Can a lawyer keep all firm and client funds in a single trust account if a computer accounting system tracks them as two separate accounts?
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This page answers the general question as of 1981. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-81-4 asked whether a lawyer or law firm could transfer its accounting to a computer system and, in doing so, place all funds received (both client funds and firm operating funds) in one account, the trust account, while the computer system accounted for the money as though two separate accounts existed.
On the commingling question, the committee found that the plan did not comport with SCR 20.50. That rule required all client funds to be deposited in one or more identifiable bank accounts, with no firm funds deposited except limited bank-charge cushions and amounts presently or potentially due to the lawyer. The committee said the computer's accounting distinctions would satisfy the record-keeping requirements of SCR 20.50(2)(c), but they did not satisfy the requirement that a physically separate bank account be maintained for client funds alone.
On confidentiality, the committee considered the use of outside data processing. It cited ABA Informal Opinion 1364, which treats outside data processing for general legal services as proper, and noted that using such a service for the client trust fund presents a closer question because SCR 20.22 bars revealing a client's confidence or secret without consent. The committee said that if the rationale of Informal Opinion 1364 is applied, viewing an independent data processing service as comparable to legal secretaries and in-house bookkeepers whose services are utilized by the lawyer under SCR 20.22(3), and the provisions of SCR 20.22 are complied with, the confidentiality issue would not bar use of the computerized system.
The committee's conclusions were that SCR 20.50 prohibits placing all of a firm's funds in the firm's trust account except as that rule permits, and that a computerized system fashioned to comply with SCR 20.50 and SCR 20.22 may be used for accounting purposes.
Currency note
This opinion was issued in 1981, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it applies the former Code provisions cited in the opinion (SCR 20.50 on client funds and SCR 20.22 on confidences and secrets). The current counterparts are SCR 20:1.15 / Model Rule 1.15 on safekeeping client property and trust accounts, and SCR 20:1.6 / Model Rule 1.6 on confidentiality. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.
Common questions
Q: Can a lawyer pool client and firm money in one trust account if software tracks the split?
A: No. The committee concluded that this does not comport with SCR 20.50, which requires a physically separate bank account for client funds; the computer's accounting distinctions do not substitute for that separate account.
Q: Can a lawyer use a computerized accounting system at all?
A: Yes. The committee concluded that a computerized system fashioned to comply with SCR 20.50 and SCR 20.22 may be used for accounting purposes.
Q: Can an outside data processing firm handle trust-account accounting?
A: The committee said that, applying the rationale of ABA Informal Opinion 1364 and complying with SCR 20.22, outside data processing comparable to using secretaries or bookkeepers would not be barred on confidentiality grounds.
Background and rules framework
The opinion interpreted the former trust-account rule, SCR 20.50, which required client funds to be held in an identifiable, separate bank account, and the former confidentiality rule, SCR 20.22, which barred revealing a client's confidences or secrets without consent and treated those whose services the lawyer utilizes as within the rule. The current counterparts are SCR 20:1.15 / Model Rule 1.15 (safekeeping property and trust accounts) and SCR 20:1.6 / Model Rule 1.6 (confidentiality).
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20.50 (client trust funds; commingling) (former Code); current SCR 20:1.15 / Model Rule 1.15
- Wis. SCR 20.22, 20.22(3) (client confidences and secrets; services utilized by the lawyer) (former Code); current SCR 20:1.6 / Model Rule 1.6
Other opinions cited:
- ABA Informal Opinion 1364: outside data processing for legal accounting
See also
- WI Ethics Op. E-88-5: Client Trust Funds and Property
- WI Ethics Op. E-86-9: Retainers and Advances in Trust Accounts
- WI Ethics Op. E-83-7: Applying a Client's Funds Against Fees Owed
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-81-4.pdf
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