The West Virginia Office of Disciplinary Counsel statistics for 2010 and what does this tell us about the practice of law? Every year, the Office of Disciplinary Counsel for the State of West Virginia publish statistics outlining lawyer discipline and complaints for the previous year. In 2010, the West Virginia Supreme Court of Appeals received fourteen complaints regarding eleven lawyers. Of the lawyers disciplined by the West Virginia Supreme Court, seven were solo practitioners, and four had 20 or more years of experience.
These statistics are also a commentary about what type of ethical violations which were committed by attorneys. Last years figures and past years find two primary area for ethical violations: trust account violations and failure to communicate with the clients. Both of these areas, trust account violations and failure to communicate with the clients, each separately were responsible for 22 percent of all acts of ethical violations by Attorneys
So what is a trust account and why does an attorney have to have a trust account? The Office of Disciplinary Counsel in West Virginia requires that every attorney have a trust account. In deed, an attorney in West Virginia has an ethical obligation to have a trust account in which to place a client’s funds.
As an attorney, we are to maintain the confidentiality of our clients. Also, it is important as an attorney not only to safeguard the information we receive from our clients, but to also safeguard our client’s funds. In Order to accomplish this a lawyer has a duty not to co-mingle fund and segregate the client’s money from their own personal business accounts. However, this fiduciary obligation does not only apply to money. It can apply to other physical items that the lawyer takes in his/her possession, which they have a fiduciary duty to maintain in a safe and secure manner i.e. a bank safe deposit box.
An attorney is required to have a trust account, which is simply an account at a bank wherein the client’s funds are maintained separate from the lawyer’s own personal funds or operating funds. What routinely happens is a client will go in and an attorney will quote them a retainer to do a case. That retainer is placed into a trust account and kept in the trust account until the fee is earned, at which time, there are funds available to pay a lawyer for their work.
Why do we have to have trust accounts? A trust account keeps a lawyer from commingling the funds of the client’s money and his own money to avoid the appearance of impropriety by the lawyer. Next to having a trust account, it keeps an adequate paper trail of all payments and deposits made regarding a client’s funds.
There is a requirement of the West Virginia Office of Disciplinary of Counsel that a trust account be maintained in a federally insured financial institution located in the state where the lawyer’s office is located. All trust accounts are required to be interest-bearing accounts. However, that interest is not the client’s money nor is it the lawyer’s money. That interest gets placed into the IOLTA, Interest On Lawyers Trust Account fund pursuant to Rule 1.15 of the Rules for Professional Conduct, which sets out how the West Virginia State Bar then utilizes these interest payments. An attorney makes arrangements with a financial institution to remit the interest on the funds to the West Virginia State Bar.
Most attorneys today still use a paper trust ledger book or trust receipt journal. However, with modern software, there are many accounting programs that can keep track of the trust providing the date, the source of the funds, the amount of deposits, the amount of withdrawals, and the payee. These programs are very helpful as they can be electronically backed up and keep accurate records of trust funds. Most trust account records in West Virginia are recommended to be kept five years after the termination of the client’s representation. This is the same for the retention of client files. In 2010, 22 percent of all ethical violations, which the West Virginia Supreme Court disciplined, were for trust violations.
Often, when I settle a personal injury case, the clients do not understand why their check has to go into a trust account. Once I explain to them that it is required under the Rules of Ethics, and that it provides a safe and adequate means of insuring that all of their funds are handled properly, they quickly understand the wisdom of keeping an accurate and complete trust account. It is important in life that we have someone we can trust with our secrets and with our confidences. When you seek out an attorney make certain that he maintains an approved trust account in a federal insured bank.