Page 10 - JanuaryFebruary25 CBA Report

TRUST
ACCOUNTS,
AGAIN
By Edwin W. Patterson III
10 I am on the CBA Ethics Committee as a volunteer. I was
counsel to the CBA from 1982-2021. In that time, my
colleagues and I saw a constant flow of problems with
client trust accounts, and I’m not talking about thefts. We
certainly had those, but I always considered those to be in a
separate category- and it was one that we knew how to deal
with. Ethics inquiries and grievance allegations about client
trust accounts increased to what felt like a
daily basis. I was frustrated. In 2007, I asked
my friend John J. Mueller, an attorney and
CPA, to prepare CLE materials on trust
accounts. Those materials eventually
became a book, Lawyers’ Trust Accounts,
and the CBA published about 3,000 copies.
Most trust account
questions arise after
the fact, often when a
client asks, “Where’s my
money?” Our normal
analysis was to ask: (1)
Does the attorney have a
trust account? (2) Were the
funds in question depos-
ited into that account?
(3) Has the account been
maintained in compliance
with Prof. Cond. R.1.15
(a)? (4) Has there been a
commingling of client and
lawyer funds?
However, a recent
inquiry raised the issue of where the client funds should have
been deposited in the first place,1 and, further, whether the
attorney’s handling of the matter constituted a breach of
fiduciary duties. The attorney who called was a domestic
relations practitioner who routinely holds proceeds from the
sale of a marital residence in an Interest on Lawyers’ Trust
Account ( IOLTA), pending a final agreement between the
parties or a court order as to property division. Such an
agreement or order could take months and may not occur in
a predictable time frame.
The trust account rule requires a lawyer to “maintain
funds of clients or third persons that cannot earn any net
income for the clients or third persons in an interest-bearing
trust account that is established in an eligible depository insti-
tution,”2 per the Ohio Revised Code. Revised Code §4705.09
(A) requires attorneys to “deposit all client funds held that
are nominal in amount or are to be held by the attorney
for a short period of time”
in an IOLTA. However,
“nominal in amount” and
“a short period of time” are
not defined terms. Never-
theless, RC §4705.09 (A)
(3) provides cover for the
attorney: “The determina-
tions of whether funds held
are nominal or more than
nominal in amount and of
whether funds are to be held
for a short period or longer
than a short period of time
rests in the sound judgment
of the particular attorney. No
imputation of professional
misconduct shall arise from the attorney’s exercise of judgment
in these matters.” 3
Thus, an attorney who holds the not-so-nominal sum of
THE REPORT | January/February 2025 | CincyBar.org
When Gates emphasized in his
client trust account lectures,
“You could be sued for malpractice!
You could lose your law license!
You could face criminal charges!”
even the end-of-the-year CLE attendees,
who were sitting in the back row, looked
up from reading their newspapers!