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Thursday, October 09, 2008
Law - "Lawyers worry about liability if banks holding client trust accounts fail"
An article in The National Law Journal, by Julie Kay, begins:
Following the failure of California's IndyMac and the very real potential of other bank collapses, lawyers have been flooding bar associations with questions about whether they would be responsible for client trust accounts if a bank fails.In response, bar associations have been posting guidance to lawyers on their Web sites, holding internal meetings on the issue and issuing formal ethics opinions.
The consensus of the bar associations is that lawyers must be cautious about where they hold clients' funds, making sure they're in Federal Deposit Insurance Corp. (FDIC)-insured, solid banks. Opinions vary on whether funds should be split up in different banks to take advantage of the $250,000 insured deposits.
According to research and interviews with a variety of bar associations, including those of California, Los Angeles, Florida and Virginia, lawyers should not worry about sanctions or disciplinary actions if a bank failure leads to the loss of client funds, provided the lawyer chooses an FDIC-insured, stable bank.
Posted by Marcia Oddi on October 9, 2008 06:49 PM
Posted to General Law Related