bench & Bar March/April 2026

employers, prior addresses) and rea sonable attempts to reach them where appropriate. • Basic online searches (including social media) and, where justified by the amount at stake, the use of a reputable skip‑tracing service. The duration of these efforts should be reasonable in light of the amount at issue and any information you have about the client’s likely location or transience. Nei ther E‑433 nor SCR 3.830 specifies a fixed holding period after which a client becomes “unlocatable,” but the unclaimed‑property statutes (currently in KRS Chapter 393A) set dormancy periods for various types of intangible property, and those periods provide a useful benchmark in deciding when funds may properly be treated as unclaimed. 2 While the client remains missing and your efforts to locate him continue, the funds must remain in your client escrow account and be accounted for on your books as belonging to that specific client. If, after reasonable and documented efforts over a reasonable period, you conclude that the client cannot be located, you should comply with the Supreme Court’s IOLTA rules (SCR 3.830). Under that rule, if client funds in an IOLTA account become unclaimed or the owner cannot, after reasonable efforts, be located or identified, the lawyer may remit those funds to the Kentucky IOLTA Fund, administered by the Kentucky Bar Foun dation, using the Fund’s “Unclaimed Funds Remittance” procedures and forms. With regards to your fee, SCR 3.130(1.15) (c) permits - and once the fee is earned, effectively requires - a lawyer to withdraw from a trust escrow account funds that are earned fees or reimbursement of expenses, provided the lawyer’s entitlement to those funds is clear and there is no dispute. Ken tucky trust-account guidance repeatedly emphasizes that a lawyer may not use a client trust account as a repository for the lawyer’s own funds, and that leaving earned fees in an IOLTA account consti tutes impermissible commingling. See SCR 3.130(1.15)(a); Kentucky Bar Foundation, Trust Account Basics (Aug. 2023).

In an ordinary case, where the client signs a settlement closing statement itemizing fees and expenses, the lawyer would remove the agreed contingent fee and costs from trust at the conclusion of the matter and disburse the balance to the client. Here, however, your client is missing and there is no signed closing statement. Nonetheless, your engagement agreement establishes the contingent fee arrangement and, absent any competing claim or dispute, is sufficient to define your contractual entitlement to the fee once the settlement proceeds have been received and the contingency satisfied. You are now required to withdraw that fee from the trust account, provided there is no bona fide dispute as to entitlement. The fiduciary duty owed to a missing client runs to safe guarding the client’s funds—not to holding the lawyer’s own funds in trust. The remaining client funds must continue to be held in trust, subject to reasonable efforts to locate the client and, if those efforts fail, eventual disposition as unclaimed IOLTA funds under SCR 3.830. Taking this step ensures compliance with SCR 3.130(1.15)’s prohibition against commingling a lawyer’s funds from a client’s funds while still fully protecting the absent client’s interests. I trust this advice has been of assistance and if you have any questions, you will contact me. Finally, with regards to this Opinion, please understand the following important points.

ABOUT THE AUTHOR

SHELDON G. GILMAN recently retired from the active practice of law but

remains involved in various law related matters. Gilman received his under graduate degree from Ohio University and his law degree from Case Western Reserve University. After graduation from law school Gilman served four years as a member of the U.S. Army’s Judge Advocate General’s Corps with duty assignments at The Office of the Judge Advocate General and The Office of the Secretary of Defense. With regards to lawyer professional responsibility matters, Gilman contin ues to serve as a member of the Ethics Committee and has been a member of the Ethics Hotline for 30 years and has written more than 800 Hotline Infor mal Opinions and answered more than 500 telephone inquiries. He served as a member of KBA Ethics 2000 Com mittee which recommended the current revised edition of our Rules in 2009.

1 See Comment 3: At the outset of a representation, the client may authorize the lawyer to take specific action on the client's behalf without further consultation. Absent a material change in circumstances and subject to Rule 1.4, a lawyer may rely on such an advance authorization. The client may, however, revoke such authority at any time. 2 I am cognizant of the following comments of KBA E-433: Once the lawyer has made a good faith search without success, then the lawyer must follow the procedures set out in the unclaimed property laws of the state. Although it is beyond the jurisdiction of the Committee to render opinions on the law, the lawyer must comply with the law and is directed to KRS 393.010 – 393.099 and KAR 1:080 dealing with abandoned property. You will note that my opinion does not contain a discussion of Kentucky’s unclaimed property laws. This omission is intentional, not an oversight. While the general public must use the State Trea surer for unclaimed property the Kentucky Supreme Court requires that lawyers hold client funds in an IOLTA account. If client funds become unclaimed then the Kentucky lawyer must comply with the Supreme Court’s Rules regarding unclaimed IOLTA funds because Kentucky lawyers are subject to the Rules of our Supreme Court regarding IOLTA account funds. Kentucky lawyers are subject to the laws of the General Assembly and to the Rules of the Supreme Court of Kentucky, but in distinct spheres of operation. With regards to the practice of law, licensure, and professional conduct, the Kentucky Supreme Court holds exclusive, primary jurisdiction, often rendering conflicting statutes void or ap plicable only through comity. Therefore, once I concluded that you have an obligation to claim and take the settlement monies belonging to your client and deposit them into your firm’s IOLTA account, then it is altogether proper that a lawyer’s conduct pertaining to the administration and disbursement of IOLTA monies becomes subject to the Rules of the Kentucky Supreme Court and not Kentucky’s General Assembly. See Kentucky’s Constitution § 116.

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