SUPREME
JUDICIAL COURT APPROVES NEW ETHICAL RULE
ON LAWYER
ACCOUNTING
Boston--The
Supreme Judicial Court today announced that it has adopted
a revised ethical rule (Massachusetts Rule of Professional
Conduct 1.15) that provides Massachusetts lawyers with
a more detailed description of the record-keeping requirements
for client and trust funds maintained by any lawyer. The
new rule identifies the records that must be maintained
in order to comply with the rule, describes operational
requirements for maintaining proper trust accounts, and
requires lawyers to reconcile client funds accounts, including
the balance held for each client.
The
new rule is intended to address a persistent problem of
lawyers who keep inaccurate or inadequate records of client
funds they hold in trust. Records
of the Board of Bar Overseers, the organization that investigates
complaints of misconduct against lawyers, indicate a steadily
rising number of cases involving inadequate record keeping
by lawyers. Between 1999 and 2002, cases reported to the
Bar Counsel as a result of dishonored check notifications
involving careless bookkeeping have resulted in 74 admonitions
of lawyers. There were also cases of more serious discipline
where inadequate bookkeeping was part of the problem.
Recognizing
the scope of the problem, after considerable study and
following the lead of 18 other states, the Board of Bar
Overseers proposed amendments to Rules of Professional
Conduct Rule 1.15. The
proposed amendments were published in the Massachusetts
Lawyers Weekly in March 2001 with a request for comments. They
have been discussed at length by the Massachusetts Bar
Association, the Boston Bar Association, and other bar
organizations. The
proposals were studied in detail by the Supreme Judicial
Court’s Standing Advisory Committee on the Rules of Professional
Conduct. The Committee revised the Board of Bar Overseers’ draft rule to
respond to the concerns raised by the comments received
as a result of publication and by members of the Committee.
The
key features of the revised rule are:
1) a
clear description of the records that must be created and
maintained with respect to lawyers’ trust accounts, including
check registers, individual client ledgers, ledgers for
bank fees, and reconciliation reports every 60 days verifying
that funds are being properly maintained in the trust accounts;
and
2) operational
requirements, including use of pre-numbered checks, prohibitions
against making withdrawals from trust accounts by ATM
card or by checks payable to “cash.”
The
rule change becomes effective January 1, 2004. It is anticipated that Bar Counsel’s office will make available numerous educational
programs for lawyers within the next three months.
The new rule, Rule 1:15 of the Massachusetts
Rules of Professional Conduct, can be accessed on the Internet
at www.state.ma.us/courts/rule115.pdf
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