Disbursement Against Funds Credited to Trust Account by ACH and EFT [2013 Formal Ethics Opinion 13]

May an attorney immediately disburse against funds credited to a client trust account by automated clearinghouse transfer and electronic funds transfer?

Photo Courtesy of the North Carolina State Bar

View formal ethics opinion in full here

Adopted at the January 2014 meeting, this opinion examines whether an attorney may immediately disburse against funds credited to the client trust account by automated clearinghouse (ACH) transfer and electronic funds transfer (EFT).  With each type of transfer, there is a risk that the originator may initiate a reversal.

Per the opinion, lawyers may disburse immediately following such transfers.  Although some risk of reversal exists, the opinion notes the presence of safeguards: “the lawyer should get notice from the receiving bank in time to take action to prevent the reversal or otherwise to protect other client funds on deposit in the bank account.”

If a reversal nevertheless occurs, the lawyer does not violate the rules by immediately acting “to protect the funds of the lawyer’s other clients on deposit in the trust account.”  Such action may include personally depositing the necessary funds in order to address the deficit (see RPC 191).

If you wish to respond or otherwise offer a guest contribution discussing this formal ethics opinion, please contact the ethics editor at cu***********@em***.edu.

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About Tripp Huffstetler, Senior Staff Writer (57 Articles)
Tripp Huffstetler served as the Senior Ethics Staff Writer for the Campbell Law Observer. He is originally from Cherryville, North Carolina. In 2011, Tripp graduated from the University of North Carolina at Chapel Hill with a bachelor’s degree in Philosophy as well as Political Science. During his undergraduate studies, Tripp spent summers assisting at a practice in his hometown of Cherryville. During law school he interned with the Hon. Kris Bailey, District Court Judge; Judge Paige Phillips, Wake County Magistrate; the Hon. Paul C. Ridgeway, Superior Court Judge; and the Wake County District Attorney's Office. He also assisted a local attorney in drafting a guide to interlocutory appeals, which will be published by the North Carolina Bar Association. Tripp graduated from Campbell Law School in May 2014.
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