WSR 15-13-031
RULES OF COURT
STATE SUPREME COURT
[June 4, 2015]
IN THE MATTER OF PROPOSED AMENDMENTS TO ELC TITLE 15 - IOLTA, AUDITS AND TRUST ACCOUNT DRAFT NOTIFICATION—ELC 3.6—MAINTENANCE OF RECORDS AND ELC 7.2—INTERIM SUSPENSION IN OTHER CIRCUMSTANCES—REGULATIONS 101-106
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ORDER
NO. 25700-A-1112
The Washington State Bar Association, having recommended the Proposed Amendments to ELC Title 15 - IOLTA, Audits and Trust Account Draft Notification—ELC 3.6—Maintenance of Records and ELC 7.2—Interim Suspension in Other Circumstances—Regulations 101-106, and the Court having considered the amendments and comments submitted thereto;
Now, therefore, it is hereby
ORDERED:
(a) That pursuant to the provisions of GR 9(g), the proposed amendments as shown below are to be published for comment in the Washington Reports, Washington Register, Washington State Bar Association and Administrative Office of the Court's websites expeditiously.
(b) The purpose statement as required by GR 9(e), is published solely for the information of the Bench, Bar and other interested parties.
(c) Comments are to be submitted to the Clerk of the Supreme Court by either U.S. Mail or Internet E-Mail by no later than September 30, 2015. Comments may be sent to the following addresses: P.O. Box 40929, Olympia, Washington 98504-0929, or supreme@courts.wa.gov. Comments submitted by e-mail message must be limited to 1500 words.
DATED at Olympia, Washington this 4th day of June, 2015.
 
For the Court
 
 
 
Madsen, C.J.
 
