Must a lawyer whose income comes almost entirely from being house counsel or a corporate officer keep separate personal and business bank accounts under the attorney-records rule?

Plain-English summary

After the Supreme Court adopted R. 1:12-5 on September 26, 1967, governing the accounts and records attorneys must keep, the Committee received inquiries about it. The first asked whether an attorney whose income is derived almost exclusively from employment as house counsel or as an appointive officer of a corporation must maintain two separate accounts, a personal account and a business account.

The Committee reasoned that requiring two accounts would only force the attorney to transfer his salary from a business to a personal account. Good sense and reasonableness dictated that he should not be required to keep books or records merely to record periodic salary receipts: he is not handling monies on behalf of his employer, and the employer is not a "client" in the usual sense. Compelling two accounts and two sets of records would be a needless duplication serving no purpose in helping the court correct the problems that arise in the traditional attorney-client relationship.

The Committee added a qualification: if the attorney represents independent clients from time to time, separate records for those cases should be kept as prescribed by the rule.

Currency note

This opinion was issued in February 1968, before New Jersey's September 13, 1971 adoption of the Disciplinary Rules (Code of Professional Responsibility), and well before the 1984 Rules of Professional Conduct and all later revisions. It construed R. 1:12-5 as it stood in 1967; the attorney-records and trust-account requirements have since been recodified (now R. 1:21-6) and the duty to safeguard client property appears in RPC 1.15. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific requirement mentioned here.

Common questions

Q: Does a salaried in-house lawyer need a separate business account just for salary?

A: No. The Committee held that recording periodic salary receipts does not require a separate set of books, because the lawyer is not handling client funds and the employer is not a client in the usual sense.

Q: What if the in-house lawyer also takes outside clients?

A: Then the Committee said separate records for those independent client matters must be kept as the records rule prescribes.

Background and rules framework

The opinion construes R. 1:12-5 (1967), the precursor to today's attorney-records rule, against its purpose of policing client funds in the attorney-client relationship. Because a salary is not client money, the rule's recordkeeping burden does not attach to it; it does attach to any independent client representation. The duty to keep client funds separate and to maintain records is now found in RPC 1.15 and R. 1:21-6.

Citations and references

Court rules:

• R. 1:12-5 (adopted September 26, 1967): accounts and records required to be kept by attorneys

See also

• NJ ACPE Op. 145: Producing Attorney-Client Letters

Source

• Landing page: https://law.justia.com/cases/new-jersey/advisory-committee-on-professional-ethics/2004/acp124-1.html

Original opinion text

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

91 N.J.L.J. 108
February 15, 1968

OPINION 124

Accounts - Commingling

On September 26, 1967 our Supreme Court adopted R. 1:12-5 relating to accounts and records required to be kept by attorneys. Several inquiries have been made relative to the same.

The first inquiry is: Where an attorney's income is derived almost exclusively from his employment as "house counsel" or as an appointive officer of a corporation, must he maintain two separate accounts, a personal account and a business account?

If two accounts were required, the attorney would merely be required to transfer his salary earnings from his business to his personal account. Good sense and reasonableness dictate that under the above set of facts the attorney should not be required to keep books or records merely to record his periodic salary receipts. He is not handling monies on behalf of his employer. His employer is not a "client" in the usual sense of the word. To compel two accounts, two sets of records, would be a needless duplication and an unnecessary burden, serving no purpose in helping the court to correct a situation which sometimes occurs in the traditional attorney-client relationship. If, however, independent clients are represented from time to time, separate records for these cases should be kept as prescribed by the rule in question.