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ETHICS
Limited Scope Representation a/k/a
Unbundled Legal Services
by Sara Rittman by the Legal Services Corporation. representation in the matter for which
However, better practice dictates that the the attorney was hired.
The Supreme Court adopted rule attorney will document the contact and Several other rules were amended
changes, effective July 1, 2008, clarify- the services provided, even if a signed to establish uniformity in relationships
ing the duties and procedures that apply writing is not mandated. among attorneys who provide limited
when an attorney provides limited scope The exception for initial consultations scope representation, the courts, and
legal services to a client. Although the will likely be the most commonly used opposing counsel. One of these rules
adoption of these changes was some- exception to the signed writing require- is Rule 55.03. If an attorney provides
what controversial, it was common, ment. Paragraph [2] of the comment assistance with preparation of plead-
and ethically permissible, for attorneys recognizes that an attorney may provide ings, that fact may be shown on the
to provide limited scope legal services legal advice during an initial consulta- pleading without constituting an entry
prior to the adoption of these changes. tion: “The initial consultation ends when of appearance by the attorney. Rule
However, the previous method by which the lawyer and the client agree that the 55.03(b)(2).
this was accomplished by attorneys, lawyer will or will not undertake the These rules specifically provide that
and the manner in which it was treated representation.” an attorney may enter a limited appear-
by various courts and judges, differed The requirement of a signed writing ance. The attorney must specify the
greatly. only applies to limitations on the scope purpose(s) for which he or she is enter-
The new version of Rule 4-1.2(c) of the representation in a particular mat- ing a limited appearance. As a general
makes it clear that the client must give ter. For example, it would apply if the rule, during the period the limited ap-
“informed consent in a writing signed by attorney agreed only to review pleadings pearance is in effect, the opposing party
the client.” A sample form is included and other documents to be filed by the will continue to serve papers on the oth-
in the comment. Attorneys who engage client pro se. It would apply if the at- erwise self-represented party. However,
in limited scope representation should torney agreed to draft a trust but not to be the limited appearance attorney may
pay close attention to the written agree- involved in transferring title of property serve opposing counsel “with a copy of
ment to make sure it spells out what the to fund the trust. It would also apply if the notice of limited appearance setting
attorney will do and what the attorney the attorney agreed to represent the cli- forth a time period within which service
will not do. In general, a good fee agree- ent at trial, but not on appeal. of papers shall be upon the attorney for
ment or engagement letter, for any type The signed writing requirement the otherwise self-represented party.”
of representation, will spell out what is would not apply to a situation in which Rule 44.03(b). Similarly, under Rule
excluded as well as what is included. an attorney agrees to fully represent a 4-1.2(e), the otherwise self-represented
Complete coverage of excluded as well defendant in a damages case but does party will be treated as unrepresented
as included services is paramount in a not agree to handle a related subrogation under Rules 4-4.2 and 4-4.3, unless the
limited scope representation fee agree- action. It would not apply if the attorney limited appearance attorney “provides
ment. agreed to fully defend a client against other counsel with a written notice of
The requirement of a signed writing a criminal charge but does not agree a time period within which other coun-
does not apply to: (1) an initial consul- to handle civil litigation arising from sel shall communicate only with the
tation, (2) pro bono services provided the same facts. Malpractice and other lawyer of the party who is otherwise
through a non-profit organization, a concerns make it advisable to exclude self-represented.”
