Answer: It is unethical for a lawyer, LLP, or firm to commingle their own funds with client or third-party funds. An exception applies to allow for payment of bank fees.

Explanation: While lawyers, LLPs, and firms may not generally deposit their own funds into a COLTAF account, an exception applies to allow for payment of anticipated service charges or other fees for the maintenance or operation of the COLTAF account. This includes making a required minimum deposit to open a COLTAF account. Any amount of a lawyer’s, LLP’s, or firm’s funds placed into a COLTAF account must be clearly identified in a separate ledger as part of the trust accounting records. By failing to properly record these funds in trust records, the responsible lawyer or LLP not only violates the Colorado Rules of Professional Conduct, but also risks having to forfeit the funds to COLTAF as unidentifiable funds upon the dissolution of the firm.

The Colorado Rules of Professional Conduct do not set a limit on the amount of funds that can be deposited into a COLTAF account for the purposes of covering bank service charges or fees. However, the amount must be limited to what is reasonably anticipated as necessary to cover fees and service charges. You may not deposit your own funds or the firm’s funds above what is required to cover fees in order to create a “cushion” to prevent accidental overdrafts. If you are maintaining your trust account and records ethically and are not the victim of fraud, you will not overdraft the account.

While not binding, COLTAF’s recommendation for the average practitioner is that no more than $500 should be deposited into a COLTAF account for the purpose of covering fees and service charges. Your own practice and experience may lead you to choose a different amount. However, if selecting a larger amount, consult the Colorado Rules of Professional Conduct.

See Colorado Rule of Professional Conduct 1.15B(f) or Colorado Licensed Legal Paraprofessional Rule of Professional Conduct 1.15B(f) for more information.