Professionalism and Ethics
I thought I’d write a little bit about attorney ethics and our disciplinary boards. The Louisiana Disciplinary board mainly investigates matters related to client complaints. Its purpose is to protect the public:
The primary purpose of the discipline and disability system is to protect the public. To accomplish this purpose, the agency investigates complaints of lawyer ethical misconduct and makes recommendations to the Louisiana Supreme Court when discipline is warranted.
Most attorneys, after many years of practice, will have at least one or two complaints. Sometimes the complaints have merit. Sometimes it stems from a client who is simply frustrated with the legal process or did not get the results he or she wanted. Also, clients confuse malpractice with issues related to ethics and professionalism.
If a complaint is lodged by a client, the disciplinary board is charged with investigating and determining if there is cause to bring further action against the attorney.
Most of the ethics rules are related directly to client communication and representation, but there are some rules that are related to client trust accounts. Attorneys are required to maintain client funds in a separate account from their operating accounts. This is called a client trust account. An attorney can, and typically does keep all of their clients’ funds in one account for all of them. The attorney must keep careful record of what funds belong to which client.
The rules about these accounts are quite stringent, for good reason. We have a fiduciary duty to our clients. Thus, there are rules against comingling, for example. Comingling simply means mixing funds together. This term is often used in the context of marital accounts in family law, but also in other contexts like client accounts.
I think we can all understand the concept that we don’t put our client funds in our own accounts or deposit our funds into our clients’ account. However, the rules are stricter and more detailed then that. For example, if an attorney deposits a settlement check into the client account, once the attorney prepares a disbursement memo to disburse the funds to the client, he or she also probably has earned certain fees from that settlement check. So how is that handled? Obviously, the client gets their money paid out of his or her account right away, but what does the attorney do with his or her portion? Under the governing rules, an attorney is required to take out his or her fees right away from that account and into his or her own account. If it is left too long in the account, it’s considered “comingling” and is an ethics violation even if there is no client harm.
Another strict rule is that attorneys cannot leave a significant “cushion” in the trust account, even if it’s for a good reason, like protecting against bouncing a check by mistake. Normally, in our personal bank accounts we feel more comfortable having at least $1,000 or more extra in our daily use checking account in case we make a mistake and to make sure we do not bounce a check or payment for groceries, gas, or other items. However, as a lawyer, we are not allowed to do that. We can leave a very small “cushion” of say $100 or so to cover account fees, and the costs of checks, but not any more then that. If a check bounces, the bank is required to report that to the disciplinary board to investigate the account. The amount of the “cushion” that is allowed and how quickly an attorney is required to remove his or her fees from the account is not specified, so it is best to err on the side of caution.