Code of Professional Conduct

CHAPTER VIII

PRESERVATION OF CLIENTS' PROPERTY

RULE

The lawyer owes a duty to the client to observe all relevant laws and rules respecting the preservation and safekeeping of the client's property entrusted to the lawyer. Where there are no such laws or rules, or the lawyer is in any doubt, the lawyer should take the same care of such property as a careful and prudent owner would when dealing with property of like description.¹

Commentary

Guiding Principles
1. The lawyer's duties with respect to safekeeping, preserving and accounting for the clients' monies and other property are generally the subject of special rules.² In the absence of such rules the lawyer should adhere to the minimum standards set out in the note.³ "Property", apart from clients' monies, includes securities such as mortgages, negotiable instruments, stocks, bonds, etc., original documents such as wills, title deeds, minute books, licences, certificates, etc., other papers such as clients' correspondence files, reports, invoices, etc., as well as chattels such as jewelry, silver, etc.⁴

2. The lawyer should promptly notify the client upon receiving any property of or relating to the client unless satisfied that the client knows that it has come into the lawyer's custody.⁵

3. The lawyer should clearly label and identify the client's property and place it in safekeeping separate and apart from the lawyer's own property.

4. The lawyer should maintain adequate records of clients' property in the lawyer's custody so that it may be promptly accounted for, or delivered to, or to the order of, the client upon request. The lawyer should ensure that such property is delivered to the right person and, in case of dispute as to the person entitled, may have recourse to the courts.⁶

5. The duties here expressed are closely related to those concerning confidential information.⁷ The lawyer should keep clients' papers and other property out of sight as well as out of reach of those not entitled to see them and should, subject to any right of lien,⁸ return them promptly to the clients upon request or at the conclusion of the lawyer's retainer.

Privilege
6. The lawyer should be alert to claim on behalf of clients any lawful privilege respecting information about their affairs, including their files and property if seized or attempted to be seized by a third party. In this regard the lawyer should be familiar with the nature of clients' privilege, and with relevant statutory provisions such as those in the Income Tax Act,⁹ the Criminal Code, the Canadian Charter of Rights and Freedoms and other statutes.

NOTES

1. Cf. CBA-COD 7; CBA 3(8); Que. 3.02.06; ABA-MR 1.15; ABA DR 9-102(B). Although the basic duty here declared may parallel the legal duty under the law of bailment, it is reiterated as being a matter of professional responsibility quite apart from the position in law.

2. For example, in Ontario, secs. 13 to 18 captioned "Books, Records and Accounts" of O.Reg. 573 enacted pursuant to the Law Society Act, R.S.O. 1980, c. 233. Similar provisions exist in the other provinces and territories.

3. The minimum standards are:

(a) paying into and keeping monies received or held by the lawyer for or on behalf of clients in a trust bank account or accounts separate from the bank account of the lawyer or the lawyer's firm;
(b) keeping properly written books and accounts of all monies received, held or paid by the lawyer for or on behalf of each of the lawyer's clients which clearly distinguish such monies from the monies of every other client and from the monies of the lawyer and the lawyer's firm;
(c) not retaining for an unnecessarily long period, without the express authority of the client, monies received for or on behalf of such client;
(d) subject to rules prescribed by the governing body of the province, no lawyer shall take fees, as opposed to disbursements, from funds held in trust for a client without the client's express authority unless the work being done by the lawyer for the client has been performed and a proper account in respect thereof has been rendered to the client. Where a client authorizes the payment of fees from trust funds before an account has been rendered, this arrangement should be recorded in writing and an interim account sent to the client forthwith;
(e) the lawyer should not estimate a lump sum that may in the aggregate be owed by a number of clients and then transfer that sum in bulk from a trust account to the lawyer's general account without allocating specific amounts to each client and rendering an account to each client.

4. In some provinces statutes authorize the depositing of valuable documents with public officials for safekeeping. As to wills, see Comment in (1970) 4 Law Soc. U.C. Gaz. 117.

5. Cf. ABA DR 9-102(B)(1).

6. For example, by seeking leave to interplead.

7. Cf. the Rule relating to confidential information.

8. Cf. para. 10 of the Rule relating to withdrawal. As to the proper disposition of papers, which is frequently a perplexing problem, see Cordery on Solicitors (6th ed. 1968) at pp. 118-20 for a discussion of law and principles and a table of categories with supporting authorities.
The lawyer's arrangements and procedures for the storage and eventual destruction of completed files should reflect the foregoing considerations and particularly the continuing obligation as to confidentiality.
Further, statutes such as the Income Tax Act and the operation of limitations statutes pertinent to the client's position may preclude the destruction of files or particular papers. In several provinces statutes provide for the appointment of a custodian or trustee or the intervention of the syndic to conserve clients' property where a lawyer has died, absconded or become incapable. See, e.g., Barristers and Solicitors Act, R.S.B.C. 1979, c. 26, s. 69; Bar Act, R.S.Q. 1977, c. B-1, s. 76(2); Law Society Act, R.S.O. 1980, c. 233, s. 43.

9. See Freedman, "Solicitor-Client Privilege under the Income Tax Act" (1969) 12 Can. B.J. 93.

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