May a Missouri lawyer keep personal or firm money in a trust account as a cushion against mistakes or fraud?

Plain-English summary

Rule 4-1.15(b) allows a lawyer's own money in a client trust account only to pay financial-institution service charges and only in the amount necessary for that purpose.

Keeping lawyer or firm funds as a cushion against a mistaken or fraudulent transaction serves another purpose and therefore constitutes prohibited commingling. The opinion cites In re Coleman for that conclusion.

Accurate records must identify the portion belonging to the lawyer. Funds that become the lawyer's must be disbursed reasonably promptly after the fee is earned or the expense paid.

In practice

Under this opinion, an overdraft or fraud cushion cannot remain in trust merely to protect client balances. The narrow bank-charge allowance controls the amount and purpose of lawyer-owned funds in the account.

Common questions

Q: May the lawyer maintain a small cushion against errors?

A: No. The opinion treats that as prohibited commingling.

Q: What lawyer funds may remain in trust?

A: Only the amount necessary to pay financial-institution service charges.

Q: When must earned funds be removed?

A: Reasonably promptly after the fee is earned or the expense paid.

Background and rules framework

Rule 4-1.15(b) creates the narrow service-charge exception. Comment [6] requires ownership records and reasonably prompt removal of lawyer-owned funds.

Citations and references

Rules of Professional Conduct:

• Missouri Rule 4-1.15(b) and Comment [6]

Cases:

• In re Coleman, 295 S.W.3d 857, 866 (Mo. banc 2009), commingling

See also

• Oregon Ethics Op. 2005-145: Trust-Account Cushions
• Rhode Island Ethics Op. 93-57: Lawyer Funds for Bank Charges
• Washington Advisory Op. 949: Personal Funds in a Trust Account

Source

• Landing page: Missouri Informal Opinion 2020-13

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

QUESTION: May Attorney maintain in the trust account funds belonging to Attorney or Attorney’s law firm to be used as a “cushion” to protect client funds in the event of a mistake or fraudulent transaction regarding the trust account?

ANSWER: No. Rule 4–1.15(b) allows a lawyer to “deposit the lawyer’s own funds in a client trust account for the sole purpose of paying financial institution service charges on that account, but only in an amount necessary for that purpose.” Comment [6] to Rule 4–4.15 provides guidance that accurate records must be kept as to which part of the funds belong to Attorney. Attorney would be engaging in prohibited commingling of funds if Attorney were to allow funds belonging to the law firm or to Attorney to be maintained in the trust account for any other purpose. See In re Coleman, 295 S.W.3d 857, 866 (Mo. banc 2009). Funds in the trust account belonging to Attorney must be disbursed to Attorney reasonably promptly after the fee is earned or the expense paid, in accordance with the guidance in Rule 4–1.15, Comment [6].