By Guest Blogger, Melanie Fischer
The Colorado Bar Association recently aired a webinar entitled Trust Account Basics for the benefit of attorneys practicing law in the state of Colorado. The webinar was presented by Ms. Reba Nance, Director, Law Practice and Risk Management at the Colorado Bar Association.
The webinar covered the topic of COLTAF and regular client trust accounts, and discussed the Colorado Rules of Professional Contact that are related to the handling of these types of accounts.
All attorneys that currently practice law in Colorado, as well as aspiring attorneys who intended to practice law in Colorado at some point in the future, are highly encouraged to view the Trust Account Basics at their convenience.
The webinar covered details about why attorneys in Colorado are required to maintain a trust account. Essentially, any attorney that practices law within the state of Colorado must keep other people’s money (e.g. clients or third parties) in a separate account in order to safeguard it. This includes fees and/or retainers for work not yet completed, money that is intended for third parties, and settlement funds that have not yet been distributed. Colorado Rules of Professional Conduct mandate that a trust account must be handled properly.
All Colorado Rules of Professional Conduct can be found on the Colorado Bar Association website. The specific rules discussed in the Trust Account Basics webinar were: Rules 1.15A, 1.15B, 1.15C, 1.15D, and 1.15E.
Some of the points discussed in great detail during the webinar include the following:
- Rule 1.15A General Duties of Lawyers Regarding Property of Clients and Third Parties
- Attorneys must hold property of clients and third parties separate
- Funds kept in trust accounts must be in compliance with Rule 1.15B
- Tangible property must be kept safeguarded
- Records shall be kept and must comply with Rule 1.15D
- Rule 1.15B Account Requirements
- Deposit slips and checks must state one of the following:
- Business Account
- Office Account
- Operating Account
- Professional Account
- An attorney must only maintain a trust account if:
- The attorney is responsible for holding money for a client or a third party
- Rule 1.15C Use of Trust Accounts
- Debit cards or ATM cards may not be used to withdraw money from a trust account
- Withdrawals from a trust account must be completed by an attorney licensed in Colorado or a person who is supervised by an attorney licensed in Colorado
- Trust accounts must be accurately reconciled at least quarterly
- Rule 1.15D Required Records
- Attorneys must retain trust account records for at least seven years
- A separate record must be kept for each individual client for whom the firm holds funds
- A record of all deposits and withdrawals must be kept
- Copies of written communication regarding fees, rates, terms of engagement, etc. must be maintained
- Statements showing disbursements of funds and/or property must be kept
- Rule 1.15E Approved Institutions
- A trust account must be held by an institution approved by the Regulation Counsel
- A list of approved banks can be found at http://www.coltaf.org
- Deposit slips and checks must state one of the following:
Other topics mentioned during the webinar include: the difference between COLTAF trust accounts and regular trust accounts, and tips on how to effectively and efficiently handle trust accounts.
Ms. Nance, the webinar’s presenter, encourages any attorney that has questions about client trust accounts to contact the Colorado Bar Association’s Ethics Hotline at (303) 860-1115. Additional information about trust accounts can be found at http://www.cobar.org/lpm.
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