Lawyers e-Journal
Thursday, Jan. 19, 2012
Law Practice Management Tip
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
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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.