Florida - TRUST ACCOUNTING
Third DCA upholds order requiring production of law firm’s trust account wire receipt records over attorney-client privilege objections. [Added 11/5/14] -- Sweetapple, Broeker & Varkas, P.L. v. Simmon, ___ So.3d __ (Fla. 3d DCA, No. 3D14-1543, 10/29/2014).
Father’s lawyer in paternity action is ordered to disgorge funds held in his trust account as unearned fees. [Added 5/28/14] -- Baratta v. Costa-Martinez, __ So.3d __ (Fla. 3d DCA, No. 3D14-206, 5/21/2014).
Supreme Court approves most rule changes requested by Florida Bar, including revisions to rules governing conflicts and paying witnesses, but rejects proposal to restrict activities of suspended and disbarred lawyers. [Added 3/29/14]
Responding to a petition filed by the Florida Bar in October 2012, the Florida Supreme Court approved all but one of the Bar’s requested rule changes. The amendments to the Rules Regulating The Florida Bar are effective June 1, 2014. Below is a sunEthics summary of notable changes. In re: Amendments to the Rules Regulating The Florida Bar (Biennial Report), __ So.3d __ (Fla., SC12-2234, 3/27/2014).
Rule 4-1.7(d) (conflicts, current clients). This rule was amended “to clarify that family relationships that must be considered as creating conflicts between lawyers include relationships by blood or marriage.” Rule 4-1.7(d) prohibits lawyers related by blood, adoption, or marriage as a parent, child, sibling, or spouse from representing conflicting interests without the clients’ informed consent. In addition to amending the rule, the Court directed the Bar “to study the rule further and consider whether the current categories should be broadened beyond parent, child, sibling, and spouse to include other significant relationships.”
Rule 4-1.9, Comment (conflicts, former clients). The Comment to Rule 4-1.9 was amended to delete an example of misuse of confidential information concerning a former client. The following sentence was deleted: “For example, a lawyer who has represented a businessperson and learned extensive private financial information about that person may not then represent that person’s spouse in seeking a divorce.”
Rule 4-3.4(b) (paying witnesses). Rule 4-3.4(b) was revised to permit lawyers to pay non-expert witnesses for “time spent preparing for, attending, or testifying at proceedings” (new language italicized). This amendment may broaden the ability of lawyers to pay witnesses; the former rule only allowed “reimburse[ment] . . . for preparing for, attending, or testifying at proceedings.
Rule 5-1.2(c) (trust accounting). Every firm with more than one lawyer must have a written plan for compliance with trust accounting rules, and this plan must be “disseminated to each lawyer in the firm.” The rule also sets out requirements for reporting trust account problems within the firm and, if a satisfactory response is not received, to the Bar.
REJECTED proposal; Rule 3-6.1 (activities of suspended/disbarred lawyers). The Bar asked the Court to amend Rule 3-6.1 "to prohibit suspended attorneys and former attorneys who have been disbarred, or whose disciplinary resignations or revocations have been allowed, from representing clients in administrative proceedings and before administrative agencies which allow nonlawyer agents or 'qualified representatives' to represent clients in certain circumstances." The Court rejected this proposal, concluding that it does "not have the authority to prohibit a lawyer from doing non-legal work." In re: Amendments to the Rules Regulating The Florida Bar (Biennial Report), __ So.3d __ (Fla., SC12-2234, 3/27/2014).
Florida Ethics Opinion 12-4, concerning title insurers’ audits of lawyers’ trust accounts under Florida law, becomes final. [Added 3/14/14]
Florida Ethics Opinion 12-4 is now a final advisory opinion. The opinion answers questions concerning a lawyer’s ethical obligations in light of both the Rules of Professional Conduct and Fla.Stat. sec. 626.8473(8). The statute requires lawyers to maintain funds received in the capacity of a “title or real estate settlement agent” in a separate trust account and to “permit the account to be audited by its title insurers, unless maintaining funds in the separate account for a particular client would violate applicable rules of The Florida Bar.”
The Committee responded to two questions asked by an inquiring member of the Florida Bar. These two questions were:
“Question 1: Is an attorney permitted to allow a title insurance company to audit the firm’s special trust account used exclusively for real estate and title transactions without the informed consent of the clients who have no involvement with that particular title insurance company?”
“Question 2: If an attorney is not ethically permitted to allow a title insurer to audit the special trust account without the clients’ informed consent because the special trust account involves unrelated transactions, but new section 626.8473(8), Florida Statutes, requires that attorney to allow the audit, does the attorney abide by the ethics rules or the statute?”
The Committee’s responses to these questions are summarized in the opinion's final paragraph: “[T]he inquirer may not permit multiple title insurance companies to audit a single trust account used exclusively for real estate and title transactions, unless the lawyer reasonably concludes that permitting the audits would serve the affected clients’ interests and the affected clients have not prohibited disclosure of the information. The inquirer may permit a title insurer to audit a single trust account used exclusively for client transactions insured by the title insurer requesting the audit. The answer to the inquirer’s second question offers three alternatives that may harmonize the inquirer’s obligations under the applicable Rules Regulating The Florida Bar and the statute if the lawyer concludes that permitting the audits is not necessary to serve the affected clients’ interests or if affected clients’ have prohibited the lawyer from disclosing the information.”
Supreme Court disbars rather than suspends lawyer whose gross negligence regarding trust account was insufficient to prove intent to misappropriate funds. [Added 9/5/13] -- Florida Bar v. Johnson, __ So.3d __, 38 Fla.L.Weekly S626 (Fla., Nos. SC11-1136, SC11-1578, SC11-2343, 9/4/2013), 2013 WL 4734568.
Lawyers whose bookkeeper embezzled millions in client funds are disbarred for trust accounting violations and their conduct in responding to the problem. [Added 3/30/13] -- Florida Bar v. Rousso, 117 So.3d 756 (Fla. 2013).
Supreme Court suspends lawyer for 3 years rather than 90 days; confidentiality gives way to fiduciary obligations when holding money in trust for non-client. [Added 12/13/11] -- Florida Bar v. Watson, 76 So.3d 915 (Fla. 2011).
Supreme Court disbars lawyer for multiple trust account violations. [Added 4/8/11] -- Florida Bar v. Mirk, 64 So.3d 1180 (Fla. 2011).
Supreme Court disciplines lawyer who allowed non-lawyer to have signatory authority on escrow account. [Added 6/10/10] -- Florida Bar v. Hines, 39 So.3d 1196 (Fla. 2010).
Supreme Court holds that lawyer whose trust account check to client has not cleared has duty to stop payment when served with writ of garnishment seeking those funds. [Added 5/2/08] -- Arnold, Matheny and Eagan, P.A. v. First American Holdings, Inc., 982 So.2d 628 (Fla. 2008).
Lawyer who intentionally misappropriated trust funds, but had "impaired judgment" due to medications and mental health difficulties, is suspended rather than disbarred. Florida Bar v. McFall, 863 So.2d 303 (Fla. 2003).