The Supreme Court of South Carolina
In re: Amendments to the South Carolina Appellate Court Rules
The South Carolina Bar has proposed amending Rule 1.15(f), RPC, Rule 407, SCACR, which concerns disbursement of funds in trust accounts. The proposed amendments restructure the text of section (f) and divide it into several subsections. The proposed amendments also add a section permitting disbursement of funds where ten days have passed and there is no notice that the credit for or collection of the funds has been delayed or impaired. Finally, the Bar suggests several new comments to Rule 1.15.
After the Bar proposed the amendment, the South Carolina Association for Justice requested that Rule 1.15(f) be further amended to permit checks issued by insurance companies to be disbursed immediately. The Court agrees, but we believe such disbursements should be permitted only in cases where insurance company checks total $50,000 or less.
Pursuant to Article V, § 4, of the South Carolina Constitution, we hereby amend Rule 1.15, RPC, Rule 407, SCACR, as set forth in the attachment to this Order. The amendments are effective immediately.
IT IS SO ORDERED.
s/Jean H. Toal C.J.
s/Costa M. Pleicones J.
s/Donald W. Beatty J.
s/John W. Kittredge J.
s/Kaye G. Hearn J.
Columbia, South Carolina
October 6, 2010
RULE 1.15: SAFEKEEPING PROPERTY
. . .
(f)(1) A lawyer shall not disburse funds from an account containing the funds of more than one client or third person ("trust account") unless the funds to be disbursed have been deposited in the account and are collected funds.
(2) Notwithstanding Subsection (f)(1) above, a lawyer may disburse funds from a trust account at the lawyer's risk in reliance on the following deposits when the deposit is made:
(i) in cash or other items treated by the depository institution as equivalent to cash;
(ii) by verified and documented electronic funds transfer;
(iii) by a properly endorsed government check;
(iv) 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;
(v) by any other instrument payable at or through a depository institution, but only if the amount of such other instrument does not exceed $5,000 and the lawyer has a reasonable and prudent belief that the deposit of such other instrument will be collected promptly; or
(vi) by any other instrument payable at or through a depository institution and at least ten (10) days have passed since the date of deposit without notice to the lawyer that the credit for, or collection of, such other instrument has been delayed or is impaired.
If the actual collection of deposits described in Subsections (i) through (vi) above does not occur, the lawyer shall, as soon as practical but in no event more than five (5) business days after notice of noncollection, deposit replacement funds in the account.
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. . .
 The requirement in Rule 1.15(f)(1) that funds be deposited and collected in the lawyer's trust account prior to disbursement is fundamental to proper trust accounting.
 Based on the lawyer's relationship with the depository institution or other considerations, deposited funds of various types may be made "available" for immediate withdrawal by the depository institution; however, lawyers should be aware that "available funds" are not necessarily collected funds since the credit given for the available funds may be revoked if the deposited item does not clear.
 Subsections (i) through (vi) of Rule 1.15(f)(2) represent categories of trust account deposits which carry a limited risk of failure so that disbursements may be made in reliance on such deposits without violating the fundamental rule of disbursing only on collected funds. In any of those circumstances, however, a lawyer's disbursement of funds from a trust account in reliance on deposits that are not yet collected funds is at the risk of the lawyer making the disbursement. The lawyer's risk includes deposited instruments that are forged, stolen, or counterfeit. If any of the deposits fail for any reason, the lawyer, upon receipt of notice or actual knowledge, must promptly act to protect the property of the lawyer's clients and third persons. If the lawyer accepting any such items personally pays the amount of any failed deposit within five (5) business days of receipt of notice that the deposit has failed, the lawyer will not be considered to have committed professional misconduct based upon the disbursement of uncollected funds.
 A lawyer's disbursement of funds from a trust account in reliance on deposits that are not yet collected funds in any circumstances other than Subsections (i) through (vi) of Rule 1.15(f)(2) may be grounds for a finding of professional misconduct.
 The obligations of a lawyer under this Rule are independent of those arising from activity other than rendering legal services. For example, a lawyer who serves only as an escrow agent is governed by the applicable law relating to fiduciaries even though the lawyer does not render legal services in the transaction and is not governed by this Rule.
 The Lawyers’ Fund for Client Protection provides a means through the collective efforts of the Bar to reimburse persons who have lost money or property as a result of dishonest conduct of a lawyer. Under Rule 411, SCACR, each active or senior member of the Bar is required to make an annual contribution to this fund.
 A lawyer’s obligations with regard to identified but unclaimed funds are set forth in the Uniform Unclaimed Property Act, S.C. Code Ann. § 27-18-10, et seq.