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Lawyer wants Settlement to go into T-Bill money market account?

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Hlebowitz

Junior Member
What is the name of your state (only U.S. law)? Florida


Within my closing statement, my attorney from a huge lawfirm in Florida says this...
"Further, the undersigned hereby authorizes and gives power
of attorney to FLORIDA ACME LAW FIRM to endorse my (our) name(s) for the purpose of depositing settlement drafts
into the attorney's trust account for disbursement in accordance with the foregoing closing statement.
Further, the undersigned has been informed and understands that standard attorney trust accounts
have coverage through the Federal Deposit Insurance Corporation (FDIC) limited to $250,000.00 after
January 1, 2013. As such, I have authorized my attorneys to deposit the above recovered gross
settlement/verdict amounts into a treasury bill money market account which THE FLORIDA ACME LAW FIRM maintains as an alternate trust account. I understand that this alternate trust
account is not insured by the FDIC for any amount; however, the account purchases Treasury Bills
issued by the United States government which are widely considered to be the safest investments in
the world because the United States government backs them. I also understand that there is effectively
no interest earned on the funds when they are deposited in the alternate (T-Bill Money Market) account.


CAN YOU BELIEVE THIS STUFF? MY QUESTION IS ... DO I HAVE THE RIGHT TO INSTRUCT MY ATTORNEY THAT I WILL NOT SIGN THIS CLOSING STATEMENT UNTIL IT STATES THE SETTLEMENT MONEY WILL BE DEPOSITED INTO HIS STANDARD FDIC INSURED TRUST ACCOUNT.

( the reason being, TREASURY BILLS ARE BOUGHT FOR LESS THAN FACE VALUE, THEN AFTER MATURITY DATE IS REACHED ARE WORTH FACE VALUE. NO INTREST IS MADE, BUT MONEY IS MADE. LAWYERS CAN NOT MAKE INTREST ON ATTORNEY/ CLIENT ACCOUNTS. ITS ILLEGAL.
MATURITY DATES RANGE FROM
3 WEEKS TO ONE YEAR... NOW I UNDERSTAND WHY THEY SAID IT WOULD TAKE 120 DAYS TO GET MY MONEY. AS THIRTEEN WEEKS IS ONE OF THE MATURITY DATES!!!!

THANK YOU VERY MUCH FOR ANY HELP!

Harvey Lebowitz JR. ( alias)
 


quincy

Senior Member
What is the name of your state (only U.S. law)? Florida


Within my closing statement, my attorney from a huge lawfirm in Florida says this...
"Further, the undersigned hereby authorizes and gives power
of attorney to FLORIDA ACME LAW FIRM to endorse my (our) name(s) for the purpose of depositing settlement drafts
into the attorney's trust account for disbursement in accordance with the foregoing closing statement.
Further, the undersigned has been informed and understands that standard attorney trust accounts
have coverage through the Federal Deposit Insurance Corporation (FDIC) limited to $250,000.00 after
January 1, 2013. As such, I have authorized my attorneys to deposit the above recovered gross
settlement/verdict amounts into a treasury bill money market account which THE FLORIDA ACME LAW FIRM maintains as an alternate trust account. I understand that this alternate trust
account is not insured by the FDIC for any amount; however, the account purchases Treasury Bills
issued by the United States government which are widely considered to be the safest investments in
the world because the United States government backs them. I also understand that there is effectively
no interest earned on the funds when they are deposited in the alternate (T-Bill Money Market) account.


CAN YOU BELIEVE THIS STUFF? MY QUESTION IS ... DO I HAVE THE RIGHT TO INSTRUCT MY ATTORNEY THAT I WILL NOT SIGN THIS CLOSING STATEMENT UNTIL IT STATES THE SETTLEMENT MONEY WILL BE DEPOSITED INTO HIS STANDARD FDIC INSURED TRUST ACCOUNT.

