August 31, 2013 /24-7PressRelease/
-- Earlier this summer, the Ohio Supreme Court indefinitely suspended the law license of a Cincinnati attorney after confirming the findings made in earlier proceedings. According to Court News Ohio, the lawyer was charged with violating more than 20 disciplinary rules
, including misappropriation of client funds and mismanagement of his client trust account.
At the disciplinary hearing, it was alleged that the attorney periodically withdrew funds from his IOLTA account for his own use. It was further shown that he reimbursed the account with his own money and shuffled funds between client accounts. His license suspension
will continue until he is eligible for reinstatement in two years.
What is IOLTA?
In Ohio, certain funds held in trust for clients must be kept in banking accounts that comply with IOLTA -- Interest on Lawyers' Trust Accounts -- rules. Prior to adoption of the IOLTA program in the 1980s, attorneys were required to keep certain client funds in a non-interest bearing account so that the lawyers would gain nothing by holding funds on behalf of their clients. Once IOLTA accounts were established, the earned interest passed on to local legal aid organizations.
Management of IOLTA accounts
Strict rules govern deposits held in trust for clients of attorneys in Ohio. Some of these rules include the following:
- Funds held in trust for clients must not be used for personal or business expenses of the law firm or its lawyers or staff.
- Comingling of personal or business funds with client trust funds is prohibited.
- Each client's funds must be maintained and tracked separately within the IOLTA account.
- Accurate accounting records of the IOLTA account must be maintained at all times.
- IOLTA accounts must be reconciled on a regular basis.
It is important for Ohio lawyers to stay abreast of rules governing client trust funds. Potential violations of ethics rules may be avoided through careful business planning and strict adherence to recordkeeping procedures.
New tax reporting rule
Last year, the Internal Revenue Service (IRS) enacted a new rule that affects firms that accept credit cards. If a third party processes credit card transactions on behalf of your firm, that entity is required to file an annual information return pursuant to Section 6050W of the Housing Assistance Tax Act of 2008. The rule applies to all bank accounts, including IOLTA accounts, and may not accurately reflect actual amounts received by a lawyer as income.
When to get professional help
If you are facing accusations of mismanagement or misappropriation of client funds, it is important to seek the assistance of your own lawyer. An experienced ethics and disciplinary defense attorney can also help your firm avert potential pitfalls.
Article provided by James E. Arnold & Associates, LPA
Visit us at www.arnlaw.com