Does a bank-supplied CD-ROM of digital check images satisfy a North Carolina lawyer's trust-account record-keeping requirement?

Plain-English summary

Rule 1.15-3(a)(2) requires a lawyer to keep, among the minimum trust-account records, either original canceled checks or printed digital images of them furnished by the bank. A bank provides its customers a CD-ROM with digital images of the fronts and backs of checks that can be downloaded, viewed on a monitor, and printed, with protections against tampering and a way to compare suspect images to the originals the bank retains. Some lawyers worried that receiving only the CD-ROM would not satisfy the rule.

The opinion concludes the CD-ROM satisfies Rule 1.15-3(a)(2) because the digital check images can be retrieved from the CD-ROM and printed when necessary. It adds that the CD-ROM also satisfies the minimum records requirements for dedicated trust accounts and fiduciary accounts under Rule 1.15-3(b)(2). The opinion also cites the state statutes recognizing the validity of electronic records.

In practice

Under the North Carolina rule as it stood at the time of the opinion, the analysis turns on whether the lawyer can retrieve and print the check images when needed. The opinion holds that a bank-supplied CD-ROM of digital check images meets the minimum trust-account record-keeping requirement, and likewise the requirement for dedicated trust and fiduciary accounts.

Per the opinion, the lawyer in this inquiry remains in compliance receiving only the CD-ROM, given that the images can be printed on demand. (Trust-account record-keeping requirements have since been revised; verify the current Rule 1.15 series before relying on a particular record format.)

Common questions

Q: Can a lawyer rely on a CD-ROM of check images instead of original canceled checks?

A: Yes. The opinion concludes a CD-ROM containing digital images of the fronts and backs of checks satisfies Rule 1.15-3(a)(2), because the images can be retrieved and printed when necessary.

Q: Does it matter that the bank prefers to send the CD-ROM rather than the canceled checks?

A: No. The opinion concludes a lawyer who receives only the CD-ROM is in compliance with the record-keeping requirement, given the images can be printed on demand.

Q: Does the CD-ROM also work for dedicated trust and fiduciary accounts?

A: Yes. The opinion concludes the CD-ROM satisfies the minimum records requirements for dedicated trust accounts and fiduciary accounts under Rule 1.15-3(b)(2).

Background and rules framework

The opinion interprets the trust-account record-keeping rules Rule 1.15-3(a)(2) (minimum records, including digital check images furnished by the bank) and Rule 1.15-3(b)(2) (records for dedicated trust and fiduciary accounts), part of the North Carolina Rule 1.15 series on safekeeping property, corresponding to Model Rule 1.15. It also cites the North Carolina statutes recognizing electronic records.

Citations and references

Rules of Professional Conduct:

• MR 1.15 / NC Rule 1.15-3(a)(2) (minimum trust-account records; digital check images), Rule 1.15-3(b)(2) (dedicated trust and fiduciary account records)

Statutes:

• N.C. Gen. Stat. §66-322(e); N.C. Gen. Stat. §66-323 (validity of electronic records).

See also

• NC State Bar 2021 FEO 2: Identifying and Avoiding Counterfeit Checks
• NC State Bar 2008 FEO 7: A Lawyer's Obligation to Record or Disburse Closing Funds
• NC State Bar 2002 FEO 5: Retention of Email in a Client's File

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/2001-formal-ethics-opinion-14/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

Rule 1.15-3(a)(2) of the Revised Rules of Professional Conduct provides that a lawyer must keep minimum records for a trust account that include either original canceled checks or "printed digital images thereof furnished by the bank." C Banks, Inc. currently provides to its customers a CD-ROM that contains digital images of the fronts and backs of checks. Once downloaded to a computer, the check images can be viewed on a computer monitor and printed. There are protections against recording on or tampering with the digital images on the CD-ROM. If tampering or counterfeiting of the digital images is suspected, the images or printed copies thereof can be compared to the original check images retained by C Banks, Inc. C Banks, Inc. can provide the canceled checks to lawyers but prefers to provide the CD-ROM.

Some lawyers with trust accounts at C Banks are concerned that the CD-ROM does not satisfy Rule 1.15-3(a)(2). If a lawyer receives only the CD-ROM, is the lawyer in compliance with the record keeping requirements of Rule 1.15-3(a)(2)?

Opinion:

The CD-ROM satisfies the record keeping requirements of Rule 1.15-3(a)(2) because digital images of the checks can be retrieved from the CD-ROM and printed when necessary. (The CD-ROM also satisfies the minimum records requirements for dedicated trust accounts and fiduciary accounts set forth in Rule 1.15-3(b)(2).) See also G.S. §66-322(e) and G.S. §66-323.