Roundtable offers tips for handling trust accounts.

• Date: 16 October 2002

Byline: Tony Anderson

Although the handling of trust accounts may seem a straight-forward proposition, errors or confusion regarding those accounts are among the most common factors leading the Office of Lawyer Regulation (OLR) to contact attorneys. The Wisconsin Law Journal brought a group of experts in the areas of trust accounts and attorney discipline to discuss the proper handling of trust accounts and OLR's system of trust account review. Editor Tony Anderson spent 90 minutes talking with Philip J. Miller, who handles trust accounts for Weiss Berzowski Brady LLP; Keith Sellen and Mary Hoeft Smith from OLR; Nathaniel Cade Jr., who chairs the State Bar Professional Ethics Committee; Daniel L. Shneidman, who represents attorneys through his practice at Shneidman Law SC; and Melissa Forester and Robert Lamb, who handle accounts at U.S. Bank. The following is Part I of the roundtable discussion.

WISCONSIN LAW JOURNAL: When developing a trust account relationship with a financial institution, how do you start that process? What are some of the things that you have in mind as you're developing that?

PHILIP J. MILLER: I have recent experience in that regard because we just recently moved our existing accounts to a different institution and opened a new account for our relatively new office in Delafield.

The relationship is very much like the normal banking relationship. The moving of our trust accounts was part of moving our general operating account as well, except for the added paperwork, the IOLTA agreement and the overdraft agreement. Generally the people who we were dealing with were pretty knowledgeable about trust accounts.

The one problem we've had with one bank is them getting set up so that they're taking any charges or fees out of our general operating account and not out of our trust account. It's not U.S. Bank, by the way.

If there's a fee or a charge, it has to come out of the other account. It's probably that their computer systems aren't necessarily set up to do that.

WLJ: On the flip side of things, as attorneys are coming to you and trying to set up accounts, are there things that you need them to keep in mind?

ROBERT LAMB: Actually, I think over the years, that process has definitely become more streamlined. Some of the forms are now online. Many times the attorneys already have whatever documents they need as far as our company papers, especially if it's developing a new relationship.

Additionally, they've already got the IOLTA agreement and everything already set, so it's more of me just assigning an account number, opening it up, as you (Miller) said, a regular retail process, completing the forms, starting a file.

If it's a new customer, we start the brand new relationship. We like to have a full file - signatures, social security numbers of the individuals that are going to be signing on the account, identification, have a copy of the IOLTA agreement. It's fairly simple nowadays. It used to be a lot more cumbersome, especially if you had a new attorney and a new relationship, where they might not have everything together as of yet.

WLJ: Looking at the OLR Web site and some of the tips that were listed there regarding trust accounts, there were a number of reporting elements. Can you touch on some of those?

MARY HOEFT SMITH: As far as reporting elements, basically banks are required - through the agreement that they enter into with their customer, the lawyer or law firm - to report to the Office of Lawyer Regulation whenever there is an overdraft on a trust account or a lawyer's fiduciary account. That is the general understanding between the lawyer and the bank, and we are a third party, actually.

We receive a copy of that agreement, and we receive the overdraft notifications. We then follow up on whatever information we receive from the bank to be sure it's not a bank error, and then if it's not, we commence an investigation of the reason for the...