What Attorneys Need to Know About Their Coltaf Accounts

• Publication year: 2002
• Pages: 35
• Citation: Vol. 31 No. 5 Pg. 35

31 Colo.Law. 35 Colorado Lawyer 2002.

2002, May, Pg. 35. What Attorneys Need to Know About Their COLTAF Accounts

---

35

Vol. 31, No. 5, Pg. 35

The Colorado Lawyer
May 2002
Vol. 31, No. 5 [Page 35]

Features

What Attorneys Need to Know About Their COLTAF Accounts
by David Butler

David Butler is Of Counsel to the Denver law firm of Holland & Hart LLP and Chair of the Banking Committee of the Colorado Lawyer Trust Account Foundation

When asked the question, "What do you know about your lawyer's trust account?" many attorneys will respond that they know quite a bit. In general, attorneys know that they are required to segregate money received from clients (or from third parties in connection with client matters) and place it in a separate interest-bearing depository account They also know that the interest from such an account belongs to the person for whom the attorney deposits the money. This is required by Colorado Rules of Professional Conduct ("Colo.RPC") Rule 1.15

COLTAF Accounts

It often happens that amounts held for clients are so small and are held for such a short time that it is not feasible to account for the interest payable to each individual client. A wise resolution of this problem is contained in Colo.RPC 1.15(e)(2), which requires an attorney to establish a pooled, interest-bearing, governmentally insured depository account for funds "which are nominal in amount or are expected to be held for a short period of time." The account must be designated "COLTAF Trust Account," and the interest is paid to the Colorado Lawyer Trust Account Foundation, which is more commonly known as "COLTAF."

The idea of trust accounts to provide legal assistance to the poor developed nationally through a program called "Interest On Lawyer Trust Accounts" ("IOLTA"). Approximately twenty years ago, Bruce T. Buell and other dedicated attorneys founded Colorado's IOLTA program, COLTAF, to direct interest on client accounts toward an important part of a lawyer's obligations?providing access to justice for all.

Income from the COLTAF program provides a way for attorneys to handle small or short-term amounts of client money for the benefit of the poor. The alternatives would be: (1) to commingle these client funds with their own monies (which is prohibited as unethical); (2) set up a checking account for those client funds, which pays no interest (easy...