As all lawyers should be aware, if you hold escrow, you do so at your own peril. A simple mistake that results in a returned escrow check automatically results in a notice to the Lawyers’ Fund for Client Protection and a referral to the appropriate Grievance Committee. The Grievance Committee will open a complaint, audit your account, and examine your office banking records for the six months prior to the issuance of the check. This is extremely time-consuming and can reveal small errors that could become big problems.
Recently, certain banks have begun charging a small monthly maintenance fee for those accounts under their care that do not switch over to electronic monthly statements. Inquiry of a few banks reveals that they will not waive this fee for IOLA (Interest on Lawyer Account) or any attorney trust accounts. The fee will be removed by the bank each month without advance notice to the attorneys.
The removal of these fees by banks, despite the fact that they may be just a few dollars each month, can create a problem for those attorneys who maintain a precise account balance.
The lesson here is twofold:
- Stay current on your account management. If your bank has not instituted these charges yet, keep an eye out for notices from the bank that may be included with your monthly statements announcing this change. Check every entry on your account statements when you reconcile your accounts every month.
- Keep at least $100 of the law firm’s money in your escrow account to “maintain the account.” This is specifically permitted under the language of Rule 1.15 b (3). This will avoid a potential bounced check in case of a maintenance fee or other bank fee is imposed, which you may otherwise fail to account for in your monthly reconciliation (e.g., new checks).
Chris McDonough, Esq.
New York Grievance Attorneys: Lawyers for Lawyers