ABA Model Rule 1.15: Client Trust Accounts Explained

By Steve Levine · Updated July 3, 2026 · 7 min read

Quick Answer

ABA Model Rule 1.15 is the safekeeping rule: money a lawyer holds for a client or third party — settlement proceeds, advance fees, escrowed funds — must sit in a separate client trust account, never mixed with the lawyer's own money. When funds come in, the lawyer must promptly notify you, promptly deliver what you're entitled to, and give a full accounting on request. If any portion is disputed, that portion stays in trust until the dispute is resolved — but the undisputed part must still be paid out promptly. This is why, in individually represented cases, your settlement check flows through the lawyer's trust account before you're paid, and why complete records must be kept for years afterward.

On this page

What the Rule Requires
How a Settlement Check Actually Moves
Your Rights: Notice, Delivery, Accounting
Disputed Funds
IOLTA, in One Paragraph
Frequently Asked Questions

What the Rule Requires

Rule 1.15 requires a lawyer to hold property of clients or third persons separate from the lawyer's own property. Funds go in a separate trust account maintained in the state where the lawyer's office is situated (or elsewhere with the client's or third person's consent); other property gets identified and safeguarded. The lawyer must keep complete records of trust funds and property, preserved for a period after the representation ends — five years under the model rule; states set their own periods. Commingling is forbidden: the lawyer may deposit personal funds into the trust account only in the amount necessary to pay bank service charges. Advance payments of fees and expenses also go into trust, to be withdrawn only as fees are earned or expenses incurred.

How a Settlement Check Actually Moves

In an individually represented case — an injury claim, an employment dispute, a mass tort inventory deal — the defendant's payment is typically made to the law firm's trust account, not directly to you. From there, the sequence Rule 1.15 requires looks like this: the lawyer notifies you the funds arrived; the agreed contingent fee and case expenses are deducted according to your written fee agreement (see Rule 1.5 for what that agreement must say); amounts owed to third parties with a lawful interest in the funds — a medical lienholder, for example — are held or paid; and your net share is promptly delivered with a settlement statement showing the math.

Class actions work differently: a court-appointed settlement administrator usually pays class members directly from the settlement fund, so most class members never interact with a lawyer's trust account at all.

Your Rights: Notice, Delivery, Accounting

Rule 1.15(d) gives clients (and third persons with an interest in the funds) three concrete rights: prompt notification when the lawyer receives funds or property in which you have an interest; prompt delivery of any funds or property you are entitled to receive; and, upon request, a full accounting of the funds or property. If a recovery has come in and you can't get a straight answer about where your money is, the rule is on your side — and persistent failures to deliver or account for client funds are among the most seriously disciplined violations in legal ethics.

Disputed Funds

Under Rule 1.15(e), when two or more persons — which can include the lawyer — claim interests in the same funds, the disputed portion must be kept separate in trust until the dispute is resolved, and the undisputed portion must be promptly distributed. In practice: if you dispute the size of the fee, the lawyer must still pay out the part of the recovery nobody disagrees about, holding only the contested slice in trust while you resolve it.

IOLTA, in One Paragraph

IOLTA — Interest on Lawyers' Trust Accounts — answers the question of what happens to the interest on pooled trust funds. When individual client deposits are small or short-term, the interest each could earn wouldn't cover the cost of tracking it, so every U.S. state operates an IOLTA program that pools that interest and directs it to legal aid and access-to-justice funding. IOLTA is created by state rules and statutes rather than by Rule 1.15 itself, but it's the reason most client trust accounts you'll encounter are labeled "IOLTA."

Frequently Asked Questions

What is a client trust account?

A client trust account is a bank account, separate from the lawyer's own operating funds, where a lawyer must hold money belonging to clients or third parties — settlement proceeds, advance fee payments, escrowed funds. Model Rule 1.15 requires the account to be maintained in the state where the lawyer's office is situated (or elsewhere with consent), requires complete records to be kept for a period after the representation ends, and forbids commingling: the lawyer may deposit personal funds only in the amount needed to pay bank service charges.

Why does my settlement check go to my lawyer first?

In individually represented cases, the settlement payment is typically issued to the lawyer's trust account. Under Rule 1.15, the lawyer must promptly notify you when the funds arrive, hold them in trust while the agreed fee and case expenses are deducted per your fee agreement, promptly deliver your share, and provide a full accounting if you ask. Amounts owed to third parties with a lawful interest — such as medical lienholders — may also be paid from the trust account before disbursement. In class actions, by contrast, a court-appointed settlement administrator usually pays class members directly.

What happens if I dispute my lawyer's fee after a settlement?

Under Rule 1.15(e), when the lawyer and client (or a third party) both claim interests in funds, the disputed portion must be kept separate in the trust account until the dispute is resolved, while any undisputed portion must be promptly distributed. A lawyer cannot hold your entire recovery hostage over a dispute about one piece of it.

What is an IOLTA account?

IOLTA stands for Interest on Lawyers' Trust Accounts. When client funds are small in amount or held briefly, the interest they could earn individually wouldn't exceed the cost of accounting for it, so states operate IOLTA programs that pool that interest and direct it to legal-aid and access-to-justice funding. IOLTA programs are established under each state's rules; every U.S. state operates one.

Sources

• American Bar Association — Model Rules of Professional Conduct (Table of Contents)

About This Page

General informational summary of a legal-ethics rule, not legal advice. The ABA Model Rules are a template; the rule that actually governs any particular lawyer is the version adopted in the state where that lawyer is licensed, and trust-account record-keeping and IOLTA requirements vary by state.