Multistate Professional Responsibility Examination (MPRE)The Client-Lawyer RelationshipHard
A lawyer represents a client in a real estate transaction. The lawyer receives a large earnest money deposit from the buyer, which is to be held in trust until closing. The lawyer deposits these funds into her personal checking account, intending to transfer them to the client trust account later that week when she has time. The lawyer has no intention of misusing the funds. Has the lawyer violated any ethical rules?
- ANo, as long as the funds are transferred to the trust account before closing.
- BYes, but only if the amount of the deposit exceeds a certain threshold established by state bar rules.
- CNo, because the lawyer intended to transfer the funds and had no intent to misuse them.
- DYes, because the lawyer has commingled client funds with personal funds.
Show answer & explanationAnswer & explanation
Correct answer: D. Yes, because the lawyer has commingled client funds with personal funds.
A lawyer must keep client funds separate from the lawyer's own funds. Depositing client funds into a personal checking account, even temporarily and without intent to misuse, constitutes commingling and is a serious ethical violation.
Why the other options are wrong
- A. The violation occurs at the moment of commingling, not when (or if) the funds are later separated.
- B. The prohibition against commingling applies regardless of the amount of the client funds, as it protects against even unintentional misuse.
- C. Intent to misuse is irrelevant; the act of commingling itself is the violation.
Commingling Funds
Commingling occurs when a lawyer mixes client funds with the lawyer's own personal funds. This is a serious ethical violation, even if there is no intent to misuse the client's money.
- Client funds must be kept separate in a trust account.
- Mixing client funds with personal funds is prohibited.
- Intent to misuse is not required for a violation.
Memory trick: Separate Money, Separate Accounts, No Mixing.