Frequently Asked Questions About Client Trust Accounts

1. What is a client trust account?

A client trust account is an account maintained at a bank, savings and loan, or credit union for the purpose of holding client funds. See Rule 1.15A of the Rules of Professional Conduct for the lawyer's ethical obligations regarding handling client funds.

2. Does every lawyer need to have a client trust account?

No. Only if the lawyer handles client funds. 

Determining client funds involves who the money belongs to or is entitled to it, not the source of the money. It depends on what type of funds you accept in your practice. If you accept advance fee deposits or have contingency fee cases, you handle client funds. If you only bill for the work after it is done, and receive payments for these invoices, these would be considered earned fees and not client funds.

3. What is an IOLTA account?

IOLTA stands for Interest on Lawyers' Trust Accounts. An IOLTA account is a pooled, interest-bearing trust account for deposit of client funds that are so small in amount or that will be held for so short a time that they would not earn net interest that would be payable to the client.

4. What happens to the interest earned on an IOLTA account?

Interest on an IOLTA account is payable to the Legal Foundation of Washington, a non-profit organization that is independent from the WSBA. The Foundation administers grants to finance law-related projects, particularly the delivery of legal services to the indigent. If you have questions about the Foundation, call them at (206) 624-2536.

5. What is an "individual" client trust account?

An individual client trust account is an interest-bearing account set up for one client, where the interest goes to that client instead off the LFW. It is set up in the client's name using the client's tax ID number.

6. What if a lawyer is admitted in Washington and also in another state, and practices wholly or partly in that other state?

The trust account declaration form relates only to the practice of law under your Washington license. The Rules of Professional Conduct Committee has issued an informal opinion that if client funds come into a lawyer's possession as a result of the lawyer's practice under the lawyer's Washington license, then those funds should be handled as required by the Washington rules. Otherwise, the lawyer must comply with the rules of the jurisdiction in which he or she practices.

7. On the trust account declaration form there are two parts requiring two signatures. Do both parts have to be signed?

Part I must be signed by all attorneys. Part II must be completed only if you have an IOLTA account. Part II may be signed by either the individual lawyer or by an authorized member of the lawyer's firm on behalf of the lawyer.

8. Part II also asks for the bank and account number of my IOLTA account. Why?

It is required under Regulation 106. That information may be provided to the Legal Foundation of Washington so that they may verify that the bank is turning over all appropriate funds to the Foundation.

9. Do I also list other account numbers besides my IOLTA account in Part II?

No. Do not list individual client trust accounts or other non-IOLTA accounts.

10. What if I do not have a trust account now because I do not handle client funds, but I had one for part of this year or I expect to have one next year?

The trust account certification questions should be answered according to the facts as they exist on the date the certification is signed. You do not need to report closed IOLTA accounts - only currently open accounts. You do not need to notify the WSBA if you open an IOLTA account midyear. You report only once a year.

11. Where can I get a Trust Account Declaration form?

The trust account declaration form is part of the WSBA Licensing Form mailed to every WSBA member in December. If you did not receive a licensing form, please call (206) 727-8217 or E-mail questions@wsba.org. Only active status members receive a trust account form.

12. Where can I get more information about complying with the trust account rules?

A WSBA booklet titled Managing Client Trust Accounts: Rules, Regulations and Common Sense is available on the web. This is a guide for attorneys in dealing with trust account questions. It is also available in print to WSBA members free of charge. Call the WSBA Service Center at 206-443-WSBA or 1-800-945-WSBA or e-mail questions@wsba.org to receive a copy.

For specific questions, call the WSBA auditors at 206-727-8242 or 206-733-5937. IOLTA is administered by the Legal Foundation of Washington. For more information call 206-624-2536.

13. Where is the authority requiring the trust account declaration form?

Rule for Enforcement of Lawyer Conduct 15.5(a).