Multistate Professional Responsibility Examination (MPRE)The Client-Lawyer RelationshipHard
A lawyer successfully negotiates a large settlement for a client in a personal injury case. The settlement check, made out to the client and the lawyer, is received. The lawyer promptly deposits the check into her client trust account. What is the lawyer's immediate ethical obligation regarding the funds once they clear?
- ATo promptly notify the client of the receipt of the funds and disburse the client's share.
- BTo hold the entire amount in the trust account for at least 30 days to ensure all claims are settled.
- CTo immediately disburse the lawyer's fee and expenses from the trust account.
- DTo transfer the client's portion to the lawyer's operating account to facilitate easier disbursement.
Show answer & explanationAnswer & explanation
Correct answer: A. To promptly notify the client of the receipt of the funds and disburse the client's share.
Upon receiving funds in which a client has an interest, a lawyer must promptly notify the client. After the funds clear, the lawyer must promptly deliver to the client any funds that the client is entitled to receive, and account for the funds. The lawyer cannot disburse their own fee until the client has been notified and any disputes resolved.
Why the other options are wrong
- B. Holding funds for an arbitrary period like 30 days without client instruction or a specific reason (e.g., third-party claims) is generally not required and delays the client's access to their money.
- C. The lawyer cannot disburse their own fee until the client has been notified and any potential disputes regarding the fee or expenses are resolved.
- D. Transferring the client's portion to the operating account is prohibited; client funds must remain in the trust account until disbursed to the client or a third party.
Prompt Delivery of Client Funds
A lawyer must promptly notify the client upon receiving funds in which the client has an interest, and promptly deliver any funds or other property that the client is entitled to receive.
- Prompt notification of receipt of funds.
- Prompt delivery of client's share.
- Funds must be kept separate in a trust account.
Memory trick: Trust Account In, Client Notified, Funds Out Swiftly.