Deposit of client funds in an account not federally insured; trust account funds exceeding FDIC limit of $100,000
The inquirer asked two questions related to the interpretation of RPC 1.14. First, may an attorney, at the direction and with the consent of his client, place trust funds of the client in a higher interest bearing account not Federally insured as required under 1.14? Second, when trust account funds exceed FDIC limit ($100,000.00) is an attorney required to open multiple accounts to provide full coverage for individual clients?
The committee opined in answer to the first question that according to Informal Opinion No. 86-3, the requirements of RPC 1.14(c) are mandatory and cannot be waived by the client. Per RPC 1.14, trust funds must be deposited in "qualified public depositories" and "each trust account referred to in section (a) shall be an interest-bearing trust account in any bank, credit union or savings and load association, selected by a lawyer in the exercise of ordinary prudence, authorized by federal or state law to do business in Washington and insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, the Washington Credit Union Share Guaranty Association, or the Federal Savings and Loan Insurance Corporation (which is a qualified public depository as defined in RCW 39.58.010(2))." Accordingly, it is the committee’s opinion that client funds cannot be deposited into accounts at institutions lacking the insurance specified in RPC 1.14, unless the institution is a "qualified public depository", as defined. Client consent does not waive this requirement.
As to the second question, the committee opined that RPC 1.14 does not require multiple accounts in multiple institutions or otherwise to guarantee insurance for the full amount of the deposit so long as RPC 1.14 is followed. The committee does not opine on other legal requirements such as fiduciary duties, standards of legal negligence, or statutory duties that may apply to your question.