E. Safeguarding Property & Funds

Question 1

What is Lawyer’s fiduciary duty regarding another’s funds/property related to his practice of law?*

Answer 1

Keep in separate account
- Account/Checks/Deposit slips must identify as ‘escrow’/’trust’ account

Keep in NY State bank that agrees to provide dishonoured check reports to Lawyer’s Fund for Client Protection
- Can keep in out-of-state bank if bank provides dishonoured check reports + Client gives written approval

Promptly notify Client/TP
- Within hours/days, NOT weeks

Promptly pay + deliver funds to Client/TP entitled to receive

NOT misappropriate/commingle with Lawyer’s/Law firm’s;

• Business accounts
• Personal accounts
• Fiduciary accounts

Question 2

Is Lawyer allowed to withdraw funds from separate account?*

Answer 2

Yes - ONLY funds belonging to Lawyer (NOT Client)

- UNLESS Client disputes Lawyer’s right to funds => Dispute must first be resolved

Question 3

What type of account may Lawyer deposit funds?

Answer 3

Interest-bearing account

• ‘Interest on Lawyer account’ (IOLA)
• Fiduciary funds
• Too small to justify separate account in which interest would be paid to Beneficial Owner

Non-interest bearing account

Question 4

What are Lawyer’s obligations regarding bookkeeping records?*

Answer 4

Maintaining records

1) For 7 years
2) Records including;
- Deposits/Withdrawals/Fund disbursements concerning Lawyer’s practice
- Retainer agreements
- Statements/Bills to Clients
- Copies of Retainer + Closing agreements filed w/ Office of Court Administration

Producing records

• In response to notice/subpoena
• In response to disciplinary proceedings

Question 5

What if Lawyer fails to bookkeep records?*

Answer 5

Disciplinary proceedings