The Devil is in the Details: Common Trust Accounting Issues

Recently at a NCBA Law Practice Management & Technology Section Council meeting, Peter Bolac, the Trust Account Compliance Counsel at the State Bar, presented “Common Trust Accounting Issues.”  The presentation was exceptionally beneficial to both small and large firms and focused on several areas: employee theft, check scams, reconciliations and outstanding checks on trust accounts.  Although it is essential to have a comprehensive reconciliation and accounting procedure in place with checks and balances, Peter provided several easy ideas to add to that procedure.  From his presentation, I derived some easy-to-implement and smart accounting practices to safeguard your trust accounts and your law license:

1)      Always, always, always be vigilant; as we all know, lawyers have a professional duty to supervise their non-lawyer staff and can be disciplined by the Bar for failure to do so;

2)      Have well-documented and sound accounting procedures in place that are followed consistently.  Consult an expert if you are unsure of what those procedures should look like;

3)      Write a letter to your bank stating that the principals or partners are the only ones who are  authorized to transfer/withdraw money.  Although the Rules permit non-lawyers to be signatories on trust accounts, best practices dictate that non-lawyers should not be signatories;

4)      Reconciliations are still the number one problem with attorney trust accounts.  Although quarterly 3-way reconciliations are required, it is a better practice to do them monthly. The 3-way reconciliation compares the sum of the individual client ledgers to the firm’s general ledger and to the bank statement. Peter provided a Trust Account Reconciliation Sheet to our group and gave us permission to share.  Feel free to call us for a copy.

5)      Implement a system so that different employees do different functions, such as:

(a) The person who opens and reviews the trust account statements should not also reconcile the accounts.

(b) The person who issues checks should not complete the reconciliations;

(c) The employee completing the reconciliations should not be the only person to review the reconciliations.

6)      An attorney needs to carefully review the reconciliations and periodically spot check the source documents (account statements, checks and deposit slips);

7)      Consider Positive Pay. It is an anti-fraud service offered by banks and protects companies against altered checks and counterfeit check fraud.  After a firm cuts checks, the firm transmits to their bank a list of the checks they issued with the check number, date and dollar amount.  The bank imports the list into their computers.  When checks are presented to the bank for payment, the bank will match each check presented to the firm’s previously transmitted lists.  If a check does not match, it will not clear.

8)  A lawyer may only take funds remaining in the trust account if the funds can be conclusively documented as the lawyer’s money;

9)  Regarding outstanding checks on trust accounts, if the check is over five years old, the funds may qualify for escheatment according to N.C.G.S. 116B-53.  Make sure you have a process in place and each year review the trust accounts to determine which funds should be escheated.

10)  Miscellaneous items: (a) Make sure the account is set up as an IOLTA account;  (b) When you meet with your bank, go with your NSF directive; (c) Bank statements must include copies of canceled checks; (d) SIZE does matter (when it comes to check copies from the bank) and the rules are very specific; (e) Specify clients, bank name, and check number on all trust account deposit slips and keep a copy; (f) Keep records for 6 years; and (g) Words not to use with trust accounts are “borrow, adjustment,” and “auto-reconcile.”

Last great tip derived from the presentation:  Peter Bolac is now on Twitter and you can follow him @TrustAccountNC for attorney scam alerts and other news affecting attorneys and their trust accounts.

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Turning Out the Lights Part Four: Ethics of Closing a Law Firm

Ethical responsibilities should be one of the most important considerations in the sale, purchase, or dissolution of a law firm.  The Rules of Professional Conduct provide that the practice of law is a profession and not merely a business; clients may not be purchased and sold at will. The Rules also make it clear, while a lawyer may sell or purchase a law practice, the lawyer must uphold certain professional responsibilities. Although not comprehensive, referencing the following rules and ethics opinions is a good starting point if you are selling, purchasing or winding down a law firm:

