Beginning September 15, 2010, Michigan lawyers will be required to maintain their client or third-person trust accounts at financial institutions that have been approved by the State Bar of Michigan. Financial institutions must submit a signed agreement to the State Bar for approval to maintain lawyer trust accounts.
This new requirement is the result of the Michigan Supreme Court's adoption of Rule 1.15A of the Michigan Rules of Professional Conduct. Also known as the Trust Account Overdraft Notification (TAON) rule, the purpose is to provide an early warning system to lawyers and to the Attorney Grievance Commission when activity in a lawyer trust account results in an overdraft.
State Bar President Charles Toy emphasized that comprehensive and accurate recordkeeping by lawyers is central to their role as caretakers. "It is the duty of Michigan lawyers to safeguard client property and to be vigilant in ensuring ethical financial management of their trust accounts."
Lawyers must confirm that their financial institutions are on the list of approved financial institutions posted on the bar's website at www.michbar.org/opinions/TAON.cfm.
Many lawyers maintain both Interest on Lawyer Trust Accounts (IOLTA) and non-IOLTA trust accounts. They must provide written notice to their banks for each non-IOLTA trust account. Those who have existing IOLTA accounts in TAON-approved banks do not need to take further action.
Information about TAON has been communicated to financial institutions doing business in Michigan as a result of a cooperative effort between the State Bar, the Michigan State Bar Foundation, the Michigan Bankers Association, and the Attorney Grievance Commission. For more information please visit www.michbar.org/opinions/TAON.cfm or call Danon Goodrum-Garland at (517) 346-6333.