State Bar of Wisconsin

Vol. 73, No. 5, May 2000

Practice Tips

Complying with the Trust Account Overdraft Reporting Rule

by Mary Hoeft Smith

The Overdraft Notification Rule (SCR 20:1.15(j) - (p)) went into effect on Jan. 1, 1999. That rule requires attorneys to authorize their banks to notify the Board of Attorneys Professional Responsibility (BAPR) of overdrafts on their client trust accounts. SCR 20:1.15(n) states: "Every lawyer practicing or admitted to practice in this state shall comply with the reporting and production requirements of this rule."

Over the past year, BAPR has made several attempts to contact lawyers throughout the state by mail in order to provide each firm with the forms that are necessary to comply with this rule. Those forms include an Agreement (which must be executed by the attorney/firm and the bank) and a document called "Exhibit A" (which identifies the name of the firm, the name and bar number of each attorney associated with the firm, and the name of each of the firm's trust accounts). Any attorney who has not received these forms, and who is not listed on his or her law firm's Exhibit A, should contact BAPR at (414) 227-4623 to request them.

A new Agreement must be filed with BAPR under any of the following circumstances:

1. an attorney establishes a new law practice;
2. the trust account is moved to a new financial institution;
3. a trust account is opened at a new financial institution;
4. the name of the law firm changes; or
5. the name of the financial institution changes.

A new Exhibit A must be filed with BAPR under any of the following circumstances:

1. an attorney leaves the firm (delete name from Exhibit A);
2. an attorney joins the firm (add name and bar number to Exhibit A);
3. the name of the law firm changes; or
4. the name of the financial institution changes.

Trust Account Tips

Proper Identification of Trust Accounts. SCR 20:1.15(a) requires a trust account to be identified as a "Client's Account," a "Trust Account," or with "words of similar import." "Client Trust Account" or "IOLTA Trust Account" are acceptable. However, "IOLTA Account," with no further elaboration as to the nature or ownership of the account, does not comply with the requirements of the rule.

State Bar Dues Statements

Read the Small Print. By signing your annual State Bar Dues Statement, you certify that you are complying with the trust account record keeping requirements that are set out in SCR 20:1.15(e). Those records include:

1. a cash receipts journal, with the sources and date of each receipt;
2. a cash disbursements journal, with the date and payee of each disbursement;
3. a subsidiary ledger, with a separate page for each client that lists receipts and disbursements and carries a running balance for each client;
4. a monthly schedule of the subsidiary ledger, with the balance of each client's account at the end of the month;
5. a monthly reconciliation of the account, which reconciles the checkbook balance of the account with the bank statement's balance; and
6. the monthly bank statements, canceled checks, duplicate deposit slips, and vouchers or share drafts.

Important Notice

Any lawyer licensed in Wisconsin, who has not filed an Agreement and/or an "Exhibit A" with BAPR as of June 30, 2000, may be found in violation of SCR 20:1.15(n).

Attorneys who practice in firms should check with the firm's trust account manager to be sure that they are identified in "Exhibit A" of the firm's overdraft reporting agreement.

Wisconsin Lawyer