Duties Owed to Clients

Rule 1.17 of the Rules of Professional Conduct provides a lawyer or law firm may sell or purchase a law practice or an area of law practice as long as several conditions are met: (1) Seller does not continue to engage in the private practice of law from an office that is within a 100 mile radius of the purchased practice. (Note: there is a recent amendment which would permit a lawyer to continue to work for the law practice as an employee after its sale – see blog – “Now You Can Retire…Or Not”) (2) The entire practice or entire area of practice must be sold to a lawyer or law firm; (3) Written notice is sent to each of the seller’s clients; (4) If a client cannot be given notice, an order by the court transferring representation of that client to the purchaser must be obtained; (5) The fees charged to clients may not be increased by reason of the sale; and (6) The seller and purchaser may enter into reasonable finance arrangements as the sales price does not need to be paid in one lump sum; however, the seller may not continue to have control over the practice. The requirements in Rule 1.17 do not apply to the sale of a law practice to lawyers who are current employees of the firm. See 98 FEO 6.

RPC 48 outlines the professional responsibility of lawyers involved in a law firm dissolution.  The dissolution of a firm requires consideration of several principal areas: (1) The continuity of services to clients should be paramount. Any attorney involved in a client representation at the time of dissolution has an obligation to continue the representation until the matter is concluded or the attorney is required or permitted to withdraw; (2) The rights of clients to counsel of their choice and the required notifications; (3) The duty of the firm’s principals to deal honestly with each other and not involve clients in any disputes resulting from the winding down process; and (4) The protection of and accounting for all client property.

Rule 1.16 Whether selling or winding down a practice, the client’s relationship with the departing attorney will end.  When terminating the representation of a client, the lawyer must comply with applicable law requiring notice to or permission from a tribunal. Upon termination of representation, a lawyer must take steps to reasonably protect a client’s interests including: (1) giving notice to the client; (2) allowing time for retention of other counsel; (3) surrendering papers and property to the client to which client is entitled; and (4) refunding any advance fee payments which have not been earned or incurred.

Handling Client Files

RPC 209 The opinion rules an attorney may dispose of closed client files subject to certain requirements. No particular method of destroying files is proscribed but the method used must preserve client confidentiality. With the consent of a client, a closed file may be destroyed at any time.  However, the lawyer should review the file and retain any items in the file that belong to the client or contain information useful in the assertion or defense of the client’s position where the statute of limitations has not expired. Absent the client’s consent, the client file must be retained for a minimum of six years after the conclusion of the representation, and a record must be maintained of all destroyed client files.

Rule 1.15 In addition to retaining the client file for six years after representation has concluded, a lawyer must maintain complete and accurate records of all client property entrusted to the lawyer for a period of six years immediately preceding the lawyer’s most recent fiscal year end.

RPC 234 rules an inactive client file may be stored in an electronic format provided documents with legal significance in their original format are preserved and the electronic documents can be reproduced on paper.

Communication Concerning Change of Status

Rule 7.1 provides communications about a lawyer’s services cannot be misleading, so all ads, websites, directory listings, social media, etc. must reflect the changed status of the law firm.

As suggested in part one of the “Turning Out the Lights” series, the end of a legal career is a certainty for all who practice the law, but despite that, many attorneys reach that point without considering and preparing a succession plan. Hopefully, N.C. lawyers will lead the way and change that.  Although there is no doubt exit planning is a challenge, it is also an opportunity for you to create a plan so your clients and your practice are not left in the dark.

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Seven Dirty Words in Lawyer Advertising

OK, so the words are not really dirty, indecent, or obscene, and their use won’t get you arrested — a la George Carlin.  But there are certain words or phrases a NC attorney should be wary of when creating a webpage or an advertisement.  These are words or phrases that can get you in trouble unless you are careful about how you use them and, in some cases, unless you include disclaimer language.  By the way, this is not an exclusive list, but it does include some of the usual language that trips up attorneys.

