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CONTACT PERSON:
VALERIE WILLARD
PUBLIC INFORMATION OFFICER
(504) 310-2590
| APRIL
5, 2006 |
FOR
IMMEDIATE RELEASE |
Chief Justice Pascal F. Calogero, Jr. announced today the
Court’s promulgation of amendments to the lawyer discipline
rules, and to the Rules of Professional Conduct, to provide
for trust account overdraft notification. Trust account overdraft
notification rules are designed to reduce occasions in which
client funds are misappropriated by attorneys. The Court’s
action follows the passage of complementary legislation (2005
La. Acts 249) which facilitates overdraft notification, and
which recognizes the rulemaking authority of the Supreme Court
of Louisiana in this area. Also, the Louisiana State Bar Association
has supported the implementation of trust account overdraft
notification through the promulgation of Court rules and legislation.
Pursuant to the new rules, lawyers and law firms will be required
to notify the Office of Disciplinary Counsel (ODC) of all
accounts in which client funds are held. Lawyers and law firms
that hold client funds are to confect agreements with the
banks which hold the client funds. The agreements will allow
the banks to notify the Office of Disciplinary Counsel of
overdrafts on the trust accounts.1
By requiring that the lawyer discipline agency be notified
of overdrafts on client trust accounts, the rule changes function
as an “early-warning” system that a lawyer is
having a problem with his/her trust account. Early notification
of overdrawn trust accounts may serve to prevent future misappropriations
of client trust account funds.
The intent of the rules is not to discipline or unduly burden
lawyers for occasional, inadvertent mistakes. In this regard,
the 2005 legislation which facilitates overdraft notification
provides that notification is not to be provided to the Office
of Disciplinary Counsel when the overdraft has been caused
by bank-imposed charges to the account. Furthermore, Chief
Disciplinary Counsel Charles Plattsmier has authored an overdraft
notification protocol which provides that no formal disciplinary
investigation will be opened if the ODC’s Screening
Department is able to determine that the overdraft incident
was a one-time occurrence attributable to simple inadvertence
or employee mistake.
The overdraft notification rule changes become effective on
April 15, 2006. However, since the 2005 complementary legislation
does not become effective until six months following this
Court’s adoption of final rules on the subject, initial
attorney-bank agreements which authorize trust account overdraft
notification are to become effective on November 1, 2006 and
thereafter.
The Court is hopeful that this new client protection mechanism
is effective in reducing the number of occasions in which
client funds are misappropriated.
1
The Office of Disciplinary Counsel investigates and prosecutes
complaints alleging lawyer misconduct.
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