court-annexed program, a bar associa- the other actions in writing, but Rule Withdrawal is automatic once the lim-
tion, or an accredited law school, or (3) 4-1.2 would not require a signed writ- ited appearance attorney “has fulfilled
services provided by a not-for-profit ten agreement. In these situations, the
organization funded in whole or in part attorney is not limiting the scope of the (Continued on page 24)
20 Precedent Summer 2008
ETHICS
Trust Account Recordkeeping:
What You Need to Know
to Stay Out of Trouble
By Nancy L. Ripperger and other fiduciary accounts such as • promptly pay the client/third party
those maintained for estates, guardian- his or her funds;
Attorneys frequently hold client or ships and trusts. • upon request by the client/third
third party money in trust. This is a party, promptly provide an accounting
profound responsibility upon the part WHO SHOULD HAVE A TRUST of funds held in trust;
of an attorney; however, many attorneys ACCOUNT? • separate funds if there is a dispute
do not take the time to ensure that their Every Missouri attorney who is in between the client and a third party
practices and procedures are adequate private practice should maintain a trust about the ownership of the funds and
for protecting client/third party funds. account if the attorney holds funds for a promptly distribute all portions of the
This is a huge mistake, as an attorney client or third party. This would include, funds which are not in dispute; and
can suffer dire consequences if the but not be limited to: (a) attorneys who • maintain complete trust account
attorney fails to take appropriate safe- collect advance fees,4 (b) attorneys records for five years after the represen-
guards. who collect court costs from clients, (c) tation ends or from the last disbursement
Rule 4-1.15 addresses an attorney’s attorneys who collect court fines from of funds whichever occurs later.
duties when holding client/third party the client, and (d) attorneys who receive
money in trust. The Supreme Court settlement proceeds. WHAT CONSTITUTES “COMPLETE
of Missouri imposes harsh discipline TRUST ACCOUNT RECORDS”?
against attorneys who violate Rule HOW SHOULD A TRUST Most of the requirements of Rule
4-1.15. The Court often disbars at- ACCOUNT BE TITLED? 4-1.15 are self-explanatory, except for
torneys who convert client money.1 Rule 4-1.15 requires that the trust ac- the requirement that the attorney main-
Moreover, the Court has noted on sev- count be specifically designated “Client tain “complete trust account records.”
eral occasions that even unintentional Trust Account” or words of a similar na- The rule fails to detail what the Supreme
mishandling of client funds by an attor- ture and that the account be maintained Court of Missouri considers “complete
ney can justify disbarment.2 Thus, it is in the state in which the attorney has his trust account records.” Nevertheless,
crucial that attorneys establish adequate or her office.5 the comments to the rule do provide an
practices and procedures regarding their answer in a round-about way.
client trust accounts. WHAT ARE THE BASIC The comments state that a lawyer
REQUIREMENTS OF should maintain up-to-date trust records
WHAT IS THE PURPOSE OF A RULE 4-1.15? in accordance with “generally accepted
TRUST ACCOUNT? What are the primary requirements accounting practice.” The comments
It is much easier to understand the of Rule 4-1.15 regarding trust account then cite to the ABA Model Rule On
trust accounting rules if one first consid- funds? Rule 4-1.15 requires the lawyer Financial Recordkeeping. I suspect
ers the purpose of a trust account. The to: very few attorneys are familiar with
purpose is to safeguard client and third • keep client/third party funds in a “generally accepted accounting prac-
party funds from loss and to avoid even separate account; tice.” However, a review of the ABA
the appearance of impropriety by the • not commingle the lawyer’s funds Model Rule on Financial Recordkeep-
lawyer.3 Accordingly, a trust account with client/third party funds; 6 ing is very helpful in determining what
must be separate from the attorney’s • promptly notify the client/third party trust account records an attorney should
personal or business operating account of the receipt of funds; maintain. The model rule requires the
Precedent Summer 2008 21
ETHICS
following: The use of computer software for trust If a mistake is discovered, it should be
1. receipt and disbursement journals accounting permits the attorney to corrected immediately. A brief memo-
which record all deposits and withdraw- only make one computer entry and the randum should be prepared noting the
als from the trust account specifically software will enter the information into error and what was done to correct it.
