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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."
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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:
- an attorney establishes a new law practice;
- the trust account is moved to a new financial institution;
- a trust account is opened at a new financial institution;
- the name of the law firm changes; or
- the name of the financial institution changes.
A new Exhibit A must be filed with BAPR under any of the following
circumstances:
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Compliance Tip
Be sure that you or your firm are maintaining these records before
you sign the State Bar Dues Statement. |
- an attorney leaves the firm (delete name from Exhibit A);
- an attorney joins the firm (add name and bar number to Exhibit
A);
- the name of the law firm changes; or
- 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:
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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). |
- a cash receipts journal, with the sources and date of each
receipt;
- a cash disbursements journal, with the date and payee of
each disbursement;
- a subsidiary ledger, with a separate page for each client
that lists receipts and disbursements and carries a running balance
for each client;
- a monthly schedule of the subsidiary ledger, with the balance
of each client's account at the end of the month;
- a monthly reconciliation of the account, which reconciles
the checkbook balance of the account with the bank statement's
balance; and
- 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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