Trust Accounting Questions and Answers with the Experts

At the CBA’s recent 2 hour CLE program “Everything You Need To Know About Trust Accounting” (now available to watch on demand) we had so many questions for our panelists that they didn’t have time to answer them all. However, our intrepid experts – Dan Cotter, David Holterman and Mary Andreoni – took the time to respond to some of the attendee’s questions below. Please note: The responses expressed here are solely those of the individual panelists. They are provided as only general input and should not be considered advisory opinions regarding any specific factual scenarios.

Q: If you work as a  Guardian Ad Litem & receive money before you perform your duties, does that money need to be in an IOLTA account since you really don’t represent a client?

A: [Mary Andreoni] If the “GAL” does not represent a client,  ILRPC 1.15 is not triggered and the  money in question does not go into an IOLTA  account.

Q: Scenario: – Lawyer/Lawfirm is holding Settlement proceeds in IOLTA account. – Client can’t be located despite reasonable efforts made. – There is a clear, signed, contingent fee agreement setting forth lawyer’s percentage of fee to be earned for services rendered. Question: Can a lawyer/lawfirm take its portion of the proceeds pursuant to the signed fee agreement and leave the remainder of client’s proceeds in the IOLTA account?

A: [Mary Andreoni] No.  The law firm can withdraw its fees if the client specifically authorized the law firm to withdraw its contingent fee from the settlement proceeds before the client disappeared. See, In re Walner, 519 N.E.2d at 908, and ISBA Opinion Nos. 95-11 (Jan. 1996) and 88-4 (Feb. 1989).  Without the client’s authority to the settlement distributions, the law firm must maintain the settlement proceeds in the IOLTA account until authority is obtained from either the client or elsewhere (e.g., court).  See ISBA Op. 02-02 (Nov. 2002).

Q: Do you need to maintain an IOLTA account for ARDC purposes (it’s part of annual registration) if you are not holding client funds?

A: [Mary Andreoni] No.  Supreme Court Rule 756(d) requires all Illinois lawyers to disclose whether they or their law firm maintained a trust account during the preceding year and to disclose whether the trust account was an IOLTA (Interest on Lawyer Trust Account) trust account, as defined in ILRPC 1.15(f) of the Rules of Professional Conduct. If a lawyer did not maintain a trust account, the lawyer is required to disclose why no trust account was maintained.

A: [David Holterman] I agree.  Rule 1.15 and its specific requirements to hold funds in an IOLTA or other client trust account are “triggered” when a lawyer comes to possess funds of a client or third person in connection with a representation. (See paragraph a.)

Q: How would you handle an emergency matter (e.g., an Order of Protection) where the client retains you and asks you to file a case (for which the client must incur costs) on the same day, before the retainer check is able to clear?

A: [Mary Andreoni]  The lawyer may pay the expense on behalf of the client, which is permitted under ILRPC 1.8(e)(1), and deposit the client’s check into the lawyer’s business account as reimbursement for the lawyer’s advance.

A: [David Holterman] If the check is only for court costs and/or a flat fee charged by the lawyer, I agree it can be deposited in the lawyer’s business account. If the client’s check includes any additional amounts – e.g. for a security retainer – then the check should be deposited in the IOLTA account with the appropriate amounts withdrawn by the lawyer for reimbursement.

Q: Is it permissible to state in one’s Client Engagement Letter that the attorney may withdraw funds from the security retainer account as the work is performed, and then send a statement at the end of the month? Must a statement actually be sent each time a withdrawal is to be made to give the client an opportunity to say “NO” even if it’s agreed up front that the lawyer may withdraw funds as and when earned?

 A: [Dan Cotter] Yes, it is permissible.  While a statement is not required by the rules, it is best practices to stay in communications with the client.  One of the biggest reasons for complaints against attorneys is lack of communication.  The invoice or notice of work done for withdrawal is an opportunity to communicate with the client and keep the client informed of where the case or matter is at.

 Q: Can the client advance a retainer for tax benefit (deductability)?

 A: [Mary Andreoni] No. The client’s desire to minimize the client’s tax obligations is not an appropriate use of an advance payment retainer. Advances covered by ILRPC 1.15 are funds received by a lawyer in connection with the payment of legal fees and expenses of the representation.  An advance payment retainer must meet the requirements of ILRCP 1.5(c).  The requirements of Rule 1.15(c) must be read in conjunction with the Dowling case.  As such, an advance payment retainer must be used sparingly and only where it is in the client’s interest as it relates to the client’s responsibility to pay the lawyer’s fees and expenses.

