Legal Ethics Opinion No. 1440

Personal Interest Affecting Representation--Avoiding Influence
From Others Than Client--Trust Accounts: Attorney Accepting
Consideration From Bank In Exchange For Withdrawing Trust Account
From IOLTA Program and Converting to Non-Interest-Bearing Account

You have presented a hypothetical situation in which a law firm
is offered banking concessions in exchange for maintaining
non-interest-bearing trust or escrow accounts in a bank. In one
instance, the firm is contacted by a bank and offered reduced fee
or no service charge checking in exchange for removing the firm's
trust and/or escrow accounts from the Virginia IOLTA program. In
another instance, a firm is contacted by a bank and offered a
reduced rate on a commercial loan for which the firm has applied,
in exchange for removing the firm's trust and/or escrow accounts
from IOLTA. In the last instance, a firm contacts a bank and
indicates a desire to convert its trust and/or escrow accounts
from interest-bearing to non-interest-bearing, and the bank
contacts the firm later and offers reduced fee or no service
charge checking and/or other bank services at reduced rates, on
the condition that the firm decline to place its trust and/or
escrow accounts in IOLTA. 

You have asked the committee to opine whether, under the facts of
the inquiry, it is ethical for the firm to accept the offers
presented by the bank.

The appropriate and controlling Disciplinary Rules related to
your inquiry are DR 5-l0l(A), which prohibits a lawyer from
accepting employment if the exercise of his professional judgment
on behalf of his client may be affected by his own financial,
business, property, or personal interests, except with the
consent of the client after full and adequate disclosure
[emphasis added]; DR 5-l06(A)(2), which prohibits a lawyer from
accepting from one other than his client anything of value
related to his representation of or his employment by his client;
and DRs 9-102(D), (E), (F), and (G), the provisions of which
describe the options available to attorneys as to deposit and
maintenance of clients' funds. 

The committee has previously opined that it is improper for a
lawyer or law firm to earn interest or receive any dividends for
the lawyer's or firm's benefit on client's funds held in an
attorney trust or escrow account, or to obtain a personal line of
credit for himself or a third party based upon the amount of
funds maintained in the attorney's trust account.  See LEOs #3l5,
367, 392 and 831.    

The committee believes that an offer by a bank of tangible or
substantial consideration or reward, for the opening or
maintaining of deposits in attorney trust or escrow accounts, is
the equivalent, in practice and in effect, of the payment of
interest on the deposits.  However, the improprieties proscribed
by DR 5-l0l(A) and DR 5-l06(A)(2) may be cured by the consent of
the lawyer's client after full and adequate disclosure.  The
committee is of the opinion that the attorney may choose to forgo
the benefit benefit offered by the bank or may accept the benefit
only after having received the informed consent, after full and
adequate disclosure, of the true owner of the benefit, i.e., the
clients.  See Nassau County Bar Association Legal Ethics Opinion
#88-20 (4/6/88), ABA/BNA Law. Man. on Prof. Conduct, 901:6264. 
Thus, the committee opines that it would be improper for the law
firm to accept the offers presented by the bank in exchange for
converting to, or maintaining, non-interest bearing trust or
escrow accounts in that bank, without the consent of the firm's
clients.

Committee Opinion
November 18, 1991