( the reason being, TREASURY BILLS ARE BOUGHT FOR LESS THAN FACE VALUE, THEN AFTER MATURITY DATE IS REACHED ARE WORTH FACE VALUE. NO INTREST IS MADE, BUT MONEY IS MADE. LAWYERS CAN NOT MAKE INTREST ON ATTORNEY/ CLIENT ACCOUNTS. ITS ILLEGAL.
MATURITY DATES RANGE FROM
3 WEEKS TO ONE YEAR... NOW I UNDERSTAND WHY THEY SAID IT WOULD TAKE 120 DAYS TO GET MY MONEY. AS THIRTEEN WEEKS IS ONE OF THE MATURITY DATES!!!!

THANK YOU VERY MUCH FOR ANY HELP!

Harvey Lebowitz JR. ( alias)
You have the right to refuse to sign anything presented for your signature by your attorney.

I suggest you go over the trust account with your attorney, however, and let him offer an explanation.

Here is a link to the Florida Bar Rules where you can click on Rule 5 about trust accounts: https://www.floridabar.org/rules/rrtfb/

Good luck.
 
Last edited:

ALawyer

Senior Member
Attorney Trust Accounts and FDIC Insurance

Without questioning whether you just might have uncovered a scheme that would enable your attorneys to benefit from holding your funds on deposit (which at least under the laws of several states with which I am familiar attorneys should not be doing) there just may be a legitimate purpose in a law firm keeping the funds invested in other than an FDIC insured banking institution.

Traditionally each law firm would deposit funds received from settlements in an Attorney Client Trust Account while the settlement was awaiting distribution to the client and any others that might have some claim on some of the funds -- such as the client's medical care providers, others with liens, as well as the law firm itself. The Attorney client Trust Account was also sometimes used when the law firm would hold funds pending satisfaction of certain conditions in commercial transactions -- such as when the seller of real estate would have to obtain releases from tenants or clearances from zoning authorities prior to the closing occurring.

Even when interest rates were high, the interest that could be earned on a typical transaction would not normally make it financially viable for the law firm or client to create multiple separate bank trust accounts for each client, and thus law firms generally created one common, pooled Attorney Client Trust Account, and deposited each client's funds into it, keeping very careful records as to who the funds belong to. Only when the amount of the settlement was very large or was likely to be held for an extended period of time would it be in the client's interest to create a separate trust account for each client.

While the interest that might have accrued to any one client usually would be small in the aggregate the interest would add up -- especially during the 1980s when interest rates typically paid on bank deposits often exceeded 6%. Since the 1970s each of the 50 states and the District of Columbia has created what are known as IOLTA programs under which Interest on these pooled Lawyers Trust Accounts is paid not to the law firm or its clients but instead paid to the IOLTA organization in each state and then principally applied to various Legal Aid programs where it ostensibly is used to pay for legal services for the poor. But what would happen if the bank in which a law firm made the deposit into the IOLTA account were to fail?

The FDIC insures each depositor's account at any one banking institution for only up to $250,000. (For several years after the Financial Crisis Congress authorized removal of the cap and thus the FDIC provided unlimited insurance for certain types of accounts, but my understanding is that expired in 2012.) However, with IOLTA accounts the FDIC applies that to be a limit of $250,000 for each person or business entity entitled to the funds per bank separately, rather than per account.

Even so, as big settlements and commercial transactions often involve well over the $250,000 limit, a law firm may not want to face liability for selecting a bank that failed, leaving its clients high and dry for amounts in excess of $250,000. While the law firm might use multiple banks to deposit funds into (and thus get the benefit of $250,000 FDIC protection per client per bank) that can start to result in complex record keeping if the dollar amounts get very large.

Investing the funds in T Bills -- directly or through a mutual fund that solely invests in T bills -- might well be the safest approach in such case, but there still is the issue as to what happens if the firm holding the T bills or the mutual fund fails?
 

quincy

Senior Member
ALawyer, posts like yours above are the main reason why I miss the "like" feature on this forum. Very nice!
 

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