Can a lawyer keep a cushion of personal funds in the client trust account to prevent an overdraft notice to the bar from a bookkeeping or bank error?
Apply this to your situation
This page answers the general question as of 2005. Ezel answers yours: whether it's allowed on your facts, under the current Oregon Rules of Professional Conduct, with citations.
Plain-English summary
Oregon lawyers must keep their Lawyer Trust Accounts in financial institutions that agree to notify the Oregon State Bar whenever a properly payable instrument is presented against the account with insufficient funds, whether or not the instrument is honored. A lawyer wants to deposit a "cushion" of the lawyer's own funds in the trust account so that a bank error or a good-faith bookkeeping error does not trigger a notice to the bar when a check is presented against what might be insufficient funds. The opinion asks whether the lawyer may do that, and answers no.
The opinion applies Oregon RPC 1.15-1(b), which allows a lawyer to deposit the lawyer's own funds in a trust account for the sole purposes of paying bank service charges or meeting minimum-balance requirements, and only in the amounts necessary for those purposes. It reasons that the rule contains no exception for "cushions," so placing such funds in the trust account would be impermissible commingling, citing In re Mannis and In re Holman.
In practice
The opinion holds that, under the Oregon rule as it stood at the time, the only personal funds permitted in a Lawyer Trust Account are those needed for bank charges or minimum balances; a buffer kept to prevent overdraft notification falls outside that narrow allowance and is commingling. Per the opinion, the analysis turns on the closed list of permitted personal-fund deposits in Oregon RPC 1.15-1(b). Verify the current text of Oregon RPC 1.15-1 before relying on any specific point.
Common questions
Q: Can a lawyer keep extra personal money in the trust account as a safety buffer?
A: No. The opinion concludes that Oregon RPC 1.15-1(b) allows personal funds only for bank service charges or minimum balances, so a cushion is impermissible commingling.
Q: Does it matter that the cushion is meant to prevent an innocent overdraft notice to the bar?
A: No. The opinion treats the purpose as irrelevant; the rule has no cushion exception, so depositing the funds is commingling regardless of the good-faith motive.
Background and rules framework
The opinion interprets Oregon RPC 1.15-1(b) (when a lawyer may place personal funds in a trust account), corresponding to Model Rule 1.15(b), against the trust-account overdraft-notification system that requires banks to report insufficient-funds instruments to the bar.
Citations and references
Rules of Professional Conduct:
- Oregon RPC 1.15-1(b) / Model Rule 1.15(b) (lawyer's own funds in a trust account limited to bank charges and minimum balances)
Cases:
- In re Mannis, 295 Or 594, 668 P2d 1224 (1983)
- In re Holman, 297 Or 36, 682 P2d 243 (1984)
See also
- OSB Ethics Op. 2005-135: Arbitrator and Mediator Fees in Trust
- OSB Ethics Op. 2005-117: IOLTA vs. Interest-Bearing Trust Account
- OSB Ethics Op. 2005-55: Lawyer as Escrow Agent
Source
- Landing page: https://www.osbar.org/ethics/toc.html
- Original PDF: https://www.osbar.org/_docs/ethics/2005-145.pdf
Get today's answer for your situation
You just read a 2005 opinion on this question. Ezel checks the current Oregon Rules of Professional Conduct and answers your specific situation, with citations.
Opens in Ezel Pro. Every answer cites the rules it relies on.