A matter of trust: Attorney funds may be deposited into IOLTA account to cover bank charges

While there is some confusion existing over this point, attorneys can deposit some of their own money into their IOLTA accounts in order to cover for bank charges. The reference from the Massachusetts Rules of Professional Conduct is at Rule 1.15 (b)(2)(i):

'(2) No funds belonging to the lawyer shall be deposited or retained in a trust account except that:

(i) Funds reasonably sufficient to pay bank charges may be deposited therein'

This article, from the Board of Bar Overseers' ethics articles repository, makes reference to recordkeeping requirements for those funds deposited therein, as follows:

'Records that lawyers are required to make and keep of the receipt and disposition of trust funds-- including a check register, individual client ledgers and an additional individual ledger for the small
amount of the lawyer's own funds on deposit to pay bank charges
-- are described in detail. Rule 1.15(f).'

(emphasis mine)

Here's more, from the Massachusetts IOLTA Committee, as follows:

'It is permissible to maintain a minimal amount of attorney funds in the account to cover service charges, check charges and minimum balances. Treat these funds as a separate "client" and keep track of them on their own ledger. Deduct these charges from the account balance.'

You can, and should, keep a nominal amount of your own money in your IOLTA account, in order to cover for the referenced, potential charges -- especially if you take credit card payments, where 'chargebacks' are at issue. (If you do take credit cards for payment, consider the Massachusetts Bar Association member benefit company, Affinipay's LawPay credit card processing program, to help you to manage those transactions.)

Tip courtesy of Jared Correia, Law Office Management Assistance Program.

Published January 19, 2012


To learn more about the Law Practice Management Section, which is complimentary for all MBA members, contact LPM Section Chair Thomas J. Barbar or Vice Chair Stephen Seckler.
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