Ethics

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The lawyer must hold client property as a fiduciary

Ferole L. Tingley, PLS, CLA, CL§


The headlines screamed forth: "Paralegal guilty in plea deal. . . . Clients lost as much as $6 million." Eighty-three counts, a plea of guilty to 5 counts, and 78 counts dropped. A paralegal, with a successful business, had just admitted violating the trust that the clients and the attorneys had placed in her. The headlines quoted speak of a criminal act and a violation of ethics at a basic level.

It matters not that it was my city; this could have happened in your city, any city. It matters not the reasons for this theft, or any theft, or if there were reasons or justifications given. What matters is that the actions of one solitary person reflect on each of us. I resent carrying that burden with me, and having to explain to acquaintances that this is not the way secretaries act and were trained. It is not the norm for attorneys or secretaries.

It then occurs to me that resentment must be turned into positive action, with training for every person employed in the law office. There is required continuing legal education for attorneys, a portion of which must be in ethics, but there is no mandate for legal secretaries and others who work in the law office.

At each of our meetings we have had at least one seminar on ethics. In this publication we have had numerous articles regarding ethics. We, our members, are reading and learning, so we must now teach those things that we have learned to those who are not members of our association.

The first step in training would be helping them to become completely familiar with the ABA Model Rules of Professional Conduct and/or The ABA Model Code of Professional Responsibility, and any of your state modifications to the Rules or Code.

If you see a seminar being presented for attorneys, express to your employer an interest in attending. When you become familiar with the governing principles, you and other members of his staff will be able to develop insight into actions that must or should not be taken. Develop yourself.

Talk about this subject. Talk about what is taking place in your office, so that everyone understands why a client's money must be placed in a separate account. Discuss why physical items belonging to a client should not be placed in your office filing cabinet, whether locked or not, and why moneys belonging to a client must not be placed in a firm's regular checking or savings account.

At every given moment there must be an ability to identify all moneys that are in an attorney's trust fund. No moneys may be removed for use by the attorney, for however short a period of time. Borrowing is conversion. An attorney may not draw a trust account check to pay a debt he owes. He must first draw a trust account check in the amount to which he is entitled, deposit it in his office account, and then pay his debt from his own account.

If securities such as bearer bonds are given to the attorney to hold and are merely placed in a locked filing cabinet in the office and not identified or placed in a safe deposit box, the attorney has committed a disciplinable violation.

Under the provisions of the Code, any funds given to the attorney for anticipated costs and expenses are exempt from the trust fund requirement.

Occasionally, there is a dispute as to trust funds. The dispute can arise when an attorney has received a settlement check, and there is a disagreement as to the contingent fee agreement or the expenses involved in the case. The settlement check is placed in the attorney's trust account, and disbursements are made from that account. The Rules and the Code are very clear that no disputed amounts may be removed from the trust account by the attorney but that undisputed funds shall be promptly disbursed. As to disputed funds, the attorney should retain those funds in the trust account and suggest to the client that the matter be submitted to arbitration or other alternative dispute resolution procedures.

If a third party makes a claim to a portion of the funds held in trust by the attorney, the attorney may have a duty to protect such third-party claims against interference by his client, but he should not assume an arbitration between his client and the third party.

West Publishing Company has numerous books on the subject of ethics. The books are not esoteric treatises. Professional Responsibility, Fourth Edition, by Ronald D. Rotunda, Black Letter Series, for example, is delightful reading on a very serious subject. Another recommendation for this subject is Professional Responsibility, Standards, Rules & Statutes, selected and edited by John S. Dzienkowski, also published by West Publishing Company.

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ADDENDUM


Since writing this article, there has been a sentencing. The headlines now announced: "Tab for enjoying high life: 20 years." Judge Deborah Bernini not only sentenced Tucson paralegal Marilyn Summers to 20 years in prison but ordered her to pay more than $2 million in restitution to dozens of victims.

Ferole Tingley holds professional certifications as  PLS, CLA, and CL§. She resides in Tucson, Arizona, is a charter member of Legal Secretaries International Inc., as well as a past president. She is a regular contributor to Legal Secretaries International Inc. In Brief and currently serves as Director of Certification.