Multistate Professional Responsibility Exam Practice Question
Attorney T receives a $5,000 payment labeled as an advance on fees from Client D for new litigation. T keeps the money in an envelope on a desk for several days, then places it in a primary business bank account. D does not raise concerns. Which statement best addresses T’s obligations regarding the payment?
T is allowed to keep unearned funds in a business account and move them when fees are eventually earned
Using a personal account is permissible when the payment is labeled as an advance
T must protect unearned funds by placing them in a designated account that is not used for routine business funds
Storing the money in a secure envelope is acceptable as long as T plans to earn it
Attorneys must keep unearned money distinct from their personal or firm finances. T’s actions risk mixing client money with business funds and do not safeguard the client’s interest until fees are properly earned. Other statements are incorrect because they allow improper mixing or early usage of client money.
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Why must unearned funds be kept in a designated account?
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What are the potential consequences of mixing client and business funds?