What obligation does a lawyer have when holding a disputed client fund?

When a lawyer is in possession of a disputed client fund, their primary responsibility is to withhold the disputed portion until the matter is resolved. This obligation ensures that the lawyer maintains ethical standards and protects both the client's and the opposing party's interests.

The reasoning behind this is grounded in the principle of safeguarding clients' property and adhering to the rules of professional conduct. By withholding the disputed funds, the lawyer avoids making unilateral decisions that could disadvantage either party and ensures that a proper resolution, whether through negotiation, mediation, or a court ruling, can take place without compromising the interests of those involved.

The immediate release of the funds to the client or sending them to the opposing party could lead to complications if the dispute escalates or if there are claims against the funds. Similarly, splitting the funds with a third party without a formal resolution could create additional ethical and legal issues. Therefore, the correct approach is to hold those funds in trust until the dispute is adequately resolved.