Right to the point. R.1:21-6(c)(1)(A) states:
“appropriate receipts and disbursements journals containing a record of all deposits in and withdrawals from the accounts specified in paragraph (a) of this rule and of any other bank account which concerns or affects their practice of law, specifically identifying the date, source and description of each item deposited as well as the date, payee and purpose of each disbursement. All trust account receipts shall be deposited intact and the duplicate deposit slip shall be sufficiently detailed to identify each item. All trust account withdrawals shall be made only by attorney authorized financial institution transfers as stated below or by check payable to a named payee and not to cash. Each electronic transfer out of an attorney trust account must be made on signed written instructions from the attorney to the financial institution. The financial institution must confirm each authorized transfer by returning a document to the attorney showing the date of the transfer, the payee, and the amount. Only an attorney admitted to practice law in this state shall be an authorized signatory on an attorney trust account, and only an attorney shall be permitted to authorize electronic transfers as above provided; and”
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The key part for this article is found in bold above and restated as follows to highlight the important text: “Each electronic transfer out of an attorney trust account must be made on signed written instructions from the attorney to the financial institution.”
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Likely, if you are sending wire transfers from your Attorney Trust Account, your bank has options that have surpassed the record-keeping rule (in that when it was written they did not exist or were not thought of). For instance, banks offer wire transfers to be initiated by phone with confirmations sent via email. However, this would be insufficient because you miss the key component of the rule “signed written instructions from the attorney”. There have been numerous advancements in banking technology that may seem “safer”. Such as, the use of a token for performing wires via the internet. Or voice recognition software that identifies and/or confirms the sender of wired funds. These are in violation of R.1:21-6(c)(1)(A).
So too is the electronic transfer from your Attorney Trust Account to your Attorney Business Account if you are doing it online or over the phone. I have run into a lot of attorneys who transfer their earned legal fees (legitimate funds due to the attorney) from the Attorney Trust Account to their business account online with a simple click. However, in each case they were violating R.1:21-6(c)(1)(A) as they were not sending signed written instruction and having their bank initiate the transfer. Many were doing it as a time saver at the time and after being notified of the rule they switched to writing checks from the Attorney Trust Account to the Attorney Business Account.
The good news: the rule is silent on incoming wire and electronic transfers and therefore there is nothing you need to change about receiving wire and electronic funds (other then if they are coming from your business account or personal account its going to raise red flags and the increasing potential of fraud).
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Typically, a bank will have a wire office or unit that would handle wire request. The smart move is to contact your bank and discuss with them how they would process wire request made via signed written instructions. My guess is the rule will eventually change and catch up with technology. Until then, stay compliant friends.
-Will
Source: https://tholansonnha.com
Category: lawyer