  1. Specialize/Specialist – Most everyone knows that Rule 7.4 prohibits the use of the word “specialist” or a variant of that term unless you are certified as a specialist by the State Bar or an organization approved by the State Bar or the ABA.  Be careful about advertising on third party or social media sites that use the term specialist.
  2. Guarantee/Promise – It is a bad idea to promise anything.  You can’t promise results because it creates unjustified expectations in violation of Rule 7.1.  Nonetheless, if there is something (not results) than you can assure will happen 100% of the time, then you could guarantee it.  For example, “I guarantee that if you are not satisfied, I will return your fee.”  It must be true 100% of the time, no exceptions.  Otherwise, don’t say it.
  3. Get/Obtain – these seem like a fairly innocuous words, but the word “get” gets attorneys into lots of trouble, especially when coupled with the word “results” (See #4 below).  If you are saying you will “get” anything for the client having to do with results, then you are creating unjustified expectations. Rule 7.1((a)(2).  It sounds too much like a promise or guarantee.  Use qualifiers.  Instead of saying “we will help you get ___,” say “we will try to help you get ___.”
  4. Results – This is a tricky one.  I’ve seen it in slogans: “Experience, Dedication, Results.”   That appears to be OK because it doesn’t imply a specific result.  But to talk about the actual results you will obtain for future clients, “we work to obtain money for your injuries” or “our firm can get you a quick settlement” is not permitted as creating unjustified expectations.  Rule 7.1(a).  It is unlikely a disclaimer will help the language in either example because both include the word “get” coupled with specific results.  Past results or successes, (“we’ve successfully represented hundreds of clients”) or a verdict/settlement record, can be advertised if truthful, but you must include disclaimer language consistent with 2009 FEO 16.  To sum up, don’t talk about results you will obtain for future clients; past results must include disclaimer language.
  5. Most/Best/Top – These words should not be used to describe your services.  If you are saying you are the most, the best, or the top anything, then be ready for a Bar complaint.  This is a comparison of your services with others, and it cannot be factually substantiated.  Rule 7.1(a)(3).  Can you say you are “one of the leading attorneys in the State,” or “one of the premier law firms in the state”?  Well, even saying you are “one of” the attorneys who possess those qualifications is risky.  You must be able to factually substantiate that claim.  It’s safer to leave those kinds of descriptions out of your advertisements.
  6. Deserve – This one is also a bit ticklish.  There is no specific rule which prohibits the use of the word.  To use it in the following way, however, can potentially cause problems:  “We help clients obtain the money they deserve.”  Staff counsel at the State Bar takes the position that using “deserve” in this way is misleading because it implies a promise to do something and implies that everyone deserves to recover something.  You may be able to use deserve when discussing past results without implying that everyone deserves to recover monetary damages  — “we’ve helped clients recover the money they deserved,”  — but any discussion of results should include a disclaimer. Adding more qualifiers may eliminate the need for disclaimer language: “We’ve helped clients seek to recover the money they deserved.”
  7. Expert – This is another word that is not specifically prohibited by the Rules and there is no ethics opinion which says you can’t use the word to describe your services.  But be careful because its use may be deemed misleading. You need to be certain that, at a minimum, you have sufficient experience in the practice area before using this term.  I would not recommend saying you are an expert because you may be called upon to substantiate that claim.

The words “always” and “never” did not make the list but deserve mention.  Stay away from absolutes.  They are too much like promises or guarantees.

Are we picking nits here?  Absolutely.  Will your marketing professionals like it?  Absolutely not.  Heck, this is legal advertising folks.  If your ad is slick, novel, cute, interesting, flashy, catchy, or witty, you’ve likely violated some Rule of Professional Conduct.  But hopefully, these quick tips will help you avoid a Bar complaint.

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State Bar to Tackle LinkedIn Issues

At its most recent quarterly meeting, the Ethics Committee discussed whether an attorney could accept a LinkedIn invitation from a judge or accept an endorsement from a judge on LinkedIn regarding the lawyer’s skills or expertise.  The staff-proposed opinion held that a lawyer was not able to accept a LinkedIn invitation to connect from a judge, and likewise could not accept an endorsement from a judge, unless the lawyer knows that he or she will never represent a client in a proceeding before the judge.  This proposed opinion garnered quite a bit of comment from members of the Ethics Committee and the opinion was ultimately sent to subcommittee for further study.  The proposed opinion centered around whether the LinkedIn or similar type “connection” could be prejudicial to the administration of justice under Rule 8.4(d) inasmuch as lawyers have an obligation to protect the integrity of the judicial system and avoid the appearance of impropriety or judicial partiality.

