United States District Court
Northern District Of Illinois
Local Rules
LR83.51.15. Safekeeping Property
(a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be kept in a separate account maintained in the
State where the lawyer’s office is situated, or elsewhere with the consent of the client or third
person. Other property shall be identified as such and appropriately safeguarded.
Complete records of such account funds and other property shall be kept by the
lawyer and shall be preserved for a period of seven years after termination of
the representation.
(b) Upon receiving funds or other property in which a client or third person has
an interest, a lawyer shall promptly notify the client or third person. Except
as stated in this rule or otherwise permitted by law or by agreement with the
client, a lawyer shall promptly deliver to the client or third person any funds
or other property that the client or third person is entitled to receive and,
upon request by the client or third person, shall promptly render a full
accounting regarding such property.
(c) When in the course of representation a lawyer is in possession of property in
which both the lawyer and another person claim interests, the property shall be
kept separate by the lawyer until there is an accounting and severance of
their interests. If a dispute arises concerning their respective interests the
portion in dispute shall be kept separate by the lawyer until the dispute is
resolved.
(d) All nominal or short-term funds of clients paid to a lawyer or law firm,
including advances for costs and expenses, shall be deposited in one or more pooled
interest-bearing trust accounts established with a bank or savings and loan
association, with the Lawyers Trust Fund of Illinois designated as income
beneficiary. Each pooled interest-bearing trust account shall comply with the following
provisions:
(1) Each lawyer or law firm shall establish one or more interest-bearing trust
accounts with any bank or savings and loan association authorized by Federal or
State law to do business in Illinois. Funds deposited in each interest-bearing
trust account shall be federally insured and shall be subject to withdrawal
promptly upon request.
(2) The rate of interest payable on any interest bearing trust account shall not
be less than the rate paid by the depository institution to depositors other
than lawyers or law firms.
(3) Each lawyer or law firm shall direct the depository institution to remit net
interest or dividends, after deduction of reasonable charges and fees, as the
case may be, on the average monthly balance in the account, or as otherwise
computed in accordance with the institution’s standard accounting practice, at least quarterly, directly to the Lawyers
Trust Fund of Illinois. A statement shall be transmitted with each remittance
showing the name of the lawyer or law firm directing that the remittance be sent,
the account number, the gross interest, the service fee/handling charge if any,
the net interest remitted, the amount of such remittance, the remittance
period, and the rate of interest applied.
(4) Each lawyer or law firm shall deposit into such interest-bearing trust
accounts all clients’ funds which are nominal in amount or are expected to be held for a short
period of time.
(5) The decision as to whether funds are nominal in amount or are expected to be
held for a short period of time rests exclusively in the sound judgment of the
lawyer or law firm, and no charge of ethical impropriety or other breach of
professional conduct shall attend a lawyer’s or law firm’s judgment on what is nominal or short term.
(e) Ordinarily, in determining the type of account into which to deposit
particular funds for a client, a lawyer or a law firm shall take into consideration the
following factors:
(1) the amount of interest which the funds would earn during the period they are
expected to be deposited;
(2) the cost of establishing and administering the account, including the cost of
the lawyer’s services;
(3) the capability of the financial institution, through subaccounting, to
calculate and pay interest earned by each client's funds, net of any transaction
costs, to the individual client.
(f) Any lawyer or law firm that can establish that compliance with section (d) of
this rule has resulted in any banking expense whatsoever shall be entitled to
reimbursement of such expense from the Lawyers Trust Fund of Illinois by filing
an appropriate claim with supporting documentation.
Committee Comment. A lawyer should hold property of others with the care required of a
professional fiduciary. Securities should be kept in a safe deposit box, except when some
other form of safekeeping is warranted by special circumstances. All property
which is the property of clients or third persons should be kept separate from
the lawyer’s business and personal property and, if monies, in one or more trust
accounts. Separate trust accounts may be warranted when administering estate monies or
acting in similar fiduciary capacities.
Lawyers often receive funds from third parties from which the lawyer’s fee will be paid. If there is risk that the client may divert the funds
without paying the fee, the lawyer is not required to remit the portion from which
the fee is to be paid. However, a lawyer may not hold funds to coerce a client
into accepting the lawyer’s contention. The disputed portion of the funds should be kept in trust and
the lawyer should suggest means for prompt resolution of the dispute, such as
arbitration. The undisputed portion of the funds shall be promptly distributed.
Third parties, such as a client’s creditors, may have just claims against funds or other property in a lawyer’s custody. A lawyer may have a duty under applicable law to protect such
third-party claims against wrongful interference by the client, and accordingly may
refuse to surrender the property to the client. However, a lawyer should not
unilaterally assume to arbitrate a dispute between the client and the third party.
The obligations of a lawyer under this rule are independent of those arising
from activity other than rendering legal services. For example, a lawyer who
serves as an escrow agent is governed by the applicable law relating to
fiduciaries even though the lawyer does not render legal services in the transaction.
The Lawyers Trust Fund of Illinois provides a means through the collective
efforts of the bar to reimburse persons who have lost money or property as a
result of dishonest conduct of a lawyer. This rule requires all income on clients’ funds held by a lawyer to be remitted to that Trust Fund.