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91 N.J.L.J. 108
February 15, 1968
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS
Appointed by the New Jersey Supreme Court
Accounts - Commingling
On September 26, 1967 our Supreme Court adopted R. 1:12-5
relating to accounts and records required to be kept by attorneys.
Several inquiries have been made relative to the same.
The first inquiry is: Where an attorney's income is derived
almost exclusively from his employment as "house counsel" or as an
appointive officer of a corporation, must he maintain two separate
accounts, a personal account and a business account?
If two accounts were required, the attorney would merely be
required to transfer his salary earnings from his business to his
personal account. Good sense and reasonableness dictate that under
the above set of facts the attorney should not be required to keep
books or records merely to record his periodic salary receipts. He
is not handling monies on behalf of his employer. His employer is
not a "client" in the usual sense of the word. To compel two
accounts, two sets of records, would be a needless duplication and
an unnecessary burden, serving no purpose in helping the court to
correct a situation which sometimes occurs in the traditional
attorney-client relationship. If, however, independent clients are
represented from time to time, separate records for these cases
should be kept as prescribed by the rule in question.
The second inquiry raises the question whether separate
accounts must be kept where income is received by an attorney for
professional services rendered to clients, and for monies earned
for services rendered in a nonlegal capacity such as income
received from teaching, income received as an insurance broker, as
a real estate agent, or for rendering accounting services. The
question is confined to these personal funds.
The rule in addition to requiring a separate trust account
requires the maintenance of a "business account into which all
funds received for professional services shall be deposited."
Rules of the court should receive a reasonable construction and
should be read sensibly rather than literally. Ferguson & Beardsell
v. Kays, 21 N.J.L. 431 (Sup. Ct.1848); Douglas v. Harris, 35 N.J.
270 (1961). One of the prime objectives of the new rule is to
assist an ethics committee to determine if a proper accounting has
been made to a client. Accordingly, only monies received in
connection with the practice of law should be deposited in the
business account required by the rule. Income received from
teaching, as an insurance broker, as a real estate agent or for
rendering accounting services, is not received from the practice of
law and therefore should not be deposited into such business
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