Also known as: trust accounts · client trust account · IOLTA
Written by attorneys · grounded in primary & secondary sources — see below
A separate bank account maintained by a lawyer to hold funds belonging to clients or third persons in connection with a representation. The lawyer may deposit the lawyer's own funds in the account only in the amount necessary to pay bank service charges. Advance fees and expenses must be deposited into the account and may be withdrawn only as earned or incurred.
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Tyrone Tran, a solo practitioner, opens a client trust account at a local bank. The bank imposes a monthly maintenance fee on the account. Tran deposits two hundred dollars of his own money into the account solely to cover those fees and no more. The deposit complies with the rule limiting personal funds to the precise amount needed for bank charges.
Tonya Takahashi pays her lawyer a ten-thousand-dollar retainer before litigation begins. The lawyer deposits the entire sum into the client trust account. As the lawyer performs work each month, she withdraws only the portion earned and leaves the unearned balance untouched. The deposit and limited withdrawals satisfy the requirement that advance fees remain in the trust account until earned.
A lawyer may deposit personal funds only in the amount necessary to pay bank service charges on the account. Any larger deposit would violate the prohibition on commingling. The rule permits this narrow exception solely to keep the account operational.
Supporting sources
Advance fees must be deposited into the client trust account. The lawyer may withdraw the funds only as fees are earned or expenses are incurred. Premature withdrawal constitutes commingling and subjects the lawyer to discipline.
Supporting sources
…was prepared. The final judgment directs that Buyers tender to Sellers the amount of $10,000 by depositing that amount into the trust account of Buyers' attorney within thirty days from the entry of the judgment, and that Sellers prepare and execute a good and sufficient warranty deed to Buyers for the property as described in…