Multistate Professional Responsibility Exam Practice Question
An attorney opened a deposit account at a local bank to hold settlement proceeds for a new client. A bank manager recommends using one account for all deposits, as it will be easier for account management and simplicity of use. Which approach is appropriate in this situation?
Keep each client’s settlement money in its own deposit with distinct records
Maintain a small portion of the attorney’s funds in the account to pay service charges
Use one deposit account for all transactions.
Mix the client funds with earnings from the firm’s operations to reduce costs
Attorneys keep client money separate to avoid commingling. Opening a separate deposit for these funds supports clarity and compliance. One alternative might suggest partial integration of personal funds to handle fees, but that practice risks mismanagement. Another alternative might propose combining client money with business revenue, which is generally impermissible because it compromises ethical safeguards and transparency. The better approach establishes accountability and upholds client confidence by keeping the attorney’s finances distinct.
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What is the difference between a deposit account and a trust account for client funds?