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:
- 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:
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:
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.
Wisconsin Lawyer
