Safeguarding Funds, property Flashcards
When may a lawyer properly commingle client funds with her own funds?
Never; a lawyer is subject to discipline for commingling her client’s funds with her own personal or business funds.
exceptions: money for bank maintenance fee
A client trust fund account should not contain
general business funds.
All money that a lawyer receives on behalf of a client (whether from the client or a third party) must promptly be placed
in a client trust fund account.
Ordinarily, a lawyer must never put her own money or her firm’s money into the client trust account, but she may put some of her own money into that account for the sole purpose of paying
bank service charges.
A client trust fund account normally should be located in
the state where the lawyer practices, unless the client consents.
When a client entrusts a lawyer with money to pay costs and expenses not yet incurred, the lawyer must
Place the money into a client trust fund account and pay the expenses directly with checks drawn on that account.
what are the record-keeping requirements for money and property held by a lawyer on behalf of a client?
The records must be kept in accordance with generally accepted accounting practice, and they must be preserved for five years after the termination of the representation
There is no requirement that the records be filed with the appropriate authority. These records are not an invasion of the client’s privacy, and they should not be immediately destroyed.
A lawyer safeguarding a client’s property acts as a
fiduciary and is subject to civil liability for failure to safeguard such property.
Thus a lawyer would be acting properly by arranging for a valuable ring to be placed in a
safety deposit box during the course of litigation.
A lawyer must not borrow money from a client trust account. T o F?
True
What should a lawyer do if she is entrusted with a large sum of her client’s money to be held for a significant period of time?
Place the money into a separate, interest-bearing account, with any interest belonging to the client
Only when a client entrusts a lawyer with a sum that is too small to earn any net interest, should the lawyer put it into a pooled checking account that earns interest. This interest will be used to fund
charitable legal programs.
Advances against legal fees that a lawyer has not yet earned must be
Placed in a client trust account and may be withdrawn by the lawyer as the fees are earned
When the time comes to pay over money or deliver property to which the client or a third party is entitled, the lawyer must do so
Promptly
There is no set period of time, such as 10 business days or 180 days, which meets this standard. The lawyer is directed to do so promptly, not on a timetable that meets the lawyer’s own convenience.
What duty does a lawyer have when safeguarding a client’s property?
The lawyer acts as a fiduciary and is subject to civil liability if he fails to safeguard the property
What should a lawyer do if she is entrusted with a small sum of her client’s money for a brief period of time?
Place the money into a pooled checking account, with any interest used to fund charitable legal programs
When a lawyer receives funds from a third party that are to be used, in part, to pay the lawyer’s fee, the lawyer must
Place the funds in a client trust account until there is an accounting and severance of the respective interests of the client and the lawyer.
If the client disputes the amount that is due to the lawyer, then the disputed portion must be kept in the client trust account until the dispute is resolved.
The lawyer must not place any portion of the funds in the lawyer’s business fund account. But there is no need for the lawyer to turn the funds over to a third party until the accounting takes place
What are a duty owed by a lawyer with respect to a client’s money or property?
1) A duty to promptly pay over money or deliver property to which the client or a third party is entitled
2) A duty to notify the client promptly when a third party turns over money or property to the lawyer to hold on the client’s behalf
3) A duty to keep complete, accurate, and up-to-date records of all money and property held on behalf of the client
When a third party claims an interest in funds that have come into a lawyer’s possession on behalf of a client, the lawyer can
1) Refuse to surrender the funds to his client until the third party has been paid
2) Distribute any funds that are not in dispute directly to the third party
3) File an interpleader action to have a court resolve the matter
lawyer should not unilaterally presume to arbitrate a dispute between the client and the third party regarding these funds
(the prohibition on commingling, recordkeeping requirements, etc.) don’t apply when the funds are not held
in connection with any legal representation.
he client can consent to placing the funds in the office account. T or F?
False
If there is a dispute over funds (between the lawyer and the client, or between the client and some third person), the lawyer must
keep the disputed portion in the client trust account until the dispute is resolved.
Sometimes a third party has an interest in funds that come into the lawyer’s possession on behalf of a client. Thus, Statute, common law, or contract may require the lawyer to protect the third party’s interest against interference by the client; accordingly, when the third party’s claim is not frivolous, the lawyer must refuse to surrender the funds to the client until the third party has been paid.
An attorney must not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client unless
the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction.
Informed consent/agreement in writing signed by client is required when?
1) Business transaction with/pecuniary interest adverse to client
2) Aggregate settlement between clients
3) Contingent fee agreement
