UPCOMING TRUST ACCOUNTING SEMINARS

Lawyer Trust Accounts: Management Principles & Record keeping Resources

Tuesday June 27, 2017 1:00 p.m.-5:00 pm

This reoccurring half-day seminar will feature presentations on how to ethically manage lawyer trust accounts and effectively use forms, checklists, and guidelines for recordkeeping. The seminar is open to lawyers and their staff, is an excellent way to learn more about compliance with Michigan Rules of Professional Conduct 1.15 and 1.15A, and should assist lawyers in avoiding receipt of a trust account overdraft notification.

Registration Fee: $50 (lawyers); $25 (non-lawyers)

Please visit www.michbar.org/trustaccounts for more information. 

Please direct all questions about this seminar to Karen Spohn (State Bar of Michigan) at (517) 346-6309 or kspohn@mail.michbar.org 

Trust Account Overdraft Notification (TAON)

Effective September 15, 2010, Michigan joined over 40 other states by enacting a trust account overdraft notification rule. Michigan lawyers who hold funds in trust must comply with Michigan’s trust account rules. Michigan Rule of Professional Responsibility (MRPC) 1.15A, titled Trust Account Overdraft Notification (TAON), requires that funds held in lawyer trust accounts [as defined by MRPC 1.15(a)] may be held only at pre-approved financial institutions. To review Rule 1.15A in its entirety, visit MRPC 1.15A PDF.

Lawyers must confirm that their financial institutions are approved by checking the list of approved financial institutions posted on the State Bar of Michigan’s website at http://www.michbar.org/opinions/TAON_list.pdf. After confirming that their financial institution is on the State Bar’s approved list, lawyers must provide notice to their financial institution for each of their non-IOLTA accounts. The form that may used to provide the requisite notice may be downloaded from the State Bar’s website at http://www.michbar.org/opinions/TA_notice_fillable.pdf. Lawyers must also assure that the name of each non-IOLTA account contains the term “trust” or “escrow”. If not, they must contact their financial institution and take the steps required by the financial institution to change the name on the account(s) to include the term “trust” or “escrow.” (The IOLTA Notice to Eligible Financial Institution Form filed when opening an IOLTA account suffices to advise the financial institution that the IOLTA account is a trust account subject to TAON; if needed, this form and other IOLTA account information can be obtained at http://www.msbf.org/iolta.)

Lawyers must continue to safeguard client and third-party funds held in trust to avoid all overdrafts to their IOLTA and non-IOLTA accounts. Misappropriation is a per se offense which occurs when the account balance falls below the minimum amount the lawyer is required to hold in trust. An overdraft notification signals a problem with the account. Within five banking days after the date the item was paid or returned unpaid, the financial institution must notify the Grievance Administrator of the Attorney Grievance Commission of the transaction, the identity of the financial institution, the identity of the account holder, and the account number. The financial institution must also provide information identifying the transaction item, the amount and date of the overdraft, and either the amount of the returned instrument or other dishonored debit to the account and the date returned or dishonored, or the date of presentment for payment and the date paid.

If the overdraft is nominal or when it is determined that the overdraft notice was issued in error, the Grievance Administrator may exercise discretion and determine that no further investigation is warranted. If, however, such determination cannot readily be made, a Grievance Administrator’s Request for Investigation may be issued to the lawyer(s) in whose name the account is held. Lawyers who receive a Request for Investigation shall provide the Grievance Administrator, in writing, within 21 days after issuance of the request, a full and fair explanation of the cause of the overdraft, how it was corrected, and remedial measures taken to prevent future overdraft occurrences. The Grievance Administrator will accept trust account overdraft notifications from financial institutions by e-mail to TAON@agcmi.com. For additional questions regarding the reporting process, financial institutions may contact the Attorney Grievance Commission at (313) 961-6585 or email questions to TAON@agcmi.com.