Can a lawyer run personal or a spouse's real estate and business transactions through the law office trust account?

Plain-English summary

The inquiry concerned the proper practice for a lawyer handling his or her own real estate and other business transactions through the law office trust account, and asked several specific questions.

The committee concluded that a lawyer could not handle collection of his own vendor's interest in a real estate contract through his trust account, because RPC 1.14(a) prohibits depositing funds belonging to a lawyer or a law firm into a trust account, subject to certain specific exceptions. It concluded that a lawyer may make collections of installment payments on behalf of a client and deposit the realized funds into the trust account where the lawyer has agreed with the client that one-third of all sums will be paid as a contingent fee, because that falls within the exception in RPC 1.14(a)(2). The committee further concluded that a lawyer may close a real estate transaction using the trust account where the seller is the lawyer's wife and the property is her separate property and may deposit those funds in the trust account, because as a matter of law the proceeds of that sale would not "belong" to the lawyer.

Currency note

This opinion was issued in 1987, before the Washington State Bar Association's adoption of the 2006 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed 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 Treat this page as historical context, not current guidance.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. In the 2006 revisions Washington renumbered its safekeeping-of-property rule (the former RPC 1.14, cited here) to RPC 1.15A, tracking ABA Model Rule 1.15; confirm the current rule and citation before relying on it.

Common questions

Q: Can a lawyer collect his own real estate contract payments through the trust account?

A: No. The committee concluded that collecting the lawyer's own vendor's interest through the trust account violates RPC 1.14(a), which bars a lawyer's or firm's own funds in a trust account.

Q: Can a lawyer deposit client installment collections in the trust account?

A: The committee said yes where the lawyer has agreed with the client to a one-third contingent fee on the sums collected, because that falls within the exception in RPC 1.14(a)(2).

Q: What about closing a sale of the lawyer's spouse's separate property?

A: The committee concluded the lawyer may close such a transaction through the trust account, because as a matter of law the proceeds of the wife's separate-property sale do not belong to the lawyer.

Background and rules framework

The opinion applied the former Washington RPC 1.14(a) (safekeeping of property, corresponding to ABA Model Rule 1.15 and later renumbered RPC 1.15A in Washington), which bars a lawyer's or firm's own funds from the trust account, and its exception in RPC 1.14(a)(2). The committee turned the spouse-transaction question on whether, as a matter of law, the funds "belong" to the lawyer.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.15 (safekeeping property); Washington RPC 1.14(a), 1.14(a)(2)

See also

• WA Ethics Op. 1674: Funds for an Unidentified Client
• WSBA Ethics Op. 1032: Lawyer-Fiduciary Trust Funds
• WSBA Ethics Op. 1029: Trust Funds, Unreachable Clients

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1129

Original opinion text

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

Advisory Opinion: 1084
Year Issued: 1987
RPC(s): RPC 1.14(a)
Subject: Trust account; use of trust account for lawyer or lawyer's spouse's transactions

The Committee considered your inquiry concerning the proper practice for a lawyer handling his or her own real estate and other business transactions. In response to the specific questions asked by you, the Committee was of the opinion that a lawyer could not handle collection of his vendor's interest in a real estate contract through his trust account because such conduct would violate RPC 1.14(a), which prohibits funds belonging to a lawyer or a law firm being deposited into a trust account with certain specific exceptions.

The Committee was of the opinion that an attorney may make collections of installment payments on behalf of a client and deposit funds realized into his trust account where he has agreed with his client that one-third of all sums will be paid to the attorney as a contingent fee because such conduct falls within the exception set out in RPC 1.14(a)(2).

The Committee was further of the opinion that a lawyer may close a real estate transaction using his trust account where the seller is his wife and the subject property is his wife's separate property and deposit those funds into his trust account because, as a matter of law, the proceeds of this sale would not "belong" to the lawyer.