identifying the date, source and descrip- the correct ledgers and journals. This The memo should be retained with the
tion of each item deposited as well as lessens the chance of errors occurring reconciliation for later reference in the
the date, payee and purpose of each and saves a considerable amount of time event of an audit.12
disbursement; for the attorney. While an attorney can An attorney who uses a computer pro-
2. a ledger book showing for each purchase software specifically designed gram to maintain his or her trust account
trust client the source of funds, name of for attorney trust accounting, generic ac- should print and retain, on a monthly ba-
all persons for whom the funds are held, counting programs such as Quicken or sis, the trial balance for cash receipts and
the amount of the funds, the amount of Quickbooks can be modified to provide disbursements and each client or third
withdrawals and the names of all persons the necessary trust account records.9 parties’ ledger along with the reconcili-
to whom money is disbursed: ation reports.13 It is also critical that the
3. copies of written retainer and com- HOW DO I RECONCILE MY attorney back up his or her electronic
pensation agreements with clients; TRUST ACCOUNT RECORDS? records on a regular basis. It logically
4. copies of statements to clients or Maintaining the records set forth follows that the more activity the attor-
third persons showing the disbursement above is only the first step in avoiding ney has in his or her trust account, the
of funds to them or on their behalf; problems with a client trust account. more often the computer files should be
5. copies of bills for legal fees and Next, the attorney must ensure that the backed up.14 Ideally the records should
expenses delivered to clients; trust account records are reconciled on a be backed up on a daily basis.
6. copies of records showing pay- regular basis, preferably monthly.10 This
ments to lawyers, investigators, or involves much more than reconciling a CAN AN ATTORNEY DELEGATE
other persons not in the lawyer’s regular personal bank account where someone TRUST ACCOUNT BOOKKEEPING
employ; merely compares the bank’s monthly FUNCTIONS?
7. checkbook and check stubs, bank statement with their own check register. The attorney has sole responsibility
statements, pre-numbered cancelled To reconcile a trust account the attorney for ensuring that his or her trust account
checks, and duplicate deposit slips for should complete a three-way reconcilia- is in compliance with Rule 4-1.15. This
the trust account; tion. The three-way reconciliation ties duty or responsibility cannot be del-
8. copies of monthly trial balances;7 together all the records and allows the egated.15 That being said, Rule 4-1.15
and attorney to identify mistakes in inter- does not require the attorney to make
9. copies of documents reasonably nal accounting records or the bank’s the actual entries in the trust account
necessary for a complete understanding records. records or even perform the actual trust
of the financial transactions affecting the To complete a three-way recon- account reconciliations. The attorney’s
trust account. 8 ciliation the total cash receipts and cash activities can be delegated to staff as
Maintaining the records recom- disbursements should be added to the long as the attorney closely reviews the
mended by the ABA is the first step in beginning cash balance to provide the staff’s work.
ensuring compliance with Rule 4-1.15. ending cash balance. The ending cash The need to closely review staff’s
These records can be kept manually or balance is then compared to the bank work is very evident when one looks
electronically via some type of account- statement. In order for the two records at In re Williams, 711 S.W.2d 518 (Mo.
ing software program. If the records are to match, adjustments must be made for banc 1983). In Williams, a trust account
kept manually, the lawyer must record items such as outstanding checks and de- check was returned by the bank for insuf-
each trust account transaction a number posits not credited to the account by the ficient funds.16 The attorney asked the
of different times. For example, for bank. Finally, and most importantly, the Court to mitigate the level of discipline
a check, the attorney would have to attorney should total all the individual imposed because the attorney’s wife,
prepare the check, enter the check into client or third party ledger balances and not the attorney, had handled the trust
the check registry, enter the check in compare with the ledger balance for the account bookkeeping. The Court did not
the subsidiary client ledger, and enter trust account.11 accept the attorney’s argument and held
the check in a disbursement journal.
22 Precedent Summer 2008
ETHICS
that it was the attorney’s responsibility ing account; and randomly spot check some deposits and
to review the account and rectify any • records of deposits should be suf- checks with information in the indi-
recordkeeping problems. The Court ficiently detailed to identify each item vidual client files.21
then disbarred the attorney. deposited. Seventh, the attorney should re-
For withdrawals, the attorney should view the individual client ledgers on a
WHAT SAFEGUARDS SHOULD require: monthly basis to ensure that there are no
AN ATTORNEY TAKE WHEN • staff to provide complete documen- negative balances.
