Answer:
Call your state's Bar Association and ask for a copy of their publication on IOLTA's or client trust funds. It is designed to meet the needs of the depositary bank. However, of the 7 or 8 I have read, none address this issue.The relevance of that observation is that the rules regarding checks and endorsements are no different for client trust funds than they are for any other account. Technically, the client trust fund is in the name of the law firm. If an item being deposited is payable to someone/something else, then it should carry that payee's endorsement, followed by the law firm's endorsement.
If the check is payable to the client, John Doe, then he may endorse it "John Doe" or "Pay to the Order of Black and Blue, Attorneys at law, John Doe." The law firm's endorsement would follow. The law firm gives warranties in connection with the prior endorsement.
An attorney's ethical obligations in the handling of client funds are well defined. In my opinion, bar associations do a better job of enforcing them than any other aspect of professional responsibility. Yet, you should require appropriate endorsements on items deposited to these accounts just like you would any other.
First published on BankersOnline.com 12/2/02
print
share