Advisory Opinion:
193
Year Issued:
1996
RPC(s):
RPC 1.15A, 1.7(b), 1.8(a)
Subject:
Disbursal Accounts
Facts:
As required by RPC 1.15A Lawyer generally maintains client funds in an IOLTA account. When funds held in trust are payable to a client or nonclient, Lawyer simply writes a check on that account to the payee.
Recently, Lawyer has been told that Lawyer can secure free or reduced price services or obtain other benefits if Lawyer will use a non-IOLTA disbursing account in addition to an IOLTA account. Instead of writing a trust account check directly payable to the payee, Lawyer would write a check payable to the disbursing account and would then, in turn, cause a check to be written on that account to the payee. The potential for benefit arises because of the "float" on the disbursing account.
Question:
May Lawyer use such a disbursing account?
Conclusion:
No.
Discussion:
RPC 1.15A(c)(1) requires that lawyers deposit and hold in a trust account all funds belonging to the client and third persons. Under RPC 1.15A(i)(1), in specified situations, “the funds must be placed in a pooled interest-bearing trust account” (an IOLTA account). RPC 1.15A makes no exception for disbursing accounts, and we see no basis for reading one into the rule as a matter of interpretation. Moreover, the obvious purpose behind the trust account rules — to maximize the degree of protection accorded client funds — is not served by allowing those funds to pass through a disbursing account.
In light of our answer under RPC 1.15A, we need not consider whether the use of a disbursing account for Lawyer’s benefit would create conflict of interest problems under RPC 1.7(b) and 1.8(a).
[amended 2009]
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