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...
Lawyer Website Design For Sole Practitioners - Law Promo
Law Promo understands that running a solo law practice can be a difficult undertaking at any stage, especially if you are just starting up your practice.
The most challenging part of running any solo business can be managing each and every aspect, especially those areas in which you have less experience. Marketing is often one of the weakest areas for small businesses and yet is the most important in ensuring business growth.
A solid internet marketing campaign is crucial, as it can level the playing field between you and larger firms and is by far the most cost effective way to attract more clients.