Client Trust Account: Newsletter #13
Last month the Riverside Bar Association’s Solo and Small Firm Section hosted a brown bag lunch seminar on Client Trust Accounts. These are bank accounts that we as lawyers keep which hold the monies of our clients. Ms. Christine Souhrada from the Office of Trial Counsel for the State Bar of California spoke. She talked about lawyers violating of the Rules of Professional Conduct Rule 4-100.
During the presentation, she said that she tells new attorneys to read the rules on Client Trust Accounts and to read the Handbook published by the State Bar of California. See the California Bar Association link:Client Trust Account Link or http://ethics.calbar.ca.gov/Publications/ClientTrustAccountingHandbook.aspx. Download a copy of this Handbook for your reference.
One of Ms. Souhrada’s teaching points was to provide an accounting of fees earned to disgruntled former clients. Ms. Souhrada said that her office gets complaints from clients who do not feel that they received proper service and the attorney owes them money. The State Bar investigates and finds the claims are not valid since the service was provided and the matter was handled competently. The outcome may not have been favorable to the client, but from the State Bar’s point of view there was no negligence or harm done to the former client. However when the State Bar investigator asks if the “accounting necessary under 4-100” was done, the attorney has not provided an accounting to his former client and the State Bar must further investigate.
“4-100(b)(3) Member shall…Maintain complete records of all funds, securities, and other properties of a client coming into the possession of the member or law firm and render appropriate accounts to the client regarding them; preserve such records for a period of no less than five years after final appropriate distribution of such funds or properties; and comply with any order for an audit of such records issued pursuant to the Rules of Procedure of the State Bar”.
Her Practice Pointer to us:
When a client or former client asks for money back, always give an accounting of how the money was used and what if any monies are left. Provide this Rule 4-100 accounting to the client and keep the accounting for five years if the State Bar investigates.
My apology to my readers on all the typos in last week’s edition called “Business IQ”. A special Thank You to attorney John Mansour, Rancho Cucamonga, CA for the tough love in telling me to have someone proof read the stories before they go out.