Safekeeping Property
This chapter covers a lawyer's fiduciary duty to safeguard client and third-party funds and property under Model Rule 1.15, including trust accounts and the prohibition on commingling.
Trust Accounts and Commingling
Under Model Rule 1.15, a lawyer must hold client and third-party property separate from the lawyer's own property. Client funds must be kept in a separate trust account, and the lawyer must not commingle client funds with the lawyer's personal or business funds. The lawyer may deposit the lawyer's own funds only in the small amount reasonably necessary to pay bank service charges. Complete and accurate records of the account must be kept.
Handling Disputed and Advance Funds
A lawyer must promptly notify a client or third person on receiving funds or property in which they have an interest, promptly deliver what they are entitled to receive, and render an accounting on request. When the lawyer's and the client's interests in property both exist and part is disputed, the undisputed portion must be distributed and the disputed portion kept in trust until the dispute is resolved. Advance fees and unearned retainers generally must be held in trust until earned.