One counselor brought up the fact that there are other types of connections that lawyers have with judges, such as named contributors to or direct support of campaigns for reelection, that would appear to have greater impact on the concerns about impartiality than a mere connection on LinkedIn.  There were also concerns that the proposed opinion by staff might have too broad a scope.  I would stress that there is currently no opinion restricting a lawyer from having a connection with a sitting judge at this point, but there will be an opinion of some sort coming down the pipe in the next several months.  I would urge you to submit any comments you may have to the Ethics Committee via Nichole McLaughlin. (  The more comments and input the Bar receives from its membership, the better any final opinion will be.

If you’d like a copy of the draft opinion, feel free contact me through this website.

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Soliciting Facebook “Likes”

What does it mean when someone “likes” your firm on its Facebook page? Does it mean they like your firm, the people in your firm, or the artwork on your Facebook page?  I don’t know what it means exactly, but regardless of what the person intended when they “liked” your page, N.C. State Bar staff take the position that “liking” a firm/lawyer on Facebook is akin to a referral.  Rule 7.2(b) states that a “lawyer shall not give anything of value to a person for recommending the lawyer’s services….”  If a Facebook “like” is like a referral, then Rule 7.2 may prohibit lawyers from requesting “likes” if they promise anything in exchange for doing so.  What that means is that you can’t solicit “likes” in exchange for “liking” something or someone else on Facebook.  You should not request “likes” in exchange for a donation to charity.  You also should not request “likes” in exchange for entering persons in a giveaway or drawing. In sum, there can be no quid pro quo.

If you don’t have a firm Facebook page and never intend to have one, this probably does not mean much to you.  But, if you do have one, be careful how you go about soliciting “likes.” Someone at the Bar may not “like” the way you do it.

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Turning Out the Lights Part Three: Checklist for Closing Your Law Firm

Closing a law practice takes time and planning. The most important considerations, outside of ethical responsibilities, are to start early, create and utilize a timeline and checklist, and update it often. The process should ideally be implemented over a period of six months to one year.

Ensuring your clients and their files are taken care of should be a principal concern once you have made the decision to close your practice and have informed staff of your plans.  Although individual circumstances will dictate how much time you have available, attempt to complete and close out as many clients as possible.

The following is a form checklist that you can modify to your particular circumstances:

For Closed Client Files:

  •        Determine if any inactive clients should be notified.  If the file or client matter has been closed for more than six years, the file may be destroyed as long as client confidentiality is preserved.  If six years or less, the files should be retained and the client notified how you will be storing the files and how the file may be retrieved.
  •         Create a record of all destroyed files.

For Remaining Active Clients and Files:

  •        Calculate any accounts receivables and try to collect the balances before making the announcement if possible.
  •        Prepare a letter for all active clients. Advise the clients about the termination of the representation; the status of their cases and any pending deadlines; the need to retain new representation, if necessary; and how to receive their files. Try to contact clients personally first, if possible, before sending the letter.
  •        Get the client’s prior consent, if you are planning to transfer any files to a new lawyer.
  •        Prepare and file withdrawal motions where necessary.
  •        It is a good idea to keep at least an electronic copy of all files.
  •        Determine if you may need to refund money to any of your clients, particularly in the case of flat fees designated as “earned upon receipt.”
  •        Resign from any fiduciary position held, such as administrator, executor, etc. that cannot be completed.

