Ethics Hotline & Opinions

ETHICS DOCKET NO. 2000-18

MARYLAND STATE BAR ASSOCIATION, INC.

COMMITTEE ON ETHICS

ETHICS DOCKET NO. 2000-18

Escrow Account: Returned Check

 

You have indicated that your firm has an account in which it deposits retainer fees from clients, funds received in collection matters, costs and expenses paid by clients and other similar funds (the "Trust Account"). You then note that occasionally a check deposited into the Trust Account will be returned by your bank due to "insufficient funds," at which time the bank assesses a $3.00 fee for the returned check. Your firm thereafter seeks reimbursement for the service fee from the one who wrote the bad check, and if your firm is unsuccessful, the Trust Account is reimbursed from your firm's operating account. Your request to the bank that such fees be waived has been declined. Based upon these facts, you have inquired whether the "appropriation of funds from the … [Trust A]ccount by the bank to pay the service charge for the returned check" "may be an ethical violation."

Maryland Rules of Professional Conduct, Rule 1.15(a), states in pertinent part that

[a] lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with the representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained pursuant to Title 16, Chapter 600 of the Maryland Rules.

In turn, Maryland Rule 16-607(b)(1) provides:

An attorney or law firm shall either (A) deposit into an attorney trust account funds to pay any fees, service charges, or minimum balance required by the financial institution to open or maintain the account, including those fees that cannot be charged against interest due to the Maryland Legal Services Corporation pursuant to Rule 16-610 b 1 (D), or (B) enter into an agreement with the financial institution to have any fees or charges deducted from the operating account maintained by the attorney or law firm.

Accordingly, the Committee believes that you should deposit into your Trust Account funds to cover fees charged by the bank for returned checks or arrange for such charges to be deducted from your operating account.

 

DISCLAIMER: Opinions of the Maryland State Bar Association (MSBA) Ethics Committee are an uncompensated service of the MSBA. This Committee’s opinions are not binding on the Maryland Court of Appeals, Maryland Attorney Grievance Commission, MSBA or this Committee. The reader is advised that subsequent judicial opinions, revisions to the rules of professional conduct, and future opinions of this Committee may render the Opinions stated herein outdated. As such, the Committee’s opinions are advisory only and neither the Committee nor the MSBA assumes any liability whatsoever with respect thereto. Accordingly, reliance upon the opinions of this Committee is solely at the risk of the user.