A: [David Holterman] In addition to Dowling, Comments [3A] – [3D] to Rule 1.15 are useful for understanding the requirements of paragraph (c).

 Q: What does a sole practitioner do about succession/access to Iolta funds after incapacity or death?

A: [Catherine Sanders Reach] There is guidance from the IARDC for succession planning and your IOLTA funds in The Basic Steps to Ethically Closing a Law Practice, from the Michigan Bar Association’s guide “Planning Ahead: A Guide to Protecting Your Clients’ Interests in the Event of Your Disability or Death” and in the Chicago Bar Association CLE program “Succession Planning to Cover Bumps in the Road 

Q: If you charge a fixed fee but the fee does not include a government fee and the client pays it separately and provides it to the attorney so that it can be included with the file that the attorney will mail to the government institution, does the government fee have to go in an IOLTA account?

 A: [Dan Cotter] I don’t believe so.  If the check is made payable to the government, then the fees do not appear from this scenario to be entrusted to the attorney as fiduciary.

A: [David Holterman] I agree that a separate check made payable to the government entity can be passed on to the entity. If it is a separate check payable to the attorney, then it should be processed through the IOLTA account.

Q: If I represent a client who resides or works in another state, and I hold funds for him/her in a trust account, am I subject to trust accounting rules of the client’s home state? Do the rules of one state or the other govern in the event of a conflict?

 A: [Mary Andreoni] You should follow the rules of the jurisdictions in which you open the trust account.  To the extent there are any inconsistencies between the rules of one state and the lawyer’s licensing jurisdiction, those inconsistencies should be resolved by reference to ILRPC 8.5(b).

 A: [David Holterman] Under the framework of Rule 1.15, the client trust account requirement follows the lawyer, not the client. Paragraph a states that funds should be deposited in a client trust account “maintained at an eligible financial institution in the state where the lawyer’s office is situated, or elsewhere with the informed consent of the client.” If the client trust account is maintained in the client’s state, the lawyer must follow the trust account/IOLTA requirements of that state.

Thanks to our panelists for being so generous with their time and knowledge!

Enter a Medical ID on your iPhone for Emergencies

Many ER patients arrive at the hospital without anyway for medical staff to know who they are or how to reach their emergency contact. The iPhone solves this problem with their “Medical ID” feature. When an emergency worker finds your phone, they can see your name, date of birth, medical conditions, blood type, and emergency contact, even when your phone is locked by pressing the “Emergency” button on the keypad. You can set up the Medical ID in the “Health” app that comes installed on your phone. Look for the icon with the little heart:

1 app icon

Once inside the Health app, you will see the dashboard, which features statistics on your activity throughout the day. Look toward the bottom right, and you will see the Medical ID section. Tap that.

2 health dashboard

Click to enlarge

In the top right, press Edit so that you can enter in your health information:

3 edit highlight

Click to enlarge

You have the option to enter your name; your birthday; any medical conditions, notes, allergies, or medications; an emergency contact; your blood type; organ donor status; plus height and weight.

Be sure to keep the “Show When Locked” toggled to green. Click “Done” when finished.

4 done

Now that you have entered in your information, you can see what an emergency worker will see if your phone is locked. Lock your phone and then unlock it again to be brought to the screen where you enter your passcode. Press “Emergency.”

5 emergency

This will bring up the “Emergency call” screen. Note Medical ID in the bottom left corner.

6 medical ID

When you press it, all the information you entered will be displayed. Your loved ones and hospital staff will thank you.

Layering Security: Two Factor Authentication

“In the space of one hour, my entire digital life was destroyed. First my Google account was taken over, then deleted. Next my Twitter account was compromised, and used as a platform to broadcast racist and homophobic messages. And worst of all, my AppleID account was broken into, and my hackers used it to remotely erase all of the data on my iPhone, iPad, and MacBook.”

Thus starts the story of Mat Honan, a writer for Wired Magazine. Mat’s story should be a cautionary tale for all, especially lawyers whose duties to maintain the confidentiality of client data extend the need for added security beyond just personal inconvenience.  Mat admits that much of what happened could have been avoided by using two factor authentication on his Google account and other security measures.  So, why didn’t he do it? Because adding layers of security means adding a layer of complication, and sometimes inconvenience. However, to unravel from a firm security breach or hack would be even more inconvenient.

Google’s Gmail, Google Chrome, LastPass, Dropbox, WordPress and many other popular services have added an extra layer of security that a user must enable called “two factor authentication”.  The concept of this security is that a person cannot access another user’s account without something she knows and something she has. In the case of these popular services the solution is a strong password plus a secondary code that is sent via text to a smartphone or mobile device.  Both are required to access the account. For two factor access to laptops there are devices like USB tokens and smart cards that must be plugged in for the machine to boot up. Likewise you can buy external biometric security devices, such as a fingerprint reader, which is a substitution for what the user has to what the user is.

