MPRE area 9 of 12
MPRE Safekeeping Funds and Other Property
This area tests a lawyer's fiduciary duties over client and third-party property, primarily funds, held in connection with a representation. The MPRE focuses heavily on trust account mechanics (segregation, commingling, timing of withdrawals), handling of disputed funds, and recordkeeping/delivery obligations under Rule 1.15. Expect fact patterns testing whether a lawyer properly deposited, withdrew, or disbursed funds, and whether disputed claims were handled correctly.
What the MPRE tests
Basic Duty to Safeguard Client Property
A lawyer must hold property of clients and third persons that is in the lawyer's possession in connection with a representation separately from the lawyer's own property. Client funds go into a separate trust account (often called an IOLTA account for small or short-term deposits), and other property must be appropriately safeguarded, such as in a safe deposit box. Complete records of account funds and other property must be kept and preserved for a set period after termination of the representation.
Commingling of Funds
A lawyer may not mix personal or business funds with client funds held in trust. Even brief or well-intentioned mixing of funds is commingling and violates the rule, regardless of whether any client is actually harmed. The only personal funds a lawyer may deposit into a trust account are the minimal amount needed to cover bank service charges; however, funds in which the lawyer claims an interest that is disputed must remain in the trust account until the dispute is resolved.
Prompt Notification, Delivery, and Accounting
When a lawyer receives funds or property in which a client or third person has an interest, the lawyer must promptly notify that person. The lawyer must also promptly deliver any funds or property the client or third person is entitled to receive and, upon request, provide a full accounting of such property. Delay in notifying or delivering funds violates the rule even if the lawyer ultimately pays correctly.
Handling Disputed Funds
When a lawyer and another person (client, third party, or both) have competing claims to funds in the lawyer's possession, the lawyer must keep the disputed portion segregated in the trust account until the dispute is resolved. Any undisputed portion must be promptly distributed to the party entitled to it. The lawyer cannot unilaterally decide who is right and disburse the disputed funds based on that judgment.
Trust Account Withdrawals and Fee Disputes
A lawyer may withdraw fees from a client trust account only as the fees are actually earned, and only in amounts that are not reasonably in dispute. If a client disputes a portion of the fee, the lawyer must leave the disputed amount in trust until the dispute is resolved, while withdrawing only the undisputed, earned portion.
Recordkeeping and Safeguarding Other Property
Beyond funds, a lawyer must safeguard other client property, such as securities or valuable documents, using reasonable measures like a safe deposit box, and must keep complete financial records related to client trust accounts. These records must be preserved for a specified number of years after the representation ends, as fixed by the rule.
Try an MPRE-style question
An attorney received a $10,000 settlement check on behalf of a client. The attorney deposited the check into her client trust account. The attorney's own fee, which the client had agreed was $3,000, was clearly earned and undisputed. The attorney left the entire $10,000 in the trust account for two months before disbursing any funds, using the trust account essentially as a general holding account for convenience. Is the attorney subject to discipline?
- (A) No, because the attorney owned the entire settlement amount once the check was deposited into her own trust account.
- (B) Yes, because the attorney was required to withdraw the earned fee promptly rather than leave it commingled with client funds.
- (C) No, because a lawyer may leave earned fees in the trust account indefinitely as a courtesy to the client.
- (D) Yes, because a lawyer may never deposit a settlement check into a trust account.
Show answer
B. Rule 1.15 requires client funds to be kept separate from the lawyer's own property, and once the lawyer's fee is earned and undisputed it must be withdrawn promptly; leaving it in the trust account is commingling. The lawyer also had to deliver the client's undisputed share promptly rather than park it for convenience. The claim that a lawyer owns a settlement once it is deposited is wrong, because deposit into a trust account signals that the funds belong to the client, or at least that the client has an interest in them. Model Rule 1.15
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