Can a New York lawyer put a small amount of the lawyer's own money into a trust or escrow account to stop the bank from closing it for inactivity, without it being improper commingling?

Plain-English summary

A lawyer's trust or escrow account had carried a zero balance for a time, and the lawyer feared the bank would close it for inactivity or for failing to keep a minimum balance. The lawyer worried that depositing the lawyer's own funds to keep the account open could be improper commingling once client funds were later deposited.

The opinion resolves the concern under three provisions of Rule 1.15. Rule 1.15(b)(1) requires a lawyer holding another's funds incident to practice to keep them in a special account separate from the lawyer's business and personal accounts, and Rule 1.15(a) prohibits commingling client or third-party funds with the lawyer's own. But Rule 1.15(b)(3) provides that funds "reasonably sufficient to maintain the account or to pay account charges may be deposited therein." The committee calls this common sense: a lawyer may provide a cushion of the lawyer's own funds to keep the account alive and cover charges.

The committee cautions this is no license to pad the account. "Reasonably sufficient" means amounts reasonably adequate to meet the bank's requirements to sustain the account, pay its charges, and satisfy minimum thresholds; amounts beyond that may cross the line into commingling. Because banking requirements vary, the committee sets no bright-line dollar figure, but is confident a lawyer who uses own funds to keep the account within the bank's guidelines does not risk commingling.

In practice

Under this opinion, a New York lawyer may place a nominal amount of the lawyer's own money into a trust or escrow account to prevent the bank from closing it for inactivity or a minimum-balance failure. The opinion holds that Rule 1.15(b)(3) authorizes own-fund deposits reasonably sufficient to maintain the account or pay its charges, and that staying within the bank's requirements avoids the commingling barred by Rule 1.15(a); depositing more than is reasonably sufficient may cross that line.

Common questions

Q: Can a lawyer put own funds in the trust account to keep the bank from closing it?

A: Per the opinion, yes. Rule 1.15(b)(3) permits depositing funds reasonably sufficient to maintain the account or pay account charges.

Q: Isn't that commingling under Rule 1.15(a)?

A: Per the opinion, no, so long as the amount is reasonably sufficient to maintain the account and cover charges; amounts beyond what is reasonably sufficient may cross into prohibited commingling.

Q: How much can the lawyer deposit?

A: Per the opinion, there is no bright-line dollar figure because banking requirements vary; the amount must be reasonably adequate to meet the bank's requirements to sustain the account, pay its charges, and meet minimum thresholds.

Background and rules framework

The opinion interprets New York Rule 1.15, specifically 1.15(b)(1) (separate special account), 1.15(a) (no commingling of others' funds with the lawyer's own), and 1.15(b)(3) (own funds reasonably sufficient to maintain the account or pay charges). This corresponds to ABA Model Rule 1.15.

Citations and references

Rules of Professional Conduct:

• New York Rules of Professional Conduct 1.15(a), 1.15(b)(1), 1.15(b)(3); Comment [1] to Rule 1.15
• ABA Model Rule 1.15 (analogue)

Other opinions cited:

• N.Y. State 1127 (2017); N.Y. City 2014-3 (2014): the prohibition on commingling

See also

• NY State Bar Op. 1188: Estate Funds Held Solely as Co-Executor in an Attorney Trust Account
• NY State Bar Op. 1181: Charging Interest on Unpaid Disbursements in a Contingency-Fee Case

Source

• Landing page: https://nysba.org/ethics-opinion-1176/