Inquiry is made concerning the ethical propriety of giving the interest derived from a trust account to a charity designated by the lawyer.
The ethical duties imposed when an interest bearing trust account is utilized are discussed in Formal Ethics Opinion 84-F-68 issued by the Board on May 29, 1984 and adopted herein subject to the amendments to the Code of Professional Responsibility subsequently promulgated as described herein.
On October 20, 1984 the Supreme Court amended the Ethical Considerations and Disciplinary Rules of Canon 9 of the Code of Professional Responsibility so that the lawyers of Tennessee may, on a voluntary basis, cause their trust accounts to be invested so that the interest derived therefrom may be used for legal charitable purposes as prescribed in Disciplinary Rule 9-102(C)(2) as amended, to wit:
DR 9-102(C)(2). A lawyer or law firm with which he is associated who receives client funds may maintain a pooled interest bearing insured depository account for deposit of client funds that are nominal in amount or expected to be held for a short period. Such an account shall comply with the following provisions:
(a) The account shall only include clients' funds which are nominal in amount or are expected to be held for a short period of time.
(b) No interest from such an account shall be made available to a lawyer or law firm.
(c) Lawyers or law firms depositing client funds in an interest bearing insured depository account under this paragraph
(C)(2)shall direct the depository institution:
(i) to remit interest, net any service charges or fees, as computed in accordance with the institution's standard accounting practice, at least quarterly, to the Tennessee Bar Foundation; and
(ii) to transmit with each remittance to the Tennessee Bar Foundation a statement showing the name of the lawyer or law firm on whose account the remittance is sent and the rate of interest applied, with a copy of such statement to be transmitted to the lawyer or the law firm.
(d) The determination of whether funds are nominal in amount or are to be held for a short period of time rests in the sound discretion of the lawyer and no charge of ethical impropriety or other breach of professional conduct shall attend an attorney's exercise of good faith judgment in that regard. A lawyer may notify his clients of his participation in an Interest on Lawyer's Trust accounts program.
(e) All interest transmitted to the Tennessee Bar Foundation shall be distributed by that entity for the following purposes:
(i) to provide legal assistance to the poor;
(ii) to provide student loans, grants, and scholarships to deserving law students;
(iii) to improve the administration of justice; and
(iv) for such other programs for the benefit of the public as are specifically approved by the Supreme Court of the State of Tennessee from time to time.
Disciplinary Rule 9-102(C)(1) of the Code, as amended October 20, 1984, states that except as authorized by DR 9-102(C)(2) interest earned on accounts in which funds of clients are deposited shall belong to the clients whose funds are deposited and the lawyer shall have no right or claim to such interest.
Lawyers of Tennessee may not give the interest derived from a trust account to a charity designated by the lawyer but may, on a voluntary basis, cause their trust accounts to be invested so that the interest derived therefrom may be used for legal charitable purposes as prescribed by Disciplinary Rule 9-102(C)(2) as amended on October 20, 1984.
This 22nd day of August, 1985.
G. Wilson Horde
T. Maxfield Bahner
Charles T. Herndon, III
APPROVED AND ADOPTED BY THE BOARD