Mishandling client funds is the second most common cause for lawyer discipline, second only to neglect of client matters. Last month the Ohio Supreme Court suspended two lawyers for conduct that included management of client funds. See, Disciplinary Counsel v. Darling and Disciplinary Counsel v. Smith.

Here are some reminders to avoid disciplinary problems involving client funds:

1. Do not commingle client funds with the lawyer’s funds.
2. Keep unearned client funds in an IOLTA account.
3. If there are bank service fees associated with the IOLTA account, the lawyer may keep in the IOLTA only as much of the lawyer’s own funds as necessary to cover those fees. On average, this should not exceed $100.
4. Flat fees “earned upon receipt” are considered the lawyer’s funds and cannot be deposited into an IOLTA account. However, if the representation ends before the work is completed, the lawyer is obligated to return any unearned portion of the fee. Keep an accounting of work performed for a flat fee as the fee is earned. See, Ohio Board of Professional Conduct Opinion 2016-1.
5. Keep a general ledger and client ledgers and reconcile IOLTA accounts monthly.  OBLIC is pleased to provide a complimentary spreadsheet to make tracking client funds easier.  Open this link, scroll down and click on Request OBLIC’s IOLTA Spreadsheet.
6. Maintain records of fee agreements, account ledgers, bank statements, deposit slips, cancelled checks, monthly reconciliations for seven years after the termination of the representation.

For more information about IOLTA accounting:

• Rule 1.15 of the Ohio Rules of Professional Conduct
• OBLIC Alert- IOLTA Practice Pointers
• Ohio Supreme Court Office of Disciplinary Counsel’s IOLTA FAQs
• Ohio Supreme Court Office of Disciplinary Counsel’s Trust Accounting 101 CLE
• Ohio Access to Justice Foundation’s IOLTA/IOTA FAQs
• OSBA’s Self-Study CLE, IOLTA: Rule 1.15 and New Attorney Unclaimed Funds
• Ethical Billing for Solo/Small Firm Lawyers, published in OSBA’s Solo, Small Firms and General Practice News, June 30, 2021

As always, if you have any questions, please contact us. We are here to help.