Multistate Professional Responsibility Exam Practice Question
An attorney receives a lump sum payment intended for one client, but another party claims they are also entitled to a portion of the funds. What is the attorney's best course of action?
Deposit the funds into the general client trust account and await further instructions.
Transfer a portion of the funds to the client who first claimed entitlement.
Hold the funds in the attorney's personal account until the dispute is resolved.
Place the funds into a separate trust account to address the dispute.
Placing the disputed funds into a separate trust account to address the dispute ensures that the funds are preserved and managed appropriately until the rightful ownership is determined. This approach complies with professional responsibility rules by preventing commingling and safeguarding client property. Other options either allow potential misuse of funds or do not adequately protect the interests of all parties involved.
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Why should an attorney use a separate trust account for disputed funds?
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What is commingling in the context of trust accounts?
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What steps should an attorney take after placing the disputed funds in a separate trust account?