Wisconsin Lawyer: Ethics Online Banking Not Allowed for Trust Account Transactions:

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    Online Banking Not Allowed for Trust Account Transactions

    Ethics rules prohibit most Wisconsin lawyers from engaging in trust-account transactions using online banking, but change might be in the offing.

    Dean R. Dietrich

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    Question

    I have been contacted by my bank to change to electronic banking that would allow me to deposit checks and make payments over the Internet. Are Wisconsin attorneys allowed to conduct business over the Internet?

    Dean R. Dietrichcom ddietrich ruderware Dean R. Dietrich, Marquette 1977, of Ruder Ware, Wausau, is past chair of the State Bar Professional Ethics Committee.

    Answer

    The answer to your questions depends on what you mean by “conducting business over the Internet.” No laws or rules bar a law firm from using the Internet for banking purposes when dealing with the law firm’s business account. In other words, checks received by the law firm for payment of legal services could be deposited electronically, and the firm could agree to automatic withdrawals from its business account to pay vendors if the law firm wanted to conduct business that way. Using electronic banking in that fashion might or might not be the best idea for a law firm that needs to document its business expenses and income, but it certainly is becoming a common way to conduct business. Electronic banking is becoming the norm for businesses and individuals, and law firms may use electronic banking for transactions involving the business of the law firm.

    Using electronic banking for the handling of client funds is a very different situation. Lawyers cannot engage in electronic banking for the handling of client funds placed into the IOLTA (interest on lawyers’ trust account) trust account or a separate client trust account under the Wisconsin trust account rule, SCR 20:1.15. Lawyers may use wire transfers for various transactions, provided sufficient documentation is retained of the wire transfer transaction to show where the money came from and where it is being placed.

    SCR 20:1.15(d)(4)g. contains an exception for lawyers who are actively engaged in a sophisticated collection practice. This exception allows some types of electronic recordkeeping and electronic withdrawals by clients, but lawyers must receive special approval from the Office of Lawyer Regulation (OLR) before engaging in this type of client-fund transaction.

    At some point, lawyers might not be able to use standard check-writing procedures to handle funds and transact business with a local bank.

    A special study committee formed by the OLR is meeting on a regular basis to explore ways in which lawyers could engage in electronic banking for the handling of client funds, but no specific proposals have been finalized or presented to the Wisconsin Supreme Court for consideration. It is generally recognized that electronic banking is the wave of the future: at some point, lawyers might not be able to use standard check-writing procedures to handle funds and transact business with a local bank. Several safeguards must be established to ensure that funds handled electronically are not subject to misappropriation or theft by hackers. It is hoped that changes will be proposed that will ensure the proper safety and documentation of client funds while at the same time allowing lawyers to use electronic banking techniques.




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