Safekeeping Funds and Property

Question 1

When do the rules for safekeeping property apply?

What is the standard of care?

Answer 1

When holding property or funds FOR A CLIENT

Care required of a professional fiduciary

Question 2

What are the rules about commingling property held for a client?

Answer 2

Cannot commingle money or other property from clients with personal property. But can pool client property together for safekeeping as long as you keep records.

Question 3

Put advance payments in the client trust account

Answer 3

Do it

Question 4

Where does the client trust account have to be located?

Answer 4

In the state where the law office is located, unless client consents otherwise

Question 5

When can you pool client funds and when should you open a separate account?

Answer 5

Can pool funds when the service charges would outweigh the interest earned and inconvenience. If one client has a large amount of money that will be held for a long time, then open a separate account so that they can have the interest

Question 6

I just received $ on behalf of a client, what do I have to do now?

Answer 6

• Promptly notify client and promptly distribute the uncontested portion
• Comply if client requests an accounting
• If there’s a creditor with a lien on the funds received, notify them (can’t distribute until dispute resolved)

Question 7

A client pays you legal fees in advance. You deposit them into an IOLTA account. What precautions should you take when you withdraw them?

Answer 7

Only withdraw them after they have been earned and if there is no dispute. Smart lawyers send an itemized bill before withdrawing the funds to clarify that there is no dispute.