What is a lawyers professional responsibility when choosing the depository bank for a trust account?
A lawyer is acting as a fiduciary when holding client funds in his or her trust account. This means that the lawyer must be prudent when making financial decisions relative to those funds1 including the decision as to the depository bank for the lawyer’s trust account. However, in the absence of information tending to suggest the imminent failure of a bank, a lawyer is presumed to be acting ethically if the lawyer establishes his or her trust account at a financial institution insured by the Federal Deposit Insurance Corporation (FDIC). In other words, if the government has made the determination that the institution is insurable, the lawyer may rely upon the government’s assessment.2 Q. Does FDIC insurance protect my trust account and, if so, to what extent? A lawyer’s general trust account (sometimes referred to as an “IOLTA account”3) is a fiduciary account4 and, as such, each client’s funds deposited therein will be insured by the FDIC (up to the insurance limit) provided the accou
