|The Colorado Lawyer|
Vol. 28, No. 8 [Page 27]
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Changes to Rule 1.15 of the Colorado Rules of Professional Conduct Concerning Lawyers' Trust Accounts
by Edward J. Nugent
Effective July 1, 1999, the Colorado Supreme Court adopted changes to Rule 1.15 of the Colorado Rules of Professional Conduct ("Colo. RPC"). The effect of the rule change is to impose reporting requirements on financial institutions where lawyers deposit money in Colorado Lawyer Trust Account Foundation ("COLTAF") trust accounts.
Financial institutions, which in the past have maintained COLTAF accounts, should have received forms from the Attorney Regulation Counsel (the new Attorney Regulation System office) regarding approval of the financial institution for COLTAF accounts. The importance of the bank being approved by Regulation Counsel is that the bank must agree to notify Regulation Counsel of any dishonored instrument on the account in a report identical to an overdraft notice that is customarily sent to the depositor.
In the event of instruments that may have been presented against insufficient funds accounts, but that were honored by the financial institution, the financial institution must report to the financial institution's attorney or law firm, an account number, date of presentation for payment, and the date paid, as well as the amount of the overdraft created by honoring the instrument. In addition, the approved financial institutions agree that they will cooperate fully with Regulation Counsel to produce trust account or business account records on a request from Regulation Counsel for such records, in conjunction with any grievance proceeding pursuant to C.R.C.P. 251. A bank may charge a reasonable fee for producing such reports and records.
In addition, financial institutions have immunity from suit for acts or omissions in reporting overdrafts or insufficient funds transactions, or production of documents under Colo. RPC 1.15. Colo. RPC 1.15 specifically extends no duty to the financial institution to exercise any standard of care and specifically states that compliance with the rule does not constitute a contract for the benefit of any third parties.
With respect to attorneys, any law firm maintaining a trust account in Colorado, as a condition of Colo. RPC 1.15, is presumed to have consented to the reporting and production requirements as specified in Colo. RPC 1.15. See the full rule on pages 128-29 of the May 1998 issue of The Colorado Lawyer and amendments thereto in this issue on page 96.
If you have questions about whether the financial institution maintaining your COLTAF account is approved by Regulation Counsel, or any other questions regarding your account, contact that financial institution for information. The Attorney Regulation Counsel office can be reached at (303) 893-8121; toll free, (877) 888-1370.
CHECK THOSE CHECKS!
Rule 1.15(f)(4) states that ". . . all trust accounts, whether general or specific, as well as all deposits slips and checks drawn thereon, shall be prominently designated as a 'trust account.'" Additionally, "[a]ll business accounts . . . shall be prominently designated as a 'professional account,' or an 'office account.'" Do attorneys need to throw out existing checks and buy new ones? A representative of the Attorney Regulation Counsel's office said, "No, but do bring your checks into compliance when re-ordering." It probably wouldn't hurt to type, or put on existing checks, the designation required by the rule.
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