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Trust Account Rules

By: dmc-admin//January 22, 2007//

Trust Account Rules

By: dmc-admin//January 22, 2007//

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“As the principle negotiator of the 2004 trust account rule, I apologize for all the court has faced the past two years. At the time, I thought we had achieved the goals we set out to accomplish with that proposal; to modernize fiduciary rules,” said attorney Dean R. Dietrich at a Wisconsin Supreme Court open administrative hearing on Jan. 17.

Dietrich was absolved of any sin by Chief Justice Shirley S. Abrahamson who lightly commented, “It wasn’t that bad.” But while the apology was accepted, the Supreme Court preferred to limit problems with any modifications to the trust account rules.

Significant resistance and confusion circled the 2004 revisions almost immediately after adoption and a Trust Account Rule Working Group was established to essentially revise the revisions.

Those changes to Supreme Court Rules 20:1.15 (safekeeping property), 20:1.0 (definitions), 21:16 (discipline) and 12.04 (Wisconsin Lawyers Fund for Client Protection) were submitted to the Supreme Court by the State Bar and Office of Lawyer Regulation in May 2006.

“We wanted to develop a proposal, which looked out for both the business interests of attorneys as well as protection of clients,” said attorney Michael Olds, Chairman of the Trust Account Working Group.

Dietrich, who was a member of the working group, fully endorsed the amendments and said, “They do not stand in the way of a lawyer’s ability to practice law, but rather protect and assist them as well as the public.”

Several presenters, including OLR Dir-ector Keith Sellen and working group members Gerald W. Morris and Diane S. Diel, also echoed Olds’ sentiments at the hearing, which was well-populated by members of the legal community.

The fact that everyone in attendance was deeply connected to the project was ultimately one of the determining factors, which prompted the Supreme Court to de-lay adoption of the amendments during its open conference.

Several justices, including Abrahamson expressed concern, that while the proposal was a worthy effort, there was no primary input from non-attorney organizations.

“I was bothered by the fact that nobody on this working group or the one from 2004 was not an attorney and it seemed that something should be done to involve people who are actually familiar with paying attorney fees,” said Abrahamson. “The court recognized the substantial work that went into the proposal, but feels that perspective from people, who have seen it cold like us, might provide a comprehensive analysis.”

The justices specifically recommended input from non-attorney members who worked on the Fee Arbitration Committee, attorneys who are not connected with the proposal, business and consumers.

Justice Jon P. Wilcox noted that the additional perspectives may not necessarily translate to additional input to the already meaty 30-plus page proposal.

“I wish we would have had this input in the first place, and it may just be window dressing, but maybe we need that window dressing in this case,” said Wilcox.

Clarification and simplification were other suggestions put forth by the court and especially Justice Ann Walsh Bradley, who took issue with language concerning un-earned advanced fees being placed in an attorney’s personal business account, rather than a trust account.

“I’m not sure that if a dozen consumers came back with input I would support this petition because of the definition that allows advanced fees to be transferred into a general checking account and be spent by an attorney,” said Bradley. “To me, that’s conversion, to spend money that is not yours, and that’s wrong.”

Bradley noted that no other jurisdictions allowed advance fees to be handled in the manner set forth in the proposal, but that multijurisdictional information could prove useful in determining Wisconsin’s course on the subject.

The court hoped to review input from additional sources, as well as any further revisions at its next open hearing in April, but Justice N. Patrick Crooks cautioned against a hasty resolution.

“Things have changed and will continue to change as to how trust and business accounts are used and while a great deal of work has been done here, it’s very complicated and there is the need for education,” said Crooks. “I don’t want to be back here in 2010 with a committee saying, we’re sorry about 2007. We need to take our time and make sure the language is understood by both lawyers and consumers.”

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