Re: I.O.L.T.A. Acounts

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On 7/05/06, W. B. Straight, Esq. wrote:
> Is it morally permissible, according the tenets of the
> Christian Religion--say the Roman Catholic Faith--for an
> attorney to put his client's money held in trust by him in
> an interest-bearing trust account and authorize the bank to
> pay the interest earned off of his client's money to a
> third party, such as a bar foundation?
>
> WBS, Esq.

You're not required to.

If you feel that strongly about it you can set up separate
bank trust accounts for each and every new client who comes
in. Then then individual client account gets the interest.

However, does it make sense? The typical Bank charges $5+ a
month for a Trust Account. Whats your typical deposit size
and how long does it typically sit in your trust account?

Assume a $2500 deposit in a 1% Savings Account. That makes $2
in interest the first month, -$5 in Bank Fees, for a net -$3
by the end of the month. How much do expect to still have in
the Trust Account at the end of the month? $1000? So we do
it again, for $0.83 of interest the second, -$5 in Bank Fees,
for a net -$4.17. And so on and so forth.

Do you see the problem?

Therefore it doesn't make sense to create separate accounts
unless you expect to have a very large retainer $7500
minimum, that sits untouched for a significant period. In the
real world, where does that happen?

The phantom interest collect by IOLTA that everyone seems so
worried about would have been sucked up by Bank Fees but for
the expedient of the State Bar IOLTA accounts.