2005-55.

• Court: Oregon

Oregon Ethics Opinions 2005. 2005-55. FORMAL OPINION NO. 2005-55Lawyer as Escrow Agent Facts: Lawyer has a substantial business practice. Questions: 1. May Lawyer act as escrow agent in a transaction in which Lawyer represents none of the parties? 2. May Lawyer act as escrow agent in a transaction in which Lawyer represents one of the parties? 3. If the answer to the second question is no, may Lawyer nonetheless hold client funds, documents, or other property pursuant to the terms of an agreement between Lawyer's client and the other party to the agreement? Conclusions: 1. Yes. 2. No. 3. Yes, qualified. Discussion: The word "'escrow' by definition means 'neutral,' independent from the parties to the transaction." Banif Corp v. Black, 12 Or App 385, 388, 507 P2d 49 (1973); ORS 696.505(3). There is no reason that a lawyer cannot play this role in a transaction in which the lawyer does not represent any of the parties. Cf. ORS 696.520(2), which exempts from the definitions and restrictions of the statute a lawyer "rendering services in the performance of duties as attorney at law." See also Oregon RPC 2.4, permitting lawyers to act as mediators.(fn1) On the other hand, a lawyer cannot simultaneously be both counsel to a party to a transaction and a neutral escrow agent for the transaction. Cf. In re Phelps, 306 Or 508, 510 n 1, 760 P2d 1331 (1988); In re Barrett, 269 Or 264, 524 P2d 1208 (1974). The obligation of neutrality is in direct contradiction to the obligations that a lawyer has to a client. The simultaneous role would constitute a situation in which there is a significant risk that the representation of the client will be materially limited by the lawyer's responsibilities as a neutral escrow, in violation of Oregon RPC 1.7(a)(2). This self-interest conflict can be waived only if the lawyer has the informed consent of the client as required by Oregon RPC 1.7(b). Moreover, the lawyer's failure to disclose the dual role to the other party would be tantamount to "conduct involving dishonesty, fraud, deceit or misrepresentation that reflects adversely on the lawyer's fitness to practice law" in violation of Oregon RPC 8.4(a)(3).(fn2) There is no reason, however, a lawyer cannot hold client funds, documents, or other property as part of a transaction involving a client as long as the lawyer is not described as an "escrow agent" and...