Banking and Accounting:

  •        Review accounts payable and contact vendors to arrange payment of bills.
  •        Check for fee sharing and fees owed to co-counsel.
  •        Reconcile and close trust and fiduciary accounts.  Disburse funds held in your trust account to appropriate client or third parties with final accounting to the clients.
  •        Research current escheat law if you have unclaimed funds in your trust account.
  •        Notify the State Bar when the trust and fiduciary accounts are closed.
  •        Preserve the financial records for the appropriate period of time. Trust records must be maintained for six years.
  •        Determine if there is other non-cash client property being held that must be returned to the client.
  •        Determine a closure date for all other accounts.
  •        Terminate all bank account direct pay arrangements from the operating account.
  •        Determine which state and federal offices should be contacted.
  •        Discuss filing final tax returns with an accountant.
  •        Cancel any credit in the name of the business entity.


  •        Cancel all relevant insurance including office, liability, etc., but only after operations have ceased.  Discuss the timing with your insurance agent.
  •        Determine need for professional liability tail coverage that would cover you for any malpractice claims that arise after you have stopped practicing for malpractice incurred while you were still practicing.
  •        Consider COBRA options for health insurance.
  •        Determine rollover options for retirement plan for you and staff.
  •        Determine if life and disability insurance may be rolled into a personal policy.

State Bar and Bar Associations:

  •        Call the membership department at the N.C. State Bar to update membership records with your status and any new contact information. You may submit a petition for transfer to inactive status, which must be received by December 31st to avoid dues for the following year.
  •        Contact all other associations and professional organizations to update membership records with your status and new contact information.

 Equipment, Furniture, and Office Space:

  •       Scrub computers, digital copiers, and other electronic devices, including smart phones, of software and client information to ensure confidential information is not compromised.
  •        Consider how to dispose of equipment, furniture, and office supplies.
  •        Determine move date and arrange moving service.
  •        Coordinate with the landlord if rental space.


  •        Dissolve the business entity.
  •        Terminate all firm e-mails accounts and any social media sources.
  •        Consider setting up a static web page on your website with information on the closure of the firm and how client files may be obtained.
  •        Cancel subscriptions and on-line accounts.
  •        Cancel vendor accounts including courier and express accounts.
  •        Cancel any advertisements by the firm and any legal directory listings.
  •        Determine whether a post office box is needed for post-dissolution mail.
  •        Disconnect utilities including phone.  Determine whether the firm needs to maintain the number for a period of time with a recording that gives information regarding the dissolution and client files.
  •        Determine what disclosures should be made to employees concerning termination of employment.

This list is not comprehensive and does not cover every situation. Hopefully, it may serve as a starting point for building and completing your own checklist so you can be confident that when you turn off the lights, no one is left in the dark.

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Procedural Dilemma? Help is a Phone Call Away…

I recently attended the Wake County Bar Association/Tenth Judicial Bar Breakfast Discussion Series at Campbell Law School, and I am so glad I did.  The members of the Office of the Wake County Clerk of the Superior Court gave a wonderful presentation including tips on everything from default judgments to foreclosures.  I learned a lot about procedure in diverse areas of the law, but the most valuable piece of information I gleaned from the presentation was: when in doubt about the proper procedure, call the Clerk’s office.

Lawyers are often hesitant to ask for help, especially when the subject matter is something they feel like they should know, and truthfully, some Clerk’s offices are not particularly helpful.  The lawyers in Wake County are fortunate.  Not only is our Clerk’s office very knowledgeable in a huge array of legal matters, we have a Clerk’s office that WANTS us to call and ask for assistance with procedural matters.  They would rather us ask then try to muddle our way through and get it wrong.  This is an amazing perk, especially for those venturing into a new area of the law.  So next time a procedural issue has you befuddled, remember, help is only a phone call away.

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Double Check For Conflicts

Do you ever wonder if your conflict checking software is doing all it’s supposed to do? Maybe you don’t even have conflicts checking software, but wonder whether you need it. When it comes to conflicts of interest, you can never be too careful. That’s why I recommend a two-step approach to checking for conflicts: First, you need some type of system for checking conflicts electronically, either as part of a document management system or a stand alone conflict checking software. Depending on the type of practice you have, even a word document search function may be sufficient for this first step (although not recommended).

