(a) A lawyer shall hold property of clients or third persons that
is in a lawyer's possession in connection with a representation separate
from the lawyer's own property. Funds shall be kept in a separate account
maintained in the state where the lawyer's office is situated, or elsewhere
with the written consent of the client or third person. Other property
shall be identified as such and appropriately safeguarded. Complete
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.
(b) A lawyer may deposit the lawyer’s own funds in a client
trust account for the sole purpose of paying bank service
charges on that account but only in an amount necessary for that purpose.
(c) A lawyer shall deposit into a client trust account legal fees
and expenses that have been paid in advance, to be withdrawn by the
lawyer only as fees are earned or expenses incurred.
(d) Upon receiving funds or other property in which a client or third
person has an interest, a lawyer shall promptly notify the client or
third person. Except as stated in this Rule or otherwise permitted
by law or by agreement with the client, a lawyer shall promptly deliver
to the client or third person any funds or other property that the
client or third person is entitled to receive and, upon request by
the client or third person, shall promptly render a full accounting
regarding such property.
(e) When in connection with a representation, a lawyer possesses
funds or other property in which both the lawyer and another person
claim interests, the funds or other property shall be kept separate
by the lawyer until there is an accounting and severance of their interests.
If a dispute arises concerning their respective interests, the portion
in dispute shall be kept separate by the lawyer until the dispute is
resolved, and the undisputed portion of the funds shall be promptly
distributed.
(f) Where funds or other items of property entrusted to a lawyer
have been impressed with a specific purpose as to their use, they shall
retain that specific character unless otherwise authorized by a client
or third person or prohibited by law. Where funds are impressed with
a specific purpose, a lawyer may not subject them to a counterclaim,
set off for fees, or subject them to a lien.
(g) Effective January 1, 2009, all members of the Bar who are required
under the Oklahoma Rules of Professional Conduct, to
maintain a trust account for the deposit of clients’ funds
entrusted to said lawyer, shall do so and furnish information regarding
said account(s) as hereinafter provided. Each member of the Bar shall
provide the Oklahoma Bar Association with the name of the bank or
banks in which the lawyer carries any trust account, the name under
which the account is carried and the account number. The lawyer or
law firm shall provide such information within thirty (30) days from
the date that said account is opened, closed, changed, or modified.
The Oklahoma Bar Association will provide on-line access and /or
paper forms for members to comply with these reporting requirements.
Provision will be made for a response by lawyers who do not maintain
a trust account and the reason for not maintaining said account.
Information received by the Association as a result of this inquiry
shall remain confidential except as provided by the Rules Governing
Disciplinary Proceedings. Failure of any lawyer to respond giving
the information requested by the Oklahoma Bar Association, Oklahoma
Bar Foundation or the Office of the General Counsel of
the Oklahoma Bar Association will be grounds for appropriate discipline.
(h) A lawyer or law firm that holds funds of clients or third parties
in connection with a representation shall create and maintain an interest-bearing
demand trust account and shall deposit therein all such funds to the
extent permitted by applicable banking laws, that are nominal in amount
or to be held for a short period of time in compliance with the following
provisions:
(1) the account may be established with any bank or savings and loan
association authorized by federal or state law to do business in Oklahoma
and insured by the Federal Deposit Insurance Corporation;
(2) the rate of interest payable on the account shall not be
less than the rate paid by the depository institution
to regular, non-lawyer depositors. Higher rates offered by the institution
to customers whose deposits exceed certain time or quantity minimums,
such as those offered in the form of certificates of deposit, may
be obtained by a lawyer or law firm so long as there is no impairment
of the right to withdraw or transfer principal immediately (except
as accounts generally may be subject to statutory notification requirements),
even though interest may be sacrificed thereby;
(3) the depository institution shall be directed:
(i) to remit interest or dividends, as the case may be, on the
average monthly balance in the account, at least
quarterly, to the Oklahoma Bar Foundation, Inc.
