Opinion ID: 1057671
Heading Depth: 1
Heading Rank: 4

Heading: The Trust Account

Text: First, we review the Panel's findings that Allison commingled his personal funds with client funds in his trust account, paid his personal expenses directly from the trust account, and failed to maintain required trust accounting records. We begin by considering Allison's argument that the trial court's finding that he commingled personal funds with client funds in his trust account was erroneous because at all relevant times the only money in the trust account belonged solely and entirely to [him]. Describing his banking practices with respect to his trust account, Allison states that when he received case settlement monies, he would write a check on the trust account for the client's share of the settlement and immediately accompany the client to the bank where he and the client would endorse the settlement check and it would be deposited in the trust account. Allison asserts that at that same time, upon his request, the bank would cash the check to the client and [t]he result was the client's part of the settlement never really got into the trust account because he/she received cash simultaneously with the deposit of the check. Allison's assertion that the client's part of the check never really got into the trust account contradicts his simultaneous assertion that the settlement check was deposited in the trust account. Allison's concession that all of the settlement monies were deposited in the trust account and then the bank cashed the check representing the client's portion of the settlement shows that during the period of time between the initial deposit and the moment funds were removed from the account to pay the client's portion of the settlement, the client's funds and Allison's personal funds were commingled. Further, it appears from the following testimony that Allison admitted that he commingled funds belonging to himself with client funds: Q. Mr. Allison, you testified that you did not commingle funds in your trust account; is that correct? A. I don't think that I said I did not. I said to my knowledge I never knowingly did it. Q. But didn't you knowingly make client deposits into that account? A. I'm sorry. What do you mean? Q. Didn't you make client deposits into that trust account while your money was also in that account? A. Yes. It is our determination that the Panel's finding that Allison commingled personal funds with client funds was supported by substantial and material evidence. Allison's commingling of personal funds with client funds in his trust account was a violation of Tennessee Supreme Court Rule 8, RPC 1.15(a), which requires a lawyer to hold the property and funds of clients separate from the lawyer's own property and funds. Next, Allison does not deny, and his testimony before the Panel confirmed, that on many occasions, he paid personal expenses from funds held in his trust account. During the time Allison was paying these personal expenses, the only funds the account contained represented attorney's fees belonging solely to Allison, and there is no proof that, in paying such personal expenses, Allison misappropriated any client funds or engaged in any acts of dishonesty, fraud, deceit, or misrepresentation. Nevertheless, Allison's use of his trust account to pay personal expenses clearly constituted a violation of Tennessee Supreme Court Rule 8, RPC 1.15(a)(1), which, in pertinent part, states that [a] lawyer may deposit the lawyer's own funds in [the trust account] for the sole purpose of paying bank service charges on that account, but only in an amount reasonably necessary for that purpose. This Rule effectively prohibits an attorney from depositing his or her own monies in the trust account in order to use the account as a personal checking account as was done by Allison. As to the Panel's finding that Allison failed to maintain required trust accounting records, Allison admitted that during 2003, and for a portion of 2004, he did not maintain a trust account receipt book, trust account disbursement records, or client ledger sheets and failed to reconcile his trust account bank statements. Requirements related to the maintenance of trust account records are addressed by Tennessee Supreme Court Rule 9, section 29(A)(2), as follows: Every lawyer engaged in the practice of law in Tennessee shall maintain ... the records of the [trust] accounts, including checkbooks, canceled checks, check stubs, vouchers, ledgers, journals, closing statements, accounting or other statements of disbursements rendered to clients or other parties with regard to trust funds or similar equivalent records clearly and expressly reflecting the date, amount, source and explanation for all receipts, withdrawals, deliveries and disbursements of the funds or other property of a client. The Panel's finding that Allison failed to maintain required trust account records was supported by substantial and material evidence, and this conduct violated Tennessee Supreme Court Rule 9, section 29(A)(2).