June 25, 2019

Formal Ethics Opinion 95, “Funds of Missing Clients,” Withdrawn

The Colorado Bar Association Ethics Committee withdrew Formal Opinion 95, “Funds of Missing Clients.” This opinion addressed what to do with funds that were held in a lawyer’s trust account but the client’s whereabouts were no longer known to the attorney. The opinion recommended obtaining an advance agreement from the client to donate unclaimed funds, or to allow the lawyer to withdraw small amounts of the funds to use in locating the client, or to proceed under the Unclaimed Property Act. The opinion was withdrawn on Saturday, May 21, 2016.

Credit Unions Now Able to Offer Federally Insured Attorney Trust Accounts

On December 18, 2014, President Barack Obama signed into law H.R. 3468, “Credit Union Share Insurance Fund Parity Act.” This Act allows credit unions to federally insure attorney trust accounts to the maximum amount allowed under the Share Insurance Fund.

The Act requires the National Credit Union Administration Board to provide pass-through share insurance to shares of any interest in a lawyer’s IOLTA account. Previously, credit unions were not able to insure these accounts at the same levels as banks because not all clients were members of the credit union, creating a competitive disadvantage for credit unions with attorney trust accounts.

 

Colo. RPC 1.15 Concerning Fees and Trust Accounts Repealed and Reenacted as Five New Rules

On Wednesday, June 18, 2014, the Colorado Supreme Court released Rule Change 2014(07), which repealed Colo. RPC 1.15 and reenacted it as Colo. RPC 1.15A, 1.15B, 1.15C, 1.15D, and 1.15E. The rule change was signed on June 17, 2014 and is effective immediately.

Colo. RPC 1.15A, “General Duties of Lawyers Regarding Property of Clients and Third Parties,” sets forth rules regarding client property and accountings. Rule 1.15A mostly tracks the language of subsections (a) through (c) of former Rule 1.15, and adds that the provisions of 1.15B through 1.15E apply to all funds or property held or maintained by the lawyer.

Colo. RPC 1.15B, “Account Requirements,” makes significant changes to subsections (d) through (h) of former Rule 1.15. Rule 1.15B sets forth requirements for COLTAF and other accounts in which to maintain client funds, and specifies practical procedures for paying account fees and dispersing interest.

Colo. RPC 1.15C, “Use of Trust Accounts,” rearranges the management provisions previously contained in 1.15(i) and increases the rule’s readability.

Colo. RPC 1.15D, “Required Records,” establishes recordkeeping requirements for client property. Some of the provisions from former 1.15(d) through (h) regarding recordkeeping procedures were moved to Rule 1.15D, and the language of former 1.15(j) through (m) is also incorporated where appropriate.

Colo. 1.15E, “Approved Institutions,” lists requirements for financial institutions housing trust accounts and defines acceptable forms of accounts. Rule 1.15E is expanded from former 1.15(e)(3), and many provisions were added regarding the financial institutions.

For the full text of new Rules 1.15A through 1.15E, click here. For all of the Colorado Supreme Court’s rules changes, click here.