("Foundation");
and
(ii) to transmit with each remittance to the Foundation a statement
showing the name of the lawyer or the law firm
for whom the remittance is sent, the account number, the period
of time covered by the statement, the rate of interest applied
and the average daily balance of the account;
(4) the lawyer or law firm shall not deposit funds belonging to the
lawyer or law firm in the account, except that funds necessary to comply
with the depository institution's minimum balance requirements for
the maintenance of the account or funds needed to pay applicable fees
and service charges may be deposited therein;
(5) in determining whether to use the interest-bearing account
herein specified, the lawyer shall consider whether
the funds to be invested could be utilized to provide a positive
net return to the client, taking into consideration the following
factors:
(i) the amount of interest that the funds would earn during the period
they are expected to be deposited;
(ii) the cost of establishing and administering the account,
including the cost of the lawyer's services and
the cost of preparing any tax reports required for interest accruing
to a client's benefit; and
(iii) the capability of financial institutions
to calculate and pay interest to individual clients;
(6) in the event that any client asserts a claim against a lawyer
based upon such lawyer's determination to place client advances in
the account because such balance is nominal in amount or to be held
for a short period of time, the Foundation shall, upon written request
by such lawyer, review such claim and either:
(i) approve such claim (if such balances are found not to be nominal
in amount or short in duration) and remit directly to the claimant
any sum of interest remitted to the Foundation on account of such funds;
or
(ii) reject such a claim (if such balances are found to be nominal
in amount or short in duration) and advise the
claimant in writing of the grounds therefor. In the event of any
subsequent litigation involving such a claim, the Foundation shall
interplead any such sum of interest and shall assume the defense
of the action;
(7) The requirements of subparagraph (h) shall not apply if:
(i) it is not feasible for the lawyer or law firm to establish an
interest-bearing trust account for reasons beyond the control of the
lawyer or law firm, such as the unavailability of a financial institution
which offers such an account in the community where the principal office
of the lawyer or law firm is situated, or
(ii) those financial institutions which offer such an account
in the community where the principal office of
the lawyer or law firm is situated impose fees
and service charges that routinely exceed the interest generated
by the account; and
(8) Information necessary to determine compliance
or justifiable reason for noncompliance with
the requirements of subparagraph (h) shall be
included in the reporting required by subparagraph
(g) of this Rule. If it appears that a lawyer or law firm has not
complied where it is feasible to do so, the matter may be referred
to the office of the General Counsel of the Oklahoma Bar Association
for appropriate investigation and proceedings.
(i) When a lawyer receives funds subject to this rule that are
not required to be deposited in an interest bearing
account payable to the Oklahoma Bar Foundation
pursuant to (h), the lawyer may create and maintain
either an interest bearing or a noninterest bearing account,
provided that any interest earned by the funds belongs to the client,
shall be distributed according to the client’s instructions,
and shall not be used by the lawyer for any purpose without the client’s
express consent.
(j) Beginning January 1, 2008 and in addition to the requirements
previously set forth in this Rule, lawyers trust accounts shall be
maintained only in financial institutions approved by the Office of
the General Counsel. The Office shall establish rules governing approval
and termination of approved status for financial institutions, and
shall annually publish a list of approved financial institutions.
(k) A financial institution may be approved as a depository for lawyer
trust accounts if it files with the Office of the General Counsel an
agreement, a Trust Account Overdraft Reporting Agreement (TAORA) form
provided by the Office, to report to the Office in the event any properly
payable instrument is presented against a lawyer trust account containing
insufficient funds, irrespective of whether or not the instrument is
honored. No trust account shall be maintained in any financial institution
which does not agree to make such reports. Any such agreement shall
apply to all branches of the financial institution and shall not be
cancelled except upon thirty (30) days notice in writing to the Office.
(l) The Trust Account Overdraft Reporting Agreement shall provide
that all reports made by the financial institution shall be in the
following format:
(1) In the case of a dishonored instrument, the report shall
be identical to the overdraft notice customarily forwarded
to the depositor, and should include a copy of the dishonored instrument,
if such a copy is normally provided to depositors.
(2) In the case of instruments that are presented against
insufficient funds but which instruments are honored,
the report shall identify the financial institution, the lawyer
or law firm, the account number, the date of presentation for payment
and the date paid, as well as the amount of overdraft created thereby.
(3) Such reports shall be made simultaneously with,
and within the time provided by law for notice of
dishonor, if any. If an instrument presented against
insufficient funds is honored, then the report shall be made within
five (5) banking days of the date of presentation for payment against
insufficient funds.
(m) Every lawyer practicing or admitted to practice
in this jurisdiction shall be deemed to have consented
to the reporting and production requirements mandated
by this rule.
(n) Nothing herein shall preclude a financial institution from charging
a particular lawyer or law firm for the reasonable cost of producing
the reports and records required by this rule.
(o) Definitions
"Financial Institution" – includes banks, savings
and loan associations, savings banks and any other
business or person which accepts for deposit funds held in trust
by lawyers.
"Properly payable" – refers to an instrument which,
if presented in the normal course of business, is
in a form requiring payment under the laws of this jurisdiction.
"Notice of dishonor" – refers to the notice, which
a financial institution is required to give, under
the laws of this jurisdiction, upon presentation of an instrument,
which the institution dishonors.
Updated: Apr. 20, 2009