DELEGATING TRUST ACCOUNT tation setting forth the reason for the Finally, the attorney should consider
RECORDKEEPING TO STAFF? issuance of a trust account check before having an annual audit of the trust ac-
There are many safeguards an attor- the attorney signs the check; count by a certified public accountant,
ney should take when delegating trust • withdrawals to be made only by especially if there are several people
account recordkeeping to staff. First, preprinted, numbered checks payable to in the firm handling trust account mat-
to lessen the risk of theft by staff, non- a named payee, wire transfers or other ters.
attorneys should not have signatory traceable methods, with no disburse- The recommendations set forth above
authority over the trust account.17 In ments made via cash; are not necessarily the only precautions
addition, before an attorney signs a trust • voided or unused checks should an attorney should take when delegating
account check, he or she should always be periodically reviewed by the actual trust account bookkeeping to staff
check the balance in the account to en- attorney;18 members. However, these recommen-
sure there are sufficient funds available • when funds are transferred from dations will go a long way in ensuring
to pay the check. If there are not funds the trust account to the firm’s operating the attorney is in compliance with Rule
available, the attorney should investigate account, the transfer should be done by 4-1.15.22
the matter immediately. issuing a check from the trust account
Second, the attorney should ensure and depositing it into the operating ac- CONCLUSION
that the staff person assigned the task count. Before preparing the check, the Although many attorneys may feel
of maintaining the trust account records staff member should require documenta- that they cannot divert time from the
understands the requirements of Rule tion supporting the transfer; and “practice of law” to oversee the client
4-1.15 and has received proper train- • the trust account checkbook should trust account, it is imperative that they
ing in accounting procedures. If there be kept under lock and key. take the time to oversee their account.
are sufficient staff to do so, it is best Fifth, the attorney should skim the Failing to properly handle a trust ac-
to split up various portions of the trust bank statement for unusual transactions, count can lead to an attorney’s suspen-
account recordkeeping among several including copies of cashed checks to sion or even disbarment. By following
staff members. For example, the staff ensure they have the proper signature some fairly simple rules the attorney
member preparing trust account checks and the checks are endorsed by the ap- can protect their clients’ interests and
should not be the staff member prepar- propriate person.19 The attorney should ensure that their license is not subject to
ing the reconciliations. Splitting the also ensure that the account did not discipline for poor trust account record-
duties makes it harder for staff to hide have a negative balance anytime dur- keeping and procedures.
discrepancies with the trust account ing the month. The review of the bank
recordkeeping. statement should occur before staff has ENDNOTES
Third, the attorney should establish access to the statement. Otherwise, the 1. See In re Mendell¸ 693 S.W.2d 76 (Mo.
explicit written trust account policies banc 1985).
potential exists that staff could alter the 2. See In re Williams, 711 S.W.2d 518 (Mo.
and procedures. For deposits, the at- statement before presenting it to the banc 1986).
torney should require: attorney. 3. New York Lawyers’ Fund for Client
• deposits to be made on a daily Sixth, the attorney should require Protection, A Practical Guide to Attorney Trust
basis; Accounts and Recordkeeping, 152 PLI/NY 119
the reconciliations to be completed
(2005).
• receipts to be deposited intact, i.e. promptly and the attorney should review 4. It is the Office of Chief Disciplinary
a portion of the deposit should not be and sign and date his or her review of Counsel’s position that classifying attorney fees
taken in cash or a portion of the deposit the reconciliations.20 When reviewing as “flat fees” or “nonrefundable fees” does not
should not be deposited into the operat- the reconciliations, the attorney should allow the attorney to deposit the entire fee into
Precedent Summer 2008 23
ETHICS
his or her operating account upon receipt of the retrieved July 9, 2008, at http://en.wikipedia.og/ 15. In re Williams, 711 S.W.2d 518 (Mo. banc
fees. Rather, the unearned portion of the fee wiki/Trial_balance. 1986).
should be deposited into the trust account and 8. ABA Model Rule On Financial 16. Id.
then transferred from the trust account to the Recordkeeping §1 (1983). 17. ABA Model Rule On Financial Record-
operating account as earned. Rule 4-1.15(e). 9. The Minnesota Lawyers Professional Re- keeping § 2.(1)(1983).
