When opening a client trust account, does a lawyer have to shop around for the bank with the best interest rate and lowest fees?

Plain-English summary

A lawyer asked what duty, if any, exists to "shop" among financial institutions for the rates most beneficial to clients when establishing trust accounts under MRPC 1.15. The opinion grounded its answer in the lawyer's fiduciary role over client funds, relying on R-7's exhaustive review of MRPC 1.15 as amended in 1990.

The opinion concluded that, consistent with the fiduciary duty to preserve and increase trust assets, a lawyer should use reasonable care to select institutions offering favorable interest rates on client trust accounts and minimizing service fees and other charges. The standard of care is the same as for any fiduciary under like circumstances: reasonable care to protect and preserve client assets. The opinion was explicit that this duty does not require the lawyer to shop for the single "most beneficial" or overall highest rate; reasonable care under the circumstances suffices.

The opinion noted that many Michigan financial institutions had agreed not to charge service fees on IOLTA trust accounts, with the participating list published periodically by the Michigan State Bar Foundation in the Michigan Bar Journal, and that a lawyer exercising reasonable care should consider using institutions that waive or minimize such fees on IOLTA and other trust accounts.

Currency note

This opinion was issued in 1994, before later amendments to the Michigan Rules of Professional Conduct. The State Bar notes this opinion predates amendments to MRPC 1.15 (see the State Bar's trust-account opinions list). MRPC 1.15 and the IOLTA rules have since changed, and subsequent rule amendments or later opinions may have altered the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Does a lawyer have to find the bank with the highest interest rate for a client trust account?

A: No. The opinion concluded the lawyer is not required to shop for the most beneficial or overall highest rate; reasonable care under the circumstances is the standard.

Q: What standard of care applies to selecting a trust-account bank?

A: The opinion concluded it is the same standard as any fiduciary under like circumstances: reasonable care to protect and preserve the client's assets.

Q: Should the lawyer consider banks that waive IOLTA service fees?

A: Yes. The opinion concluded that, consistent with reasonable care, a lawyer should consider institutions that waive or minimize service fees on IOLTA and other trust accounts.

Background and rules framework

The opinion interprets MRPC 1.15 (Model Rule 1.15, safekeeping of client property), which requires establishing client trust accounts for client funds in the lawyer's possession. The analysis rests on the lawyer's fiduciary duty over those funds and on Formal Opinion R-7, which reviewed MRPC 1.15 as amended in 1990 and stated that a lawyer should patronize depository institutions providing needed services at rates most advantageous to the client. The opinion also referenced the Michigan State Bar Foundation's IOLTA program and the list of fee-waiving institutions published in the Michigan Bar Journal.

Citations and references

Rules of Professional Conduct:

• MR 1.15 / MRPC 1.15 (safekeeping client property; trust accounts)

Other opinions cited:

• Michigan Formal Op. R-7: review of MRPC 1.15 as amended in 1990; fiduciary duty over trust funds

See also

• ABA Formal Op. 475: safeguarding fees subject to division
• ABA Formal Op. 02-426: lawyer serving as fiduciary for an estate or trust

Source

• Landing page: https://www.michbar.org/opinions/ethics/numbered_opinions?OpinionID=1055&Type=6

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

RI-185

January 19, 1994

SYLLABUS

In the establishment of client trust accounts, a lawyer shall use reasonable care in selecting financial institutions which offer favorable interest rates and which minimize service fees or other charges against such client trust accounts.

References: MRPC 1.15; R-7.

TEXT

MRPC 1.15 requires the establishment of client trust accounts under various circumstances with respect to funds of a client which come into the possession of the lawyer. The inquirer poses the following question: What duty, if any, does a lawyer have to "shop" among financial institutions for the rates most beneficial to clients when establishing trust accounts?

MRPC 1.15 governs the establishment of client trust accounts. The requirements of MRPC 1.15, as amended in 1990, were exhaustively reviewed in R-7.

In R-7 it was stated in part:

"Because a lawyer has a fiduciary duty to preserve and increase assets held in trust, the lawyer should patronize depository institutions which provide needed services at rates most advantageous to the client."

Consistent with this fiduciary duty, a lawyer should use reasonable care to select financial institutions which provide favorable interest rates on client trust accounts and which minimize service fees and other charges against such accounts.

The standard of care required, however, is the same as any fiduciary under like circumstances. This duty is to use reasonable care to protect and preserve the assets of the client.

Consistent with this fiduciary duty, the lawyer is not obligated to "shop" financial institutions to secure to "most beneficial" rate available. Rather, the lawyer should use reasonable care to select financial institutions which provide favorable interest rates on client trust accounts.

It should be noted that numerous financial institutions within the state of Michigan have agreed not to charge any service fees on IOLTA Trust Accounts. The list of participating financial institutions is published periodically by the Michigan State Bar Foundation in the Michigan Bar Journal (see, e.g., November 1993, p 1233). Consistent with the lawyer's duty to exercise reasonable care, the lawyer should consider utilizing financial institutions which waive or minimize such service fees or charges to IOLTA and other trust accounts.

A lawyer in possession of funds belonging to a client occupies the role of fiduciary with respect to such funds. Consistent with that fiduciary duty, the lawyer must exercise reasonable care to deposit such funds in financial institutions which provide favorable interest rates and which minimize service fees and other charges to such accounts. The lawyer is not, however, required to continually search for financial institutions which provide the overall highest rate of return. Rather, only reasonable care under the circumstances is required.