Second, you need a method of checking for information that doesn’t make it into a conflicts checking system.  That is, checking for information only known to members of your firm. Lawyers (and staff) have personal lives, friendships, family, connections, alliances, and business relationships outside of the law firm. It is information about these kinds of relationships that do not make it into law firm conflict checking software. That’s why, whenever a new potential client approaches the firm, we first check our conflict checking software (PCLaw), and then we send around an e-mail to all the lawyers and the firm administrator indicating pertinent information about the new potential client, including opposing parties, opposing lawyers, and any other relevant information about the matter. This is our back up system. After all, a conflict checking program or software is only as good as the information you put into it. Heck, if you completely rely upon the conflict checking system in your document management program, you could end up suing your law partner’s mother-in-law (let’s assume that would be a bad thing) or business partner. Always remember to talk to each other, communicate, and double check for those kinds of connections anytime a new potential client walks through the door.

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Turning Out the Lights Part Two: To Sell or Not to Sell

As we suggested in part one of this series, exit planning is a hot topic, and the end of a legal career is a certainty for all who practice the law.  In spite of that, many attorneys reach that point without considering and preparing a succession plan. The American Bar Association estimates a vast majority of lawyers, particularly solo practitioners, do not have a plan in place.  Likely, this is because it takes time and commitment which can be challenging when running a busy law practice.  However, attorneys who develop a plan – and do it early – are in a better position to protect their clients, employees, family and reputation.  Exit strategies encompass any one of a number of different scenarios including: (1) selling the law practice; (2) internally transitioning the law practice to another attorney in the firm; or (3) winding down and closing the doors of the practice.

Selling a Law Practice

The current version of Rule 1.17 of the Rules of Professional Conduct permits a lawyer or law firm to sell or purchase a law practice or area of law practice, including good will, if certain conditions are met.  The Rule requires the selling attorney to discontinue the private practice of law, or the area of practice that has been sold, within a one-hundred (100) mile radius of the purchased practice. The Rule also requires that the seller’s entire practice, or an entire area of practice, be sold. In addition, written notice of the proposed sale must be sent to all clients who are currently represented by the seller and to all former clients whose files will be transferred to the purchaser. However, at its last quarterly meeting in July 2013, the Ethics Committee voted to adopt a proposed change to Rule 1.17 which would permit a lawyer to continue to work for the law practice as an employee after its sale. This would allow a senior selling attorney to remain in the practice during a transition period which would, in turn, create a more seamless transition for clients, staff, and the purchasing attorney. (See prior blog article, “Now You Can Retire…Or Not”).

Often the lawyer interested in selling his or her law practice already has qualified and interested buyers employed at the firm.  Regarding the transition of a law practice to a current employee, 98 Formal Ethics Opinion 6 rules that the requirements for selling a practice set forth in Rule 1.17 do not apply to the sale of a law practice to lawyers who are current employees of the firm. In addition, the law firm may continue to include in the firm name the name of a retired attorney who practiced with the firm up to the time of his retirement if that attorney has ceased the practice of law.

Aside from the multitudes of ethical considerations, it can be challenging to determine how to value and set a price for a law practice.  Attorneys may have inaccurate perceptions that their practice has little or no real value; however, that is usually not the case.  One way to ensure an objective valuation is to hire a business appraiser and/or a professional business broker.  The consultant can assist in not only determining the value of the practice, but also providing knowledge of the process, marketing the practice, dealing with unqualified buyers, attracting qualified buyers, and negotiating a price once a qualified buyer is located.

Deciding to sell, understanding the ethics involved, and determining the value of a practice is really just the beginning.  In part three of this series, we will provide a comprehensive checklist for selling a law practice.

Closing the Doors of a Law Practice

Closing, as opposed to selling, the law practice, involves different issues.  The most important considerations are to start early, create and utilize a timeline and checklist, and update it often. The process should be implemented over a period of six months to one year at a minimum.  In part three of this series, the checklist discussed above will also include a section on closing a law practice.

