Ethics & Conduct

Absent any obligation to retain a client’s file imposed by law, court order, or rules of a tribunal, a lawyer shall securely store a client’s file for a minimum of six years after completion or termination of the representation unless: (1) the lawyer delivers the file to the client or the client’s designee; or (2) the client authorizes destruction of the file in a writing signed by the client, and there are no pending or threatened legal proceedings known to the lawyer that relate to the matter. Rule 1.15(i).

A lawyer may convert files to an electronically stored format, provided the lawyer is capable of producing a paper version if necessary. A lawyer who elects to destroy files shall do so in a manner which protects client confidentiality. 

 

Rule 1.16(d) provides that upon termination of representation, a “lawyer shall take steps to the extent reasonably practicable to protect a client’s interests,” including by “surrendering papers and property to which the client is entitled.” Failure to timely return a client file may subject a lawyer to discipline under Rule 1.16(d). See, e.g., In re Melnyk, 433 S.C. 393, 395, 859 S.E.2d 257, 258 (2021).

The SC Rules of Professional Conduct do not specify what constitutes “papers … to which the client is entitled.” In the absence of a specific agreement between the client and the lawyer, the “client file” that must be returned includes all materials provided by the client or obtained by the lawyer in the course of the representation; correspondence sent or received by the lawyer on the client’s behalf; materials prepared in final form by the lawyer, including filed and unfiled pleadings and legal memoranda; research; and notes of interviews and meetings. See SC Ethics Op. 02-11; SC Ethics Op. 92-37; John Freeman, Turning Over “The File,” S.C. Law. (July-Aug. 1998). The lawyer is not required to provide notes regarding the lawyer’s personal impressions of the client or administrative materials related to the representation. See SC Ethics Op. 02-11; SC Ethics Op. 92-37; ABA Formal Op. 471, at 4 (July 1, 2015).

The lawyer may (and should as a best practice) retain a copy of all documents produced in response to client’s request for the file. Absent the client’s prior agreement, the lawyer should bear the cost of copying documents to which the client is legally entitled, except that the lawyer may charge the actual cost of making additional copies of documents previously provided. See In re Massey, 357 S.C. 439, 443, 594 S.E.2d 159, 161 (2004); SC Ethics Op. 92-37.

Rule 1.16(d) further provides that upon termination of representation, the lawyer “may retain papers relating to the client to the extent permitted by other law.” See also id. Comment 9 ( “The lawyer may retain papers as security for a fee only to the extent permitted by law.”) South Carolina recognizes a lawyer’s common law right to assert a retaining lien on a client’s file and that assertion of such a lien “is not a per se” ethical violation. In re Anonymous, 287 S.C. 250, 252, 335 S.E.2d 803, 804 (1985). “An attorney must, however, consider whether the assertion of a retaining lien in a particular case would be unethical.” Id. At a minimum, a lawyer who has been discharged for cause has no right to assert a retaining lien. See id. at 252 n.1, 335 S.E.2d at 804 n.1. At the other end of the spectrum, a retaining lien is justified when “the client is financially able but deliberately refuses to pay a fee [the client] has clearly agreed upon and is due.” In re Tillman, 319 S.C. 461, 464, 462 S.E.2d 283, 285 (1995). In all other cases, whether assertion of a lien is ethical must be determined on a case-by-case basis. See id. (identifying factors to be considered in determining whether to assert a retention lien).

The South Carolina Supreme Court has held that failure to pay a court reporter’s, mediator's or expert witness's fee in a timely fashion is a violation of Rules 4.4(a) (rights of third parties) and/or 8.4(e) (engaging in conduct prejudicial to the administration of justice), regardless of whether the client has agreed to be responsible for the costs of litigation. See, e.g., In re Brooker, 433 S.C. 232, 235, 857, S.E. 2d 553, 554 (2021); In re Jackson, 365 S.C. 176, 617 S.E.2d 123 (2005).  Payment of other persons providing services in furtherance of an attorney’s request, including, but not limited to, mediators and expert witnesses, are likely analogous.  Cf. In re Johnson, 385 S.C. 501, 504, 685 S.E. 2d 610, 611 (2009) (noting failure to pay expert witness, along with other financial misconduct, in imposing disbarment).

The lawyer has a continuing duty of confidentiality for former clients that is set forth in Rule 1.9.  Just like the duty of confidentiality for current clients, this duty for former clients is different from, and is broader than, the attorney-client privilege or the work product doctrine. Pursuant to Rule 1.9, which references 1.6, disclosure would not be permitted without the client’s permission or a court order. The lawyer should assert the protections of Rule 1.9 on behalf of the former client in response to the subpoena and refuse to produce any documents absent a further court order compelling production. 

