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Aba Model Rule 1.15

Participation in the IOLTA program is mandatory for all Louisiana attorneys and law firms.5 If a client claims interest earned on the client`s funds, the attorney must, where reasonably possible, comply with the client`s request. Interestingly, however, IOLTA rules explicitly provide that a lawyer is not required to inform the client of the disposition of interest earned on the client`s funds. See the. See IOLTA Rules 1-3 (13 December 1990). Subparagraph (a) is identical to paragraph 1.15(a) of the AbA Model Rule for Ethics, with the additional requirement that the lawyer`s escrow account must be held with a “bank or similar institution”. This requirement ensures that lawyers do not attempt to create escrow accounts with shoeboxes in their offices. (D) In the event of the dissolution of a law firm or a professional partnership, the members or shareholders shall take appropriate measures to keep the registers referred to in paragraph A of this Regulation. Lawyers often don`t realize the extent of the ban on mixing this rule. Mix of funds also for an immediate violation of this rule. See e.B. In re Wilson, 90 So.3d 1018, 1023 (La.

2012) (suspension of a lawyer for misuse of accounts, creation of potential harm, although no actual harm); In re Mayeux, 762 So. 2d 1072 (La. 2000) (Lawyer sanctions for mixing client funds, although the funds are never actually at risk of loss). For example, if a plaintiff`s lawyer receives a settlement cheque from an insurance company, deposits the cheque into the lawyer`s personal checking account, and then immediately pays the client`s share of the proceeds, the lawyer has violated Rule 1.15. Similarly, if a lawyer withholds the fees earned in a loyalty account for an excessive period of time, he or she has violated Rule 1.15. See In re Caskey, 866 Sun. 2d 226 (La. 2004). In addition, mixing is a strict liability crime – it is irrelevant whether the lawyer`s mixture was innocent or no harm was caused to the lawyer`s client. See In re Trieu, 290 Sun.3d 658 (La. 2020); In re Wilson, 90 Sun.3d at 1023; In re Mayeux, 762 Sun.

2d to 1072; In Re Dumas, 187 Sun.3d 428 (La. 2016) (suspension of the lawyer for two years for serious mistreatment of the escrow account and reduction and conversion of client funds); With respect to Mendy, 243 So.3d 538 (La. 2018) (finding of a violation of Rule 1.15 due to the mix of client funds); In Klaila, 238 So.3d 949, 951 (La. 2018) (with the conclusion that the improper handling of clients` funds by a lawyer, which led to an overdraft in a loyalty account, violated Rule 1.15). This rule is essentially the same as the original Rule 1.15, which was adopted on January 1, 2000, except that the wording has been significantly simplified for reasons of understanding and the parts regarding the obligations of financial institutions have been obscured because they have been appropriately included in the “Trust Account Notification Agreement” signed by all financial institutions approved by Virginia. In addition, Rule 1.15 requires counsel to notify the client in question or third parties1 as soon as the lawyer receives funds or property belonging to the lawyer. Subsequently, the lawyer must immediately deliver and compensate for this property. See Restatement (third) of lawyers` law § 45 (2000). Otherwise, it constitutes a transformation and violates this rule.

[9] Point (j) contains definitions specifically related to Rule 1.15. Subsection (1) broadly defines the meaning of “funds” to include any form of money, including electronic money transfers. Subsection (2) defines an IOLTA account and subsection (3) defines a financial institution that is eligible for overdraft notification and IOLTA programs. Paragraph 4 defines the term “duly due”, a term used in the overdraft notification provisions in subparagraph (h)(1). Subsections (5) to (8) define terms that refer to IOLTA accounts. Paragraph (9) defines the term “unidentified funds” as that term is used in paragraph (i). The Louisiana Supreme Court amended this rule in 2016 and 2018 to require that “an attorney who has knowledge of unidentified funds or unclaimed funds in an IOLTA account transfer the funds to the Louisiana Bar Foundation.” See Louisiana Rule of Ethics Amending Order 1.15 (signed March 23, 2016); Louisiana Supreme Court Order Amending Rule 1.15 Sections (g) (8) and (h) (signed November 27, 2018). The rule defines “unidentified funds” as follows: “[F]ands in an IOLTA account for at least one year, which, according to due diligence, cannot be documented as the property of a client, third party, lawyer or law firm.” Id. The rule defines “unclaimed funds” as follows: “Client or third party funds deposited in an IOLTA account for at least two years that, after due diligence, the owner cannot be located or the owner has refused to accept the funds.” The rule prohibits ODC from charging a lawyer for professional misconduct for “exercising reasonable judgment” under this provision. Finally, if a lawyer transfers funds in error or later identifies the owner of the transferred funds, the attorney may “make a claim against the Louisiana Bar Foundation, which, after reviewing the claim, returns the funds to the attorney or owner” see id.

(2) General Ledger Records for all escrow accounts required under [Rule 1.15 of the Model Rules of Professional Conduct], indicating for each client or individual fiduciary beneficiary the source of all funds deposited, the names of all persons for whom the funds are held or have been held, the amount of such funds, descriptions and the amounts of fees or withdrawals; and the names of all persons to whom the funds have been disbursed; In 2010, the Louisiana Supreme Court amended this rule to prohibit withdrawals of “cash” and ATMs from a lawyer`s escrow account. In 2016, the court amended it to manage a lawyer`s obligations regarding “unidentified funds” in an escrow account. In 2018, the Court amended it to reflect obligations related to “unclaimed funds”. In 2021, the court changed the rule to allow lawyers to hold funds in credit unions. (A) A lawyer operating in that jurisdiction shall keep up-to-date financial records in accordance with this Rule and keep the following records for a period of [five years] after the end of the representation: (C) Documents required by this Rule may be retained by electronic, photographic, computer or other media, provided that they otherwise comply with this Rule and provided that: that printed copies may be made. These records are located at the lawyer`s office in the jurisdiction or in an easily accessible location. The amendment of 15 January 2020, adopted on 9 January 2020, was adopted. March 2020 has rewritten paragraphs (c) and (d) to simplify and clarify the requirements for keeping escrow accounts, to use easier to understand terminology, and to specify in the body of the rule exactly what information must be included in the required records. The revised rule removes the word “cash” from the record requirements and replaces the phrase “receipt and payment log”; Similarly, “subledger” has been replaced by “customer book” to clarify that the rule only requires a separate record or a separate general ledger page that tracks the funds received and paid for each customer. Paragraphs (d)(3)(ii) and (d)(3)(iii) have been revised to include an explanation of the necessary voting steps and to require that all votes be taken on a monthly basis.

A new comment [5] requires that any discrepancies identified in the reconciliation process be explained and that this statement be approved by the lawyer who approves the votes. (k) Upon entering into a real estate transaction, the disbursement of funds deposited but not collected by a lawyer shall not breach its obligation under this Rule 1.15 if, prior to closing, the lawyer has established a segregated real estate fund account (REFA) that is maintained exclusively for the receipt and disbursement of such funds, deposited these funds in a REFA and: Subparagraph (c) is identical to model rule 1.15 (c), with the addition of the last sentence: “The lawyer shall pay the lawyer`s fees and expenses into the client`s escrow account in accordance with rule 1.5 (f). This sentence simply refers lawyers to the provisions of Rule 1.5(f), which details how lawyers are to process payments of various types of attorneys` fees, expenses, general deductions and advances. .