The SANS Institute OUCH! newsletter this month provides further information and links on two factor authentication for popular online services. When enabling two factor authentication make sure to read all the instructions carefully. Matt Cuts blogs for Google on how the two factor authentication works with Gmail, and dispels some myths about any perceived difficulties this may add to accessing your email.

Want to learn more about security best practices for your law firm? Sign up for the CBA CLE (1.5 IL PR Credit)  “Lighting the Corners: Security Best Practices”  in person or webcast on November 20 at 12 CT.

Power Down: Business Continuity Planning for Law Firms

The derecho that swept from Chicago to Washington DC on Friday, June 29 left millions in the Midwest and mid-Atlantic without power for days. A post in Forbes highlights our increasing reliability on the power grid, and the need for diversification of risk with cloud services to avoid downtime.

Business continuity plans are designed to help a firm respond to any type of disaster, from a hard drive failure to a hurricane.  They incorporate not only technology backup plans, but also illustrate when the plan should be put into action and to what extent. They identify key players, and what to do if those essential personnel aren’t available.

The ABA Committee on Disaster Response and Preparedness had BDA Global, LLC prepare a planning guide for law firms to use to create a business continuity plan. Freely available, this  guide includes step by step explanations of what should be in the plan, how to create a plan and includes a sample plan in the appendix. In the foreword former ABA President Steve Zack notes:

Disaster planning is especially important for lawyers. Not only is it necessary to protect, preserve, and in extreme cases rebuild one’s practice or firm, lawyers also have special obligations to their clients. Lawyers must represent the client competently and diligently, safeguard client’s property, and maintain client confidentiality and communications. These obligations are neither excused nor waived following a disaster.

The guide is an excellent resource, as well as the other resources at, in helping law firms plan for the inevitable.

Some Technology Backup Best Practices

  • Maintain geo-redundant backups
  • Regularly do test restores and create written instructions for restoring
  • Keep all software license numbers and installation discs
  • Create images for computers and file servers
  • Keep a local copy of cloud data
  • Consider how data created on mobile devices is backed up
  • Have a current and accurate network diagram

More information regarding computer backups, risk management and disaster recovery are available from the ABA Disaster Planning website on the Resources for Lawyers and Law Firms page.

60 Sites in 60 Minutes (ABA TECHSHOW 2012)

Did you miss ABA TECHSHOW this year? Come to the LPM Committee meeting next Friday (4/13) from 12:15 PM – 1:30 to hear a few attendees favorite tips picked up at the show. Until then…

ABA TECHSHOW 2012 – 60 Sites in 60 Minutes (The whole list)

Again this year, the always exciting 60 Sites in 60 Minutes plenary session concluded ABA TECHSHOW 2012. Presenters Natalie Kelly, Dan Pinnington, Catherine Sanders Reach and TECHSHOW Chair Reid Trautz shared variety of serious and funs sites with the packed room. For those that couldn’t make it, here is a full list of the sites they presented:

Sites to help you do your job

  • ABA Preview of Supreme Court Cases: Everything you want or need to know about what is happening at the Supreme Court, past, present and future.
  • Fastcase and Mobile Sync: Legal research on your desktop, iPhone or iPad. Bar Association users can use the Mobile Sync feature to keep one research session going across all platforms.
  • CellularAbroad is a helpful site to find the best mobile phone and coverage option specific to your phone and carrier when traveling overseas.
  • Google Scholar adds treatment to citing cases
  • Jureeka: Turn legal citations in web pages into hyperlinks that point to online legal source material in Chrome or Firefox
  • TinyEye: Reverse image search: find out source of an image, other uses of it, higher resolution versions, etc.
  • Google Images lets you search by dragging and dropping an image
  • Meevsu: Have a live confrontation or debate via webcam, with the audience voting for the winner

Helpful information

  • Law Practice Today e-zine archives is full of terrific articles on all aspects of law practice management
  • Room77: See what your hotel view is like, before you book the room
  • Priceblink: Find lower prices while you shop and set notifications for desired price points.
  • The Holotypic Occlupanid Research Group exists for one purpose. You’ll have to see for yourself because you won’t believe it until you see it.
  • PMA Pipe: Keep up with all the law practice management blogs
  • MarineTraffic: Watch the movement of ships around the world, tracked by GPS in real time
  • AllTop: See the top headlines on the most popular news sites and blogs
  • The World at 7 Billion: With seven billion people in the world, where do you fit in? Just enter your birthdate and find out!
  • Handsfreeinfo: See what your state’s cell phone and texting laws for drivers prohibit – or are about to prohibit.
  • WhoIsTheMostFamous:With just a first name, try to guess the most famous surname.
  • Scoopertino is the parody blog of all things Apple (based in Coopertino, CA) that recently claimed Apple would replace the complete iTunes library with songs sung by Siri, starting with Stairway to Heaven!
  • US Department of State provides important travel information for every country in the world
  • An American’s Guide to Canada tells you everything you want to know about life in the Great White North, including “Canadianisms” and how to immigrate.

