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    Wisconsin Lawyer
    May 01, 2000

    Wisconsin Lawyer May 2000: Practice Tips

     

    Wisconsin Lawyer: May 2000

    Vol. 73, No. 5, May 2000

    Practice Tips


    Complying with the Trust Account
    Overdraft Reporting Rule

    Wisconsin lawyers who do not comply with the Trust Account Overdraft Reporting Rule by filing their Overdraft Reporting Agreement and/or "Exhibit A" with the Board of Attorneys Professional Responsibility by June 30, 2000, may be found in violation of SCR 20:1.15(n).

    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."

    Compliance Tip

    When completing Exhibit A, be sure to identify the name of the account, as it appears in the bank's records, on the account's checks and deposit slips, and in its bank statements.

    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:

    Compliance Tip

    Be sure that you or your firm are maintaining these records before you sign the State Bar Dues Statement.

    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:

    Compliance Tip

    If your trust account is not identified as a "Trust Account," a "Client Account," or with similar language, this is a problem that must be corrected immediately. The account needs to be identified as a trust account, not only in the bank's records and on the monthly bank statement but also on the account's checks and deposit slips. Failure to do so could result in the seizure or garnishment of client funds by a creditor or in the filing of liens against the account. It also constitutes violation of SCR 20:1.15(a).

    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.

    Mary Hoeft Smith is an investigator located in the BAPR Milwaukee Office. She may be reached at (414) 227-4623 for more information.


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