Thursday, March 1, 2018

Whose Funds Are They Anyway?

A very interesting oral argument before the Ohio Supreme Court involves an attorney's admitted failure to maintain required trust account records.

The argument deals with - at least in part - the fact that, after a forensic audit of the account, there is money left over for which the legitimate owner is unknown.

From Kathleen Maloney's case summary

While the Columbus Bar Association doesn’t take issue with the recommended six-month stayed suspension or the conditions, it asks the Supreme Court to impose another condition on Keating’s suspension.

The bar association explains that Keating can’t account for the $74,517.14 that remains in account 2500 as of October 2017. The purpose of financial records required by the attorney conduct rules is to ensure that the lawyer can identify “who owns every penny in the lawyer’s trust account,” the bar association’s objection states. Keating hired a forensic accountant in 2017 to try to sort out this issue, but her report concluded that these funds are “most likely” profits for the firm and “unlikely” to be client funds. Noting that the records don’t exist for clients whose funds may be in the account, the bar association recommends that Keating be required to turn over the money to the state’s division of unclaimed funds to follow certain statutory procedures.

Attorney Believes Extras Condition Is Unwarranted
Keating responds that no client or third party is making a claim to any of these funds, the last payment from account 2500 was at least six years ago, and the forensic accountant concluded the money is owned by the law firm. He argues that other disciplinary cases have allowed lawyers to collect legal fees once any client disputes or IOLTA discrepancies are resolved. He maintains that the funds in account 2500 aren’t “unclaimed funds” based on the definition in R.C. 169.01, nor is he a “holder” of unclaimed funds. Keating asks the Court to decline to impose the additional condition recommended by the bar association.

The court's questions concerning burden of proof in such circumstances are of real practical significance in Rule 1.15 litigation.

The case is Columbus Bar Association v. Bradley Keating.  (Mike Frisch)

Bar Discipline & Process | Permalink


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