ABA adopts new trust account record-keeping rules

Aug 20th, 2010 by Michelle Lore

The American Bar Association had a busy annual meeting earlier this month. One of the many accomplishments of the House of Delegates was adopting new rules for record keeping regarding client trust accounts.

The Model Rules for Client Trust Account Records are intended to replace the Model Rule on Financial Recordkeeping (which were adopted February 1993), and will be promulgated to state high courts for potential adoption as practical guidance for compliance with ABA Model Rule of Professional Conduct 1.15. The model rule, which has been adopted in all U.S. jurisdictions, requires lawyers to maintain complete trust account records and to render a full accounting of the receipt and distribution of trust property.

According to the ABA Standing Committee on Client Protection, the key sponsor of the new model, it responds to a number of changes in banking and business practices that may have left lawyers “inadvertently running afoul of their jurisdiction’s rules of professional conduct.”

The new rule addresses record-keeping requirements after electronic transfers and clarifies who can authorize such transfers. The rule also:
–details minimum safeguards lawyers must implement when they allow nonlawyer employees to access client trust accounts;
–addresses law firm partner responsibilities for storage of and access to client trust account records when partnerships are dissolved or when a practice is sold; and
–requires that records stored off-site be readily accessible to the lawyer and that the lawyer be able to produce and print them upon request.

For third-party or Internet-based file storage, lawyers must ensure the company has established reasonable procedures to protect client confidentiality and ensure the files can be accessed by a disciplinary authority, client or interested third-party in response to a subpoena or other court demand for production.

Lawyers who maintain trust accounts might want to take a closer look at the rules — as they may be coming to Minnesota soon.