Client Trust Account Recordkeeping Altered
In most states, strict compliance with trust accounting regulations is required. Where such regulations require a paper trail that includes retaining canceled checks and other features of an older era, lawyers are inadvertently out of compliance. How? Why?
The banking industry has moved on. They are into the electronic age and we have not kept up. For example, few banking institutions, if any, still return canceled checks. They send photocopies and, after a short time, destroy the canceled checks. See the federal Check Clearing for the 21st Century Act.
In August, 2010, the American Bar Association’s House of Delegates adopted the new Model Rules for Client Trust Account Records to replace the Model Rules on Financial Recordkeeping, in effect since 1993. The ABA rules now enable lawyers to use electronic tools to comply with Model Rule 1.15 concerning holding clients funds and property.
Check your State rules — not all states have updated their regulations.
Tags: accounting, Cash Flow - Finances, Client, Electronic, Financial, Management, trust