Improper Handling of Client Trust Accounts
Legal Networks
Managing money is always tricky, especially when it belongs to someone elseThat's why, in 2006 alone, more than 20 lawyers found themselves before the State of Michigan Attorney Discipline Board after having grievances filed against them for mismanagement of their clients' funds.
However, in Michigan, there is an infrastructure in place that allows attorneys to insulate themselves from the consequences of accounting errors - both accidental and otherwise.
Specifically, Michigan Rule of Professional Conduct (MRPC) 1.15 provides guidelines for the two types of client accounts: Interest on Lawyers Trust Accounts (IOLTAs) and non-IOLTAs.
The rule defines an IOLTA as "an interest or dividend bearing account" that "shall include only client or third person funds that cannot earn income for the client or third person in excess of the costs incurred to secure such income while the funds are held."
Though interest is earned on this type of account, the client does not receive those proceeds. Instead, the interest is paid to the Michigan Bar Foundation.
Conversely, a non-IOLTA under MRPC 1.15 also earns interests or dividends, however, that "net interest or dividend will be paid to the client."
MRPC 1.15 applies to both pooled and individual client trust accounts. But, because "it is common for a lawyer only to maintain one pooled client trust account," said Professor Lawrence A. Dubin - who teaches Professional Responsibility at the University of Detroit School of Law - IOLTAs, rather
than non-IOLTAs, may be easier for attorneys to work with.
However, that doesn't mean that IOLTA administration is without its own pitfalls.
In fact, with penalties ranging from a slap on the wrist to a permanent loss of license, learning the ins and outs of proper client trust management is fast becoming an integral part of effective practice management.
Related listings
-
Lawyer to be Suspended Over Conduct
Legal Networks 04/03/2008The former head of the Wayne County, MI Prosecutor Office's drug unit will be suspended with pay Friday and now faces an investigation that could lead to criminal charges for her actions in a 2005 cocaine case.Prosecutor Kym Worthy, in a prepar...
-
DOJ Presses Bribery Case
Legal Networks 04/02/2008A US Department of Justice spokesman said Monday that the department would continue to press its bribery case against Rep. William Jefferson (D-LA) despite the US Supreme Court's refusal to review an appeals court ruling that held the FBI's conduct d...
-
New Hampshire Adopts Rule for Clients Who Email
Legal Networks 03/28/2008New Hampshire adopted a rule that clearly protects persons who, in good faith, e-mail confidential information to a lawyer from having the lawyer use the information against the prospective client. The comments to New Hampshshire Rule 1.18 prov...
The Law Offices of John M. Lynch, LLC - Our goal is to serve you and make your experience a pleasant one
Our firm founder John M. Lynch is a proven trial lawyer with a record of success in state and federal courts. His former service as a police investigator and federal drug task force agent enable him to see a case from all sides. He is routinely hired by other attorneys to assist with criminal cases. His peer recognition is also evident in the recognition that he has earned with Top 100 Trial Lawyers, AV Preeminent Rating and Super Lawyers. He has also been named as one of the Best Attorneys in St. Louis, a Rising Star in Missouri and a Rising Star in Kansas. His unique and broad -based experience has led to unparalleled success that include dismissal of charges, acquittal and markedly beneficial settlements.
Attorney John M. Lynch comes from a strong law enforcement background with a decade of experience as a police investigator and federal drug task force agent. Paired with his legal degree from St. Louis University School of Law, Mr. Lynch provides a unique and candid perspective for people charged with a full range of criminal activities.