New trust account rules for lawyers go into effect on September 15

Effective 9-15-2010, Rule 1.15A of the Michigan Rules of Professional Conduct, also known as the Trust Account Overdraft Notification ( ''TAON'') rule, requires that lawyer trust accounts be maintained in financial institutions that have signed agreements to provide the Attorney Grievance Commission with notice when a lawyer overdraws his or her trust account.

An overdrawn trust account is often the first indicator that trust account rules have been violated and a lawyer's practice may be in trouble.

A rationale behind the new rule is that payouts from the Client Protection Fund, into which all lawyers pay annually with their state bar dues, will be reduced if problems are caught early, thereby preserving the fund balance as much as possible.

The rule is in accordance with the purpose of the State Bar as expressed by its first President, Roberts P. Hudson, ''No organization of lawyers can long survive which has not for its primary object the protection of the public.''

Rule 1.15A requires the State Bar of Michigan to publish the list of approved financial institutions along with additional details regarding this new requirement. Check to verify that the banking institution where you have your IOLTA account is on the list by the effective date of Rule 1.15A.

Published: Thu, Aug 26, 2010


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