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Iowa lawyer suspended for 30 days for trust account and other violations after former paralegal reports her for accepting fee retainers and improperly placing them in her operating account and other locations

Hello everyone and welcome to this Ethics Alert blog which will discuss the recent Iowa disciplinary case suspending an Iowa lawyer for one month for failing to deposit client funds into her trust account after she was reported to the Iowa Bar by her former paralegal.  The case is Iowa Supreme Court Attorney Disciplinary Board vs. Sara Anne Kersenbrock, No. 12–0339 (September 21, 2012).

The former paralegal reported the lawyer and was a witness in the attorney discipline case.  She testified, inter alia, that between 2005 and 2010, when she worked for the lawyer, the lawyer failed to deposit a number of client retainers into her trust account and instead deposited them into her law firm operating account.  According to the paralegal, that lawyer also put cash retainers into a drawer or in books on her bookshelf and then used them when she needed money.  The lawyer testified she was not required to deposit most of the fee retainers into her trust account since they were earned when she deposited the funds into her operating account and she acknowledged some record-keeping issues, which she said she had taken steps to correct.  The lawyer also confirmed that she placed one $3,000.00 cash retainer in her “sock drawer” for several weeks.

Following a hearing, the Supreme Court of Iowa’s Grievance Commission found that the lawyer violated the Iowa Bar Rules by failing to deposit client retainers into a client trust account, failing to maintain adequate trust accounts records and procedures, collecting an unreasonable fee by accepting a premature probate fee, and engaging in conduct involving misrepresentation by claiming in her annual client security questionnaires that she (1) kept “all funds of clients for matters involving the practice of law in Iowa in separate interest bearing trust accounts located in Iowa”; (2) kept “all retainers, regardless of size . . . deposited in [her] trust account”; (3) “train[ed] and supervise[d] [her] nonlawyer staff’s involvement with [her] trust account”; and (4) performed monthly “reconciliations of [her] trust account balances with bank statement balances and individual client ledger balances.”  The commission recommended a public reprimand.

The Iowa Supreme Court opinion agreed that the lawyer had made misrepresentations in her annual Bar client security questionnaires, collected an unreasonable fee by accepting a premature probate fee, and failed to deposit retainers into a client trust account in 2 client matters.  The opinion noted that the lawyer had no prior history of discipline; however, while a public reprimand might have been adequate if her violations of the Bar rules were more limited, multiple violations called for a more severe sanction.  “Because (the lawyer) did not keep adequate records, we have no way of knowing whether the trust account violation outlined above was an isolated occurrence or a more frequent event. The persistent failure to keep appropriate records has the effect of preventing effective review of (the lawyer’s) accounting practices….  The cumulative impact of all violations is an important consideration.”  The opinion imposed a suspension of 30 days.

Bottom line:  Lawyers be aware, in Florida, depending on whether they are earned or unearned, client fee retainers must be placed in the proper bank account.  Earned fees must be placed in the lawyer’s operating account and unearned fees must be placed in the lawyer’s trust account (and not on a shelf, book, or sock drawer).  If a single check is for both an earned fee and advance costs, the funds must be initially deposited into the lawyer’s trust account and the earned fee must be removed from the trust account within a reasonable time.  In addition, every Florida lawyer who maintains a trust account must certify that the trust account is in full compliance with the Rules Regulating Trust Accounts of The Florida Bar.

Be careful out there!

            As always, if you have any questions about this Ethics Alert or need assistance, analysis, and/or guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer: this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

[email protected]

www.jac-law.com

 
 

 

 

 

 

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