The Florida Bar
PROFESSIONAL ETHICS OF THE FLORIDA BAR
May 9, 1972
May 9, 1972
It is improper for a law firm to place trust funds of clients in interest-bearing certificates or deposits so as to obtain sufficient interest to reimburse the law firm for actual expenses of administration of the funds.
CPR: DR 9-102(b)(4)
Committeeman Daniels stated the opinion of the committee:
A Professional Association states that its clients' trust account balance averages some $300,000 a month and estimates that its administrative expense in maintaining and handling such trust account is some $8,000 a year. Inquiry is made as to whether it would be proper to place some of the trust funds in interest bearing certificates or deposits so as to obtain sufficient interest to reimburse the Association for its actual expenses. The majority of the Committee concludes that the proposed arrangement would be improper. DR 9-102(B)(4) requires a lawyer to “Promptly pay . . . to the client as requested by a client the funds . . . in the possession of the lawyer which the client is entitled to receive.”
The use of time certificates or deposits would impede the lawyer's duty of prompt payment. Likewise, if earned interest were to benefit the lawyer, such fact would create serious conflicts of interest between the lawyer and his client. Situations could arise where the lawyer might gain financially by delaying the closing of a client's matter. Other potential conflicts of interest could arise as between the lawyer and the various clients inter sese. All of these conflicts would be overshadowed by the impact of federal income tax laws.
A minority of the Committee feels that under limited circumstances and upon express consent of all the clients involved, it could be proper to invest their trust funds in time deposits or certificates and use the income to pay the lawyer's actual expenses in maintaining and handling such trust funds. All Committee members agree that upon direction of a client, a lawyer may invest the client's trust funds in interest bearing accounts and account to the client for the income.