What is considered "misappropriation" of funds?

Misappropriation of funds refers specifically to the improper handling of a client’s money by an attorney, usually involving taking or using those funds for personal purposes rather than as intended. The definition encompasses wrongful taking or misuse, particularly of funds held in trust for clients, which legally belong to them.

In this context, taking funds from a client's trust account for personal use clearly constitutes misappropriation, as the attorney is violating their ethical duty to safeguard client money. Attorneys have a duty to manage client funds with a high degree of care and to use them only for the designated purposes, such as paying for fees or expenses related to the client's matter.

The other scenarios involve violations or unethical behavior, but they do not fit the narrow definition of misappropriation. Using client funds for operational costs of the firm could involve improper use of funds, but it does not necessarily mean taking funds for personal use. Failing to deposit earned fees into the business account is a different ethical issue related to accounting and billing. Providing clients with false account statements involves dishonesty and misrepresentation, which can harm the client's trust and confidence but does not fit the definition of misappropriation in the same way. Therefore, the action described in the correct choice is the clearest example