5. Rule 4-1.15(c); effective January 1, 2008, sponsibility Board and the Minnesota Office of 18. ABA Model Rule On Financial
Rule 4-1.15 began requiring attorneys to maintain Lawyers Professional Responsibility have devel- Recordkeeping § 2.(3)(1983).
their trust accounts in an “Interest On Lawyer oped a website explaining how to set up attorney 19. Susan Lieberum, Practical Approach to
Trust Account” (“IOLTA” ) unless exempted by trust accounting records on Quicken. The cite Trust Account Maintenance, 15 No. 4 Acct. &
Rule 4-1.15(i). Rule 4-1.15 also now requires is http://www.mncourts.gov/lprb/Quicken%20 Fin. Plan. For L. Firms 1 (2002).
IOLTA funds to be deposited with an institution Basic%202002%20color.htm. 20. Id.
paying rates similar to the institution’s non- 10. Reconciling is the process whereby one 21. The Creation, Nurturing And Protection
IOLTA customers. This article does not address verifies that internal accounting records agree Of Your Firm’s Client Trust Account(s) or “How
any of the IOLTA requirements found in Rule with the bank statement. Usually adjusting To Avoid Claims,” 63- Mar. J. Kan. B.A. 19
4-1.15. The reader should refer to Rule 4-1.15 entries must be made for checks that have been (1994).
for the specific IOLTA requirements. issued but have not cleared the bank, deposits 22. For other helpful tips regarding trust
6. Rule 4-1.15(d) permits a lawyer to deposit that have not been recorded by the bank yet and account recordkeeping, please refer to the
his or her own funds into a client trust account electronic transactions such as bank fees that Lawyer Trust Funds Handbook developed by
for the sole purpose of paying bank service have not been entered in the internal accounting The Missouri Bar. A copy of the handbook can
charges on the account but only in an amount records. be found on the bar’s website at http://members.
necessary for that purpose. The preferred method The ABA Model Rule On Financial mobar.org/pdfs/practice_resources/iolta.pdf.
of handling bank service fees is to have the bank Recordkeeping requires quarterly reconciliation
take the trust account fees from the attorney’s but acknowledges monthly reconciliation is the
operating account. preferred method so that errors can be timely
7. A trial balance is a worksheet listing the discovered and corrected. See Comments to
balance of each ledger in two columns, one the Rule.
for debits and the other for credits. The trial 11. Susan Lieberum, Practical Approach To
balance is prepared in each financial period as Trust Account Maintenance, 15 No. 4 Acct. &
a summary of the activities since the closing of Fin. Plan. For L. Firms 1 (2002).
Nancy L. Ripperger
the previous ledger. The total of the debit side 12. Id. is staff counsel for
should always equal the total of the credit side. 13. Appendix 1 to the Minnesota Rules of the Office of Chief
The trial balance serves as a tool to detect errors, Professional Conduct – Maintenance of Books Disciplinary Counsel in
which may have occurred during the double-entry and Records § 7 (2008).
Jefferson City.
system of the ledger. Trial Balance, Wikipedia, 14. Id.
Limited Scope (from page 21) At the same time these rules were to Rule 4-1.2 on June 23, 2008. The
adopted, the Supreme Court adopted most recent revisions are not in the
the duties as set forth in the notice and Rule 88.09, which applies to the related bound version or the May 15, 2008
files a termination of limited appearance subject of parties not represented by supplement to the Missouri Court
with the court.” Rule 55.03(b)(3). See counsel in dissolution related proceed- Rules handbook. The complete rule
also, Rule 4-1.16(c). ings. That topic is beyond the scope of is available online through the www.
In terms of liability for sanctions, this article. courts.mo.gov website.
an “attorney providing drafting assis-
Sara Rittman is Legal
tance may rely on the otherwise self-
represented person’s representation of ENDNOTES
Ethics Counsel for the
1. The rules were originally adopted Advisory Committee of
facts, unless the attorney knows that the Supreme Court of
such representations are false….” Rule by Order dated December 21, 2007. A Missouri.
55.03(c)(3). new order was issued with revisions
24 Precedent Summer 2008
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