With summer nearly upon us, there is no better time for a refresher on attorney ethics to avoid landing in hot water with disciplinary authorities. From tips on attorney advertising to the intricacies of attorney trust accounts, this second installment will assist in avoiding common ethical pitfalls in the practice of law.
Client Files and Record Retention
Maintaining proper client files is essential to a successful practice. It is also extremely important for avoiding ethical issues and assisting in the defense of a legal malpractice claim should one arise. ABA Model Rule 1.15(a) provides, in pertinent part, that “[c]omplete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of [five years] after termination of the representation.” In the context of closing out a particular matter, attorneys must abide by applicable ethics rules to retain, maintain, and return those portions of a client’s file to which the client is entitled. ABA Model Rule 1.5(a) (attorneys must preserve client property for five years after the representation ends); N.J. RPC 1.15(a) (seven years); Pa. RPC 1.15(c) (five years)). Some jurisdictions, including New Jersey, require that certain records that constitute “property of the client” – including, for example, wills and deeds - must be returned to the client, disposed of in accordance with a court order or written agreement with the client, or else be maintained by the attorney for a seven-year period. N.J. RPC 1.16(d)(attorney has an obligation to return “papers and property to which the client is entitled”); N.J. Advisory Comm. on Prof’l Ethics Op. 692 (Jan. 15, 2001) and Supp. Op. 692 (Oct. 28, 2002). It is advisable to return the original of any legally operative document, such as an executed contract, to the client and preserve a copy for the attorney’s records. See In re Borden, 121 N.J. 520, 524 (1990) (attorney disciplined for failing to return an original contract to the client)).
It is good practice to develop a written records retention policy and update it as necessary. Apart from the obligations set out in the RPCs, attorneys have an independent interest in maintaining portions of a former client’s file for the defense of potential malpractice claims or ethics investigations.
Finally, do not ignore a former client’s request for their file. Failure to respond, or even a delay in responding, can land you before the ethics authorities. See In the Matter of Jay G. Helt, DRB No. 99-435 (Aug. 15, 2000)(reprimanding attorney for failing to adequately reply to former client’s requests for original file).
Attorney Advertising Tips
Congratulations on being recognized for being among the “best” in your practice area or being “highly rated” in your jurisdiction! Do not permit these accolades to create trouble when communicating them to the public. Lawyers are routinely recognized by various publications or organizations and seek to highlight these accolades in their attorney profiles and in social media postings. While this practice is generally permitted, practitioners should be familiar with limitations specific to their jurisdiction(s) to avoid potential discipline by attorney advertising committees and local ethics authorities. In New Jersey, the Committee on Attorney Advertising (“CAA”) is vested with “the exclusive authority to consider requests for advisory opinions and ethics grievances concerning the compliance of advertisements and other related communications” with RPCs 7.1, 7.2, 7.3, 7.4, and 7.5. N.J. Court. R. 1:19A-2(a).
When a lawyer wants to advertise the receipt of an award, honor, or accolade that is comparative of the lawyer’s services to others in the profession, RPC 7.1 requires an accompanying three-part disclaimer:
- A description of the standard or methodology used to determine the award, honor or accolade, either in the advertising itself or by reference to a publicly-available source for the information, such as a hyperlink;
- The name of the comparing organization that issued the award; and
- The statement, “No aspect of this advertisement has been approved by the Supreme Court of New Jersey.”
This rule applies equally to attorneys who advertise abbreviated forms of awards in the form of badges and logos on a website, in their e-mail signature block, and in print materials. An underlying purpose of the rule is to prevent the dissemination of misleading advertisements and to provide an adequate disclosure that is factual in nature. See, e.g., N.J. Comm. on Attorney Advertising Op. 8 (March 21, 1991) (determining that attorney who advertised herself as “[t]he best divorce lawyer in the country” violated RPC 7.1). Attorneys who receive the designation of “Super Lawyer” should provide the disclaimer required by RPC 7.1 and refer to the designation as having been included in the list of “Super Lawyers.” See N.J. Comm. on Attorney Advertising Op. 42 (Dec. 16, 2010) (“[w]here superlatives are contained in the title of the list itself…the advertising must state and emphasize only one’s inclusion in the Super Lawyers or The Best Lawyers in America list, and must not describe the attorney as being a Super Lawyer or the Best Lawyer”). In light of this, it is good practice to revisit professional websites and advertising materials to make appropriate changes and revisions, if necessary.
Recordkeeping and Attorney Trust Accounts
The stress associated with a random trust account audit cannot be understated. Proper recordkeeping and awareness of the rules applicable to trust accounts can help avoid issues when the auditors come knocking. As was aptly noted by the New Jersey Supreme Court, “[t]here can be no excuse for inadequate recordkeeping, particularly in light of the technological and relatively inexpensive means available today.” In re Orlando, 104 N.J. 344, 350 (1986). When an audit does occur, lawyers who are not comfortable with the process should consider retaining the assistance of an attorney or accountant with specific knowledge of the myriad requirements to resolve any issues that may arise.
Allegations of misconduct that implicate, even remotely, an attorney’s handling of funds, accounting, or recordkeeping practices will often subject an attorney to an ethics audit and formal examination by ethics authorities. Many jurisdictions, including New Jersey, have random audit programs to ensure compliance with recordkeeping requirements. While authorities will often assist with resolving minor recordkeeping issues, a persistent failure to comply can have harsh consequences. See, e.g., In the Matter of Howard A. Miller, DRB No. 20-189 (May 20, 2021)(reprimanding attorney who “squandered every opportunity to rectify his recordkeeping in a manner that would have avoided the filing of an ethics complaint and the imposition of discipline.”), Matter of Miller, 249 N.J. 466 (2022).
Trust Account Tips – Avoid Issues Before They Arise
New Jersey attorney trust accounts (“ATA”) are subject to the requirements set forth in N.J. Court R. 1:21-6. Remember:
- ATAs must be maintained at a financial institution approved by the New Jersey Supreme Court.
- While checks and electronic transfers are acceptable, ATAs cannot be accessed through ATMS, nor are cash withdrawals ever permissible in any form. Similarly, overdraft protection is not permitted.
- Do not work the “float.” When checks are deposited to an ATA, attorneys are best served by waiting ten business days before drawing against the deposit. Most electronic transfers and certain “certified” bank checks can be drawn against immediately.
- Only licensed attorneys may be signatories on the account. Signing a trust account check may not be delegated to non-attorney staff.
- Be sure to perform a three-way reconciliation of ATAs on a monthly basis. Records of the cash balance (from cash receipts and disbursements) must be reconciled with the checkbook, bank statement, and client trust ledger sheet balances for each ATA. Investigators assigned to conduct a random audit will request evidence of monthly three-way reconciliations.
Technology has advanced faster than the RPCs applicable to trust account maintenance. While many banking applications such as Venmo or Zelle make everyday banking transactions easier for all, they are not permissible for trust account transactions. Practitioners must be mindful of the RPCs in all trust transactions and maintain the records to ensure a successful audit when it inevitably occurs.
The Bottom Line
As a matter of course, lawyers are confronted with ethical issues in their daily practice. Being able to identify and adequately address concerns is paramount to maintaining one’s license to practice law. In this day and age, familiarity with the attorney advertising and recordkeeping rules is imperative to avoid potential ethical violations.
Reprinted with permission from the June 13, 2022 issue of The Legal Intelligencer. ©2022 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.