13.3 Trust Accounts, Technology & Practical Ethics

This final section covers the ethics rules paralegals are most likely to execute personally — handling client money, filing documents electronically, and using technology — plus scenario drills in the exam's style.

Client Trust Accounts and IOLTA

ABA Model Rule 1.15 (Safekeeping Property) requires a lawyer to hold client and third-person funds separate from the lawyer's own property, in a dedicated client trust account. The operating rules:

• Commingling is prohibited. Client money never mixes with firm operating funds. The narrow exception lets the lawyer deposit enough of the lawyer's own funds to cover bank service charges on the account.
• Advance fees and cost deposits go into trust and are withdrawn only as fees are earned or expenses incurred. (Treatment of flat fees varies by jurisdiction — some require trust deposit until earned.)
• Notify the client promptly on receiving funds in which the client has an interest, keep complete records, and deliver funds promptly when due.
• When a dispute arises over funds (e.g., a medical lien asserted against a settlement), the disputed portion stays in trust until the dispute is resolved; only the undisputed portion may be disbursed.
• Settlement checks are deposited to trust, and disbursement waits until the check clears.

IOLTA — Interest on Lawyer Trust Accounts — exists because small or short-term client deposits cannot practically earn net interest for the individual client. Those funds are pooled, and the interest goes to a state program funding legal services for the poor. Funds that are large or held long-term go into a separate interest-bearing account for that client's benefit, not IOLTA.

Paralegal role: paralegals frequently maintain trust ledgers, reconcile accounts, and prepare disbursement sheets — but the attorney bears the ethical responsibility, and the cardinal rules for staff are: never borrow from trust (it is conversion, even with intent to repay), never disburse against uncleared funds, and report discrepancies immediately.

Safekeeping Client Property

Rule 1.15 extends beyond money to property: original wills, deeds, stock certificates, settlement checks, evidence, and client files. Duties include secure storage (fireproof safe or locked file room), an inventory/log of held originals, prompt return of the file and property when representation ends, and protection of confidential documents from casual access.

The Technology Competence Duty

In 2012 the ABA amended Model Rule 1.1, Comment 8 to state that competence requires keeping abreast of changes in law and practice, including the benefits and risks associated with relevant technology. Most states have adopted this language. Combined with Rule 1.6(c) — reasonable efforts to prevent inadvertent or unauthorized disclosure of client information — it produces concrete paralegal duties:

E-Filing and Metadata Ethics

Paralegals prepare most electronically filed documents, so Federal Rule of Civil Procedure 5.2 (privacy protection for filings) is essential exam material. Unless the court orders otherwise, an electronic or paper filing may contain only:

• The last four digits of a Social Security number or taxpayer identification number;
• The year of an individual's birth (not the full date);
• A minor's initials (not the full name); and
• The last four digits of a financial account number.

Metadata is hidden information embedded in electronic files — tracked changes, deleted text, comments, author names, and edit history. Sending a Word draft of a settlement demand can expose the firm's internal valuation notes. The duty of competence requires the firm to scrub metadata before transmitting or producing documents. On the receiving side, Model Rule 4.4(b) provides that a lawyer who knows a document was inadvertently sent must promptly notify the sender — a rule that reaches paralegals who open opposing counsel's productions.

Social Media Traps

• No client confidences, ever — even anonymized war stories can violate confidentiality if the client is identifiable.
• No contact with represented persons — Model Rule 4.2 prohibits communicating about the matter with a person known to be represented; a "friend request" to the opposing party from the paralegal is an indirect contact attributed to the firm.
• Juror research — passively viewing a juror's public social media is permissible; sending a connection request or any communication violates Model Rule 3.5 (ABA Formal Opinion 466). Using deception (a fake account) to view private content of an unrepresented witness is also dishonest conduct.
• No misrepresentation — inflating a title to "attorney" online violates Rule 7.1 and NALA Canon 5.

Realistic Paralegal Ethics Scenarios

1. The earnest client. A client hands the paralegal a $5,000 check toward fees not yet earned. Correct action: deposit it to the trust account, not the operating account, and give it to the responsible attorney for proper handling.
2. The friendly request. A personal friend asks the paralegal to "just look up" whether the firm represents her neighbor. Decline — even confirming representation can breach confidentiality.
3. The rushed filing. The paralegal notices the complaint draft contains the plaintiff's full Social Security number. Redact to the last four digits per Rule 5.2 before filing.
4. The helpful DM. A witness sends the paralegal a social media message about the case; the witness is represented. Do not respond on the merits; route it to the attorney because Rule 4.2 bars the contact.

Common Exam Traps

• "Earned fees remain in the trust account indefinitely" — wrong; earned fees must be withdrawn promptly, or the account commingles firm money with client money.
• "IOLTA interest belongs to the client if the deposit is large" — wrong; large or long-term funds do not go into IOLTA at all — they earn interest for that client in a separate account.
• "Metadata review by the receiving side is always unethical" — too broad; the settled rule is only that an inadvertently sent document requires prompt notice to the sender.