Rules of Professional Conduct
NOTE: Operative January 1, 2012, Business & Professions Code section 6010, in part, provides that the State Bar is governed by a board known as the board of trustees of the State Bar and that any provision of law referring to the “board of governors” shall be deemed to refer to the “board of trustees.” In accordance with this law, references to the “board of governors” included in the current Rules of Professional Conduct are deemed to refer to the “board of trustees.”
(A) All funds received or held for the benefit of clients by a member or law firm, including advances for costs and expenses, shall be deposited in one or more identifiable bank accounts labelled "Trust Account," "Client's Funds Account" or words of similar import, maintained in the State of California, or, with written consent of the client, in any other jurisdiction where there is a substantial relationship between the client or the client's business and the other jurisdiction. No funds belonging to the member or the law firm shall be deposited therein or otherwise commingled therewith except as follows:
(1) Funds reasonably sufficient to pay bank charges.
(2) In the case of funds belonging in part to a client and in part presently or potentially to the member or the law firm, the portion belonging to the member or law firm must be withdrawn at the earliest reasonable time after the member’s interest in that portion becomes fixed. However, when the right of the member or law firm to receive a portion of trust funds is disputed by the client, the disputed portion shall not be withdrawn until the dispute is finally resolved.
(B) A member shall:
(1) Promptly notify a client of the receipt of the client’s funds, securities, or other properties.
(2) Identify and label securities and properties of a client promptly upon receipt and place them in a safe deposit box or other place of safekeeping as soon as practicable.
(3) Maintain complete records of all funds, securities, and other properties of a client coming into the possession of the member or law firm and render appropriate accounts to the client regarding them; preserve such records for a period of no less than five years after final appropriate distribution of such funds or properties; and comply with any order for an audit of such records issued pursuant to the Rules of Procedure of the State Bar.
(4) Promptly pay or deliver, as requested by the client, any funds, securities, or other properties in the possession of the member which the client is entitled to receive.
(C) The Board of Governors of the State Bar shall have the authority to formulate and adopt standards as to what "records" shall be maintained by members and law firms in accordance with subparagraph (B)(3). The standards formulated and adopted by the Board, as from time to time amended, shall be effective and binding on all members.
Pursuant to rule 4-100(C) the Board of Governors of the State Bar adopted the following standards, effective January 1, 1993, as to what "records" shall be maintained by members and law firms in accordance with subparagraph (B)(3).
(1) A member shall, from the date of receipt of client funds through the period ending five years from the date of appropriate disbursement of such funds, maintain:
(a) a written ledger for each client on whose behalf funds are held that sets forth:
(i) the name of such client,
(ii) the date, amount and source of all funds received on behalf of such client,
(iii) the date, amount, payee and purpose of each disbursement made on behalf of such client, and
(iv) the current balance for such client;
(b) a written journal for each bank account that sets forth:
(i) the name of such account,
(ii) the date, amount and client affected by each debit and credit, and
(iii) the current balance in such account;
(c) all bank statements and canceled checks for each bank account; and
(d) each monthly reconciliation (balancing) of (a), (b), and (c).
(2) A member shall, from the date of receipt of all securities and other properties held for the benefit of client through the period ending five years from the date of appropriate disbursement of such securities and other properties, maintain a written journal that specifies:
(a) each item of security and property held;
(b) the person on whose behalf the security or property is held;
(c) the date of receipt of the security or property;
(d) the date of distribution of the security or property; and
(e) person to whom the security or property was distributed.
(Publisher's Note: Trust Account Record Keeping Standards as adopted by the Board of Governors on July 11, 1992, effective January 1, 1993.)