The Supreme Court of Virginia approved amendments to the state professional conduct rule on safeguarding property.
The changes that go into effect on March 15 were “based on feedback from investigators that lawyers are frequently confused about the arcane terminology in the current rule, some of which is out of step with the way certain terms are used in the accounting field,” the Virginia State Bar Standing Committee on Legal Ethics said in its petition to the court to adopt the amended rule.
The rule holds lawyers to the standard of care of a “professional fiduciary” when holding the property of others.
For example, a lawyer has to place client funds in a trust account, separate from the lawyers’ funds, at a financial institution approved by the state bar.
The changes affect the section on record-keeping, 1.15(c).
They are an attempt to “simplify and clarify the trust account record-keeping requirements, using terminology that is more easily understood and spelling out in the body of the rule exactly what information must be included in the required records,” the committee’s petition said.
The changes will be helpful for lawyers in this confusing area, said Thomas E. Spahn. Spahn is a commercial litigator with McGuireWoods in Tysons, Va., whose practice also includes advising in-house counsel on ethics issues.
“The trust account rules are scary because the requirements are complicated and often counter-intuitive, and because the penalties can be so severe. Lawyers can be sanctioned for record-keeping violations even if no client loses a penny.”