On October 29, 2019, the New York State Bar Association Committee on Professional Ethics issued an advisory opinion, Opinion 1176, which answers the question of whether a lawyer may “make a nominal deposit of the lawyer’s own funds to avoid having the lawyer’s trust or escrow account closed for inactivity or failure to maintain a minimum balance.” Covering
The Committee of Professional Ethics reviewed the question presented in conjunction with the relevant ethics rules. The resulting opinion advises lawyers that it is okay to deposit “reasonably adequate” amounts of their own money into client escrow accounts to avoid having them shut down due to inactivity or insufficient funds. Examining the N.Y. Rules of Professional Responsibility, the committee looked specifically at subsection (b)(3) of Rule 1.15, which expresses that funds “reasonably sufficient to maintain the account or to pay account charges may be deposited therein.”
The committee took the position that it is “simple common sense” that such actions as a lawyer merely depositing funds to cover a minimum balance requirement do not violate the prohibition against the comingling of lawyer and client funds. They note, however, that there is a difference between sustaining the account and padding the account with money—an action which is still expressly forbidden. In addition, due to variances in fee amounts between banking institutions, there can be no bright line rule to set the acceptable dollar amount an attorney may use to cover minimum requirements. However, any amounts in excess of the banking requirements to maintain the account may cross the line in to comingling of funds.
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