Contingency Plans

At this point, you may be thinking retirement is too far into the future to even consider selling or closing your law practice.  However, at a minimum, it is important to plan for contingencies in the event of the unexpected.  Advance designation of another lawyer to assist with client matters is critical when a temporary disability or emergency occurs.  Lloyd Cohen is a solo practitioner and the author of Being Prepared: A Lawyer’s Guide for Dealing with Disability or Unexpected Events.  Mr. Cohen’s own office experienced a short shutdown due to his sudden illness:

During my absence from the office, my manual is getting its first real-life test. The good news is that having a manual available has been a comfort that helped the office to continue to run smoothly. Those closest to me were able to check the physical and clerical aspects of the office. Lawyers with whom I’ve developed a rapport for such a contingency were notified. A lawyer was able to screen both the physical and electronic calendars for appointments, court appearances, and deadlines. Rescheduling client appointments far ahead of time was appreciated. Immediately directing e-mail to auto-reply “out due to illness” worked well. Bill-pay and money-transfer functions were attended to. Having my medical contacts and information organized was helpful. I found that keeping updated with the continuing evolution of technology and proliferation of passwords to be a challenge, but overall, client confidence was maintained and opposing counsels cooperated.

Lloyd D. Cohen, How My Emergency Plan Saved My Practice, GPSOLO, a publication of the American Bar Association, vol. 29, no. 4.

Mr. Cohen, in his manual, advocates safeguarding your practice with five practical steps: “Define, Enable, Empower, Keep, and Inform.”  Even if you do not have time for the entire manual, his short article, “How My Emergency Plan Saved My Practice”, is worth the ten minute read and may be the spark to encourage you to create a plan so your clients and your practice aren’t left in the dark.

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The Latest on “Reply All”

The “Reply All” opinion was again discussed at the latest Ethics Committee meeting in July 2013 (2012 FEO 7).  I won’t provide the tedious details about all the iterations of this opinion over the last several months.  At its last meeting, the Ethics Committee voted to adopt for publication, a revision to the opinion which appears to be a compromise of sorts between those who supported the position that you can never hit “reply all” in response to opposing counsel’s e-mail copying his client, and those who believe you can always presume that opposing counsel impliedly consents to a “reply all” communication when copying his client on the communication.

The newly revised proposed opinion initially states that the fact that a lawyer copies his own client on an e-mail communication does not, in and of itself, constitute implied consent to a “reply all” responsive e-mail.  Rule 4.2 applies to e-mail communications and a responsive communication directed to a represented opposing party violates this rule, even where the party’s lawyer is copied.  The opinion goes on to say that the opposing lawyer’s consent to the responsive e-mail communication may be implied, however, from the totality of the facts and circumstances presented, including (1) how the communication was initiated, (2) the nature of the matter (litigation vs. transactional), (3) the prior course of conduct between the lawyers, and (4) the extent to which the communication may interfere with the lawyer-client relationship.  After consideration of these factors, a lawyer must then make a good faith determination whether opposing counsel impliedly consented to a “reply all” responsive e-mail.

The ethics opinion goes on to say that, notwithstanding that consent may be implied, the better practice would be to secure express consent from opposing counsel prior to hitting “reply all.”  In addition, a lawyer should never just respond solely to the opposing party.  In response to a number of comments received by the State Bar, additional language was added to this revised opinion which advises the sending lawyer to take certain steps if he wants to ensure his client doesn’t receive e-mail responses from opposing counsel, such as forwarding the e-mail to his client separately (rather than copying him), blind copying his client on the e-mail, or expressly stating to opposing counsel that consent is not granted.

Finally, the revised proposed opinion suggests that “to avoid a possible incorrect assumption of implied consent, the prudent practice is for all counsel involved in a matter to establish at the outset a procedure for establishing whether it is acceptable to ‘reply to all’ when a represented party is copied on an email.”

This proposed opinion is being published for comment during this quarter and will be before the Ethics Committee again in October 2013.

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