Best Practice: Trust yourself
Lawyers use trust accounts to hold cash that belongs to someone other than the lawyer. Usually the funds belong to a client, or are prepayments for fees that have not yet been earned. Solo and small firm lawyers often have a trusted employee monitor and handle the account. The employee may write checks on the account under the direction of the managing lawyer. The best practice is for the lawyers or partners to have the only signature authority. Second best practice is to have safeguards in place to catch mistakes.
Jay Foonberg and the ABA wrote the book on how to handle trust accounts “The ABA Guide to Lawyer Trust Accounts.”
The worst practice is to ignore the account and the employee handling it, thinking that the State Bar Counsel will contact you when there are bounced checks. They will, but it will not be pleasant.
Michael Krebes of Kokomo, IN used the worst practice. “She started working for me in the summer of 2002,” said Krebes. “She worked for me in the private sector. She was court reporter for me when I was judge, and when I left the bench, she came with me. I had blind trust in her. She was like the little sister I never I had. I knew her kids, her husband, her family.”
Now tens of thousands of dollars later, with disciplinary issues staring him in the face, his practice in shambles, and clients heading out the door, having lost significant sums, Krebes realizes his mistake, and the results. “I have refunded money to some clients already. I’ll take care of everyone; it’s just not something I can do overnight. The clients are understandably anxious to get this resolved, and I don’t blame them. I have to make these people right,” said Krebes. “I can’t just say it was her fault. They didn’t hire her; they hired me. The money was in my trust account. I am the responsible party. In order to keep my license, I have to make it right.”
Whatever your trust practice now, it is time to double-check the procedures you have to protect the clients (you are a fiduciary in your relationship with them), yourself and your license and livelihood.
Foonberg’s book has an 89 question self test. You might want to find or buy a copy (I have recommended this book to several lawyer clients who had trust account problems) and take the test.
You may want to: 1) require two signatures on all trust checks; 2) open the trust account statement (and certify that each such statement is opened by you) to review all checks that went through the account in the prior month; 3) re-read Rule 1.15 of the RPC and the IOLTA regs in the Admission and Discipline Rules Governing Attorney Trust Account Overdraft Reporting; 4) check on the several cases, and the reported punishments. The Supreme Court does not take these situations lightly.
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Caution about Live Tweeting
Sarah Peterson was working for an appellate court in Kansas when she screwed up. Watching an appellate hearing on her office computer she just had to share her thoughts. Her bosses did not think that she did a very good job sharing those thoughts, finding that “The overall tone of her comments revealed a disrespect for a litigant before the appellate courts as well as a disrespect for the Supreme Court panel hearing the case,”
Well she is working no longer, and after seven months, she is still looking. The details are at the link above.
H/T Vic Indiano
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End of the Run with this Blog Series
This has been a good way to learn more about blogging, and the defense of lawyer discipline matters has made the time worthwhile, but staying on top of lawyer discipline is not a fun way to spend extra time. I started this thinking that a reminder to “Look both ways” would pay dividends for you and me. It has not paid dividends for me, so I will be closing Lawyers with Troubles after this the 66th in the series, and reviving the old blog Ted’s Legal Blawg at http://tedwaggoner.wordpress.com/ soon.
I like most of the people who have chosen to be lawyers, and do not enjoy seeing so many get in trouble here or around the country. I will be pleased to continue to help those who need to respond to allegations by the Disciplinary Commission, and will provide LPM practice advice to help lawyers stay out of trouble. But I am done sharing the troubles of lawyers with you in this blog.
Another topical blog will be coming, and I may promote it with this site, but for now watch for Ted’s Legal Blawg at http://tedwaggoner.wordpress.com/.
Be good to one another and to your clients.
Lawyers with Troubles 