Technology tools and sites

  • Adobe provides great online tools for collaboration and converting and editing PDF documents
  • Alternativeto: If you’ve decided to replace a software application, this site will recommend alternatives based on user feedback.
  • FollowUpThen: Schedule followups to emails you don’t need to deal with now, by simply forwarding them to this site.
  • Snipreel: Clip YouTube videos so you can share just the best parts.
  • GreatApps: Helps you weed through the 1,000s of apps out there by featuring the best 25 at a time.
  • “If This Then That” write “recipes” and tasks to automate actions between “channels” like Facebook, Twitter, Email, Dropbox, Evernote and more
  • Thsrs Find shorter synonyms for longer words
  • Zamzar is an oldie but a goodie site that coverts computer files you upload into other formats; great for old WordPerfect docs you now need to access via MS Word
  • Down for everyone or just me? Find out if a website is down
  • Ninite: Pick all the popular software you want to install right from one page
  • FacebookCheating: Read and share stories of cheating that happened via Facebook. Also access spying and therapeutic resources for online activity.
  • Factory Reset Wiki: Find factory reset codes and procedures for all kinds of products.
  • is a free, yet robust screen sharing and conference call system that is extremely easy to set up and/or join.
  • TextMechanic allows you to manipulate and play with text in all sorts of different ways (for example, pick a random line of text)

Social media tools & resources


Law practice management

  • HBS Elevator Pitch Builder The good folks at the Harvard Business School have created the on-line pitch builder to help you hone your, well, elevator pitch. Try it!
  • Thinkstock: A huge supply of the best stock images
  • 99Designs is a new on-line graphics marketplace to have law firm logos and website graphics designed at extremely low rates, thanks to the winner-take-all nature of the marketplace.

Online privacy and dangers

  • Google Privacy Tools: All the ways Google gives you control over the information you share and store with them:
  • ScamTrends: Keep track of all the constant attemps to scam you by email, social media, phone, etc
  • AvoidAClaim This blog about law practice management and claims prevention also features warnings about the latest fraud attempts against lawyers
  • FCC Small Biz Cyber Planner: Information on how smaller companies can secure themselves against cyber crime
  • SecretSync is a great way to easily share proprietary, sensitive information using online synchronization utilities
  • StartPage: A search engine that doesn’t collect your personal data

Non-billable Time

  • MapCrunch lets you randomly teleport anywhere in the world via Google Streetview
  • MyExWife’s Wedding Dress: Family lawyers will especially get a kick out of this site started by a man whose wife purposely left behind her wedding dress when they separated, and what he did with it to get even.
  • VeryFunnyAds: Pretty self explanatory!
  • AbsolutelyMadness: collects the funniest pictures on the internet
  • PhotoShop Disasters: A collection of the worst examples of bad Photoshop efforts
  • Monk-e-Mail: In just a few minutes you can customize an animated message complete with your own voice to send a birthday greeting or other fun greeting. Hosted by of all things, but why not?
  • PoopSenders For friend or foe, res ipsa loquitor.
  • Craftastrophe:A collection of the tackiest examples of homemade crafts
  • WhySiriWhy? Amusing Siri quotes and awkward voice-text failures
  • Go. Laugh. Get back to work!
  • Devolve Me: Upload a photo of yourself (or someone else) and devolve it to see what you would look like 1.8 million years
  • MultiPlayerPiano: Play the piano online with whoever else is on the site at the same time

If you liked these sites, you can see the sites that were featured in previous ABA TECSHOW 60 Sites in 60 Minutes presentations as well as the ABA TECSHOW 60 Sites in 60 Minutes Hall of Fame

Make Your Hard Drive Picture Perfect

See one of my past posts to the AttorneyatWork blog “Make Your Hard Drive Picture Perfect“:

You have your computer backup strategy carefully planned. Your files are backed up in three locations, your servers are in a RAID array, you have all your installation disks and license numbers handy, and you have a test restore for your files scheduled on a regular basis. You are ready for the day that your hard drive fails. Or are you?