When, in the course of representation, a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute. Disputed property shall be kept separate until one of the following occurs:

(i) the parties reach an agreement on the distribution of the property;

(ii) a court order resolves the competing claims; or

(iii) the lawyer files an action and a court resolves the dispute; or

(iv) if disbursement to the client is not otherwise prohibited by law or court order, the lawyer may provide written notice to the third party informing the third party that the lawyer may distribute the property to the client unless the third party files a civil action and provides the lawyer with written notice and a copy of the filed action within 90 calendar days of the date of service of the lawyer's notice. If the lawyer does not receive written notice of the filing of a civil action from the third party within the 90-day period, the lawyer may distribute the property to the client after consulting with the client regarding the advantages and disadvantages of disbursing the disputed property and obtaining the client's written informed consent to the distribution.

(v) A lawyer may also disburse funds claimed by third parties if the lawyer determines that the claim is not a matured legal or equitable claim under applicable law¹. The lawyer does so at the risk that a subsequent tribunal may determine that the lawyer’s judgment was erroneous. A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party. (1.15(e) and Comment 4)

If the lawyer is notified in writing of a civil action filed within the 90-day period, the lawyer shall continue to hold the property unless and until the parties reach an agreement on distribution of the property or a court resolves the matter.

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Generally, no. The preparation and filing/recording of deeds is considered the practice of law in South Carolina and, therefore, may only be done under the supervision of a lawyer licensed to practice in South Carolina, unless one of the exceptions of Rule 5.5(c) applies. See Boone v. Quicken Loans, Inc., 803 S.E. 2d. 707 (S.C. 2017).

A lawyer shall not disburse funds from a trust account unless the funds to be disbursed have been deposited in the account and are collected funds and the lawyer has not received any notice indicating the funds were not yet credited to the trust account. Notwithstanding that requirement, a lawyer may disburse funds from a trust account at the lawyer’s risk when the deposit is made:

•  in cash or other items treated by the depository institution as equivalent to cash;
•  by verified and documented electronic funds transfer;
•  by a properly endorsed government check;
• by a certified check, cashier’s check, or other check drawn by a depository institution or an insurance company, provided the insurance company check does not exceed $50,000;
•  by any other depository institution instrument as long as the amount is $5,000 or less, and only if the lawyer has a reasonable and prudent belief that the deposit will be collected promptly or at least 10 days have passed since deposit without notice to the lawyer that the funds have not been credited. 

If a deposit is not collected, a lawyer is obligated to deposit replacement funds in the account as soon as practical, but no more than five business days after notice to lawyer. See Rule 1.15 and comments 5 – 8 thereto for more specific information and instruction. Additionally, see Rule 417, SCACR regarding Financial Recordkeeping.

See Ethics Opinion 18-02.

A lawyer is obligated to “abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued.” Rule 1.2(a).  Further, a lawyer “shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive.” When a client cannot be located, however, a lawyer may take only such action as is impliedly authorized to carry out the representation.  Rule 1.2(a). Such action would necessarily include diligent efforts to locate a client who has effectively disappeared. Continued inability to locate and communicate with the client would eventually constitute “good cause” for withdrawal from representation pursuant to Rule 1.16(b).

When the relationship between lawyer and client terminates, regardless of reason, the lawyer must take steps to the extent reasonably practicable to protect a client’s interests. Rule 1.16(d). That routinely includes return of all files, funds, and any other property belonging to the client. The responsibility for accounting for unclaimed escrow funds is indefinite. Accordingly, when a client cannot be located, the lawyer is tasked with holding the client’s property until such time as either the client, or some person or entity authorized to speak on the client’s behalf, directs further action by the lawyer.

Alternatively, after diligent attempts by the lawyer to disburse the funds to the rightful owner thereof have proved unsuccessful for the requisite period of time, the lawyer may follow the statutory procedure set forth in the Uniform Unclaimed Property Act, S.C. Code Ann. § 27-18-10 (1976), et seq. That statute allows for funds to be deemed abandoned if they remain unclaimed for longer than five years. In compliance with that statute, such funds may then be delivered to the custody of the State. See Ethics Advisory Opinion 02-05.

Upon termination of representation, a lawyer must refund "any advance payment of fee or expense that has not been earned or incurred" Rule 1.16(d). That is true regardless of label, including fees identified as "nonrefundable," although a "lawyer may retain a reasonable nonrefundable retainer." Id. (Also, see Rule 1.5(a) for the factors to consider in determining reasonableness of a fee.)

The language describing "nonrefundable" arrangements varies, and includes terms such as flat fee, fixed fee, earned on receipt, or nonrefundable retainer.  Regardless of label, a lawyer may enter a fee arrangement that allows the lawyer to treat fees paid in advance of performing legal services as immediately earned only if the fee agreement is reduced to writing.  The written agreement must notify the client of the following:

(1) the nature of the fee arrangement and the scope of the services to be provided;

(2) the total amount of the fee and the terms of payment;

(3) that the fee will not be held in a trust account until earned;

(4) that the client has the right to terminate the lawyer-client relationship and discharge the lawyer; and

(5) that the client may be entitled to a refund of all or a portion of the fee if the agreed-upon legal services are not provided.  RPC, Rule 1.5(f).