CHIEF JUSTICE
 
GR 9 COVER SHEET
Suggested Amendments to
Rules for Enforcement of Lawyer Conduct (ELC)
with conforming amendments repealing
Audit Regulations 101-106
A. Proponent
Washington State Bar Association
1325 4th Avenue, Suite 600
Seattle, WA 98101-2539
B. Spokesperson
Douglas J. Ende
Chief Disciplinary Counsel
Washington State Bar Association
1325 4th Avenue, Suite 600
Seattle, WA 98101-2539
C. Purpose
These amendments are suggested to revise, update, and clarify various procedures of the Random Examination Program as set forth in Title 15 of the Rules for Enforcement of Lawyer Conduct (ELC) and related ELC. It is also suggested that existing Regulations 101-106 be repealed because the matters formerly addressed by regulation will now be governed exclusively by the ELC. The most significant changes and clarifications suggested herein include the following:
•
The suggested amendments to the ELC anticipate the repeal of existing Audit Regulations 101-106. The matters addressed by the regulations will be governed directly in the amended ELC. Regulations 101-105 were adopted prior to 1990, and Regulation 106 (pertaining to the content of the trust account information form) was added in 1990 under the former Rules for Lawyer Discipline. Other than Regulation 106, which was amended once in 2009, these regulations have not been amended to account for the advent of the ELC in 2002 (and extensive ELC amendments in 2014), amendments to RPC 1.15 A & B in 2006, 2007, 2008, 2009, 2011, and 2013, and changes to staffing structures and internal procedures at the Office of Disciplinary Counsel and the Washington State Bar Association. Furthermore, the regulations have never been published alongside other Washington State Court Rules on the Washington Courts website or in widely used private publications such as the Thomson-Reuters Washington Court Rules—State. Washington lawyers will benefit from all rules relating to lawyer trust accounts being accessible in one place. With respect to Regulation 106, its repeal is not intended to affect the Washington State Bar Association's authority under ELC 15.5(a) to require disclosure of the information specified in the existing regulation.
•
The suggested amendments clarify that a random examination of a lawyer's trust account is a process distinct from a disciplinary investigation. References to trust account examinations that are conducted as part of a disciplinary investigation of a grievance under ELC 5.3 (sometimes known as a "for-cause audit") are removed from Title 15 in order to eliminate any confusion between the two types of trust account examinations. A clear procedural line is drawn between an investigative examination and a random examination, with action by a Review Committee of the Disciplinary Board being required before a random examination becomes a disciplinary investigation.
•
The responsibility for making a determination following a random examination as to whether a re-examination should be conducted, or whether a disciplinary investigation should be opened, or whether the matter should be dismissed, is transferred from the Disciplinary Board Chair to a Review Committee of the Disciplinary Board. Individualized review and decision-making on routine reports and recommendations of disciplinary counsel is not a typical duty of the Disciplinary Board Chair. By contrast, Review Committees are experienced in reviewing reports and determining whether a recommended action is appropriate. Review of random examination reports and recommendations within the Disciplinary Board's review-committee system will capitalize on existing system efficiencies and enhance the consistency of decision-making.
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The rules are clarified as to what can be required of a lawyer whose trust account is selected for examination, and a procedures is spelled out to address situations in which lawyers do not comply with the duty to cooperate with a random examination.
•
The interval following a random examination, before which another random examination maybe conducted, is extended from two years (as specified by Regulation 105(a)) to seven years. The seven-year minimum interval, based on the RPC 1.15B(a) requirement that trust account records be retained for at least seven years, will avoid random recurrence of a trust account examination within a relatively short time-frame.
•
Random selection will be required by rule, rather than subject to indeterminate methodologies to be established by the Disciplinary Board and the WSBA Board of Governors. Additionally, a mechanism is provided to authorize a Review Committee to consider a challenge to the selection of a lawyer or law firm for random examination.
•
The retention interval for random examination records is changed from 60 days (the period now specified in the regulations) to three years, which is the same period for dismissed disciplinary grievance materials.
Following are summaries and explanations of each suggested change:
•
ELC 15.1 clarifies that the authorization to conduct random examinations of the trust accounts of lawyers and law firms rests with the Office of Disciplinary Counsel (ODC) rather than ubiquitously with "the Association." All references to trust account examinations conducted as part of a disciplinary investigation are removed. The rule authorizes both initial random examinations and re-examinations and provides specified options at the conclusion of an examination or re-examination as to further action, if any, that may be ordered. The authority of Review Committees to take action based on reports from ODC is set forth, and the rule clarifies that action by a Review Committee is not reviewable.
•
ELC 15.2 removes references to a lawyer's duty to cooperate with a disciplinary investigation of the trust account, as that is adequately addressed in ELC Title 5 governing grievance investigations and disposition. The rule clarifies that the duty to cooperate with a random examination extends to both individual lawyers and to law firms and to any lawyer employed by or a member of the law firm. The amendments are not intended to alter the existing scope of an examiner's access to records or the duties of the lawyer or law firm to cooperate with an examination. A new provision is added to address situations where a lawyer does not comply with the duty to cooperate with a random examination. The new provision is modeled on ELC 5.3(h), which applies when a lawyer does not cooperate with a disciplinary investigation.
•
ELC 15.3 is amended to broadly encompass all issues of confidentiality of random-examination information. New provisions for maintaining client confidentiality are added to the rule, modeled on the disciplinary-investigation provisions of ELC 5.4 (b)(2) (as amended in 2014). Similarly, the provisions regarding disclosure are expanded and clarified, modeled on ELC 5.4 (b)(3) (as amended in 2014). The net effect of these changes is to assure the same high degree of protection for client confidentiality as is provided in disciplinary investigations.
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ELC 15.4(d) is changed to reference the "Office of Disciplinary Counsel" rather than the "Office of Disciplinary Counsel of the Association," to conform to the usage throughout the ELC.
•
ELC 15.6 authorizing the promulgation of regulations regarding Title 15 is repealed and the rule number is reserved in order to maintain unchanged the numbering of ELC 15.7 (pertaining to IOLTA and the Legal Foundation of Washington). By this change, the existing regulations approved March 29, 1990 [Order No. 25700-A-499] as revised on July 8, 2009 [Order No. 25700-A-923] will be superseded. A copy of affected Regulations 101-106 is also included as an appendix to these materials.
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ELC 3.6 is amended to add a new subsection regarding the destruction of random examination files. Other amendments address the existence of (and distinction between) disciplinary grievance records and random examination records.
•
ELC 7.2 (a)(3) on interim suspensions is conformed to reflect amendments to ELC 15.2 (b)(1) authorizing the interim suspension of a lawyer who fails to cooperate with a random examination.
D. Hearing
The proponent does not request a public hearing.
E. Expedited Consideration
The proponent requests expedited consideration so that the amendments can be adopted and made effective as soon as practicable. The existing audit regulations governing random examinations are obsolete or obsolescent in light of post-1990 amendments to the ELC and the RPC and changes to staffing structures and internal procedures at the Office of Disciplinary Counsel and the Washington State Bar Association. Accordingly, prompt amendment of the ELC will facilitate the ability of the Office of Disciplinary Counsel to conduct credible and effective random examinations at the earliest opportunity, as well as provide appropriate safeguards and procedural clarity for lawyer-examinees.
F. Appendix
The appendix consists of existing Audit Regulations 101-106 with the notation [SUPERSEDED], reflecting the suggested repeal of those regulations. Also appended this Cover Sheet is a Disciplinary Board order dated March 9, 2015, recommending presentation of these amendments, together with the repeal of Regulations 101-106, to the WSBA Board of Governors and the Supreme Court.
SUGGESTED AMENDMENTS TO
ELC TITLE 15, ELC 3.6 & ELC 7.2
Red-Line Version of Suggested Amendments
TITLE 15 IOLTA, TRUST ACCOUNT EXAMINATIONS, OVERDRAFT NOTIFICATION, AND IOLTA
RULE 15.1 AUDIT AND INVESTIGATION OF BOOKS AND RECORDS RANDOM EXAMINATION OF BOOKS AND RECORDS
The Association has the following authority to examine, investigate, and audit the books and records of any lawyer to ascertain and obtain reports on whether the lawyer has been and is complying with RPC 1.15A:
(a) Random Examination. The Board may authorize examinations of the books and records of any lawyer or law firm selected at random. Only the lawyer or law firm's books and records may be examined in an examination under this section.
(b) Audit. After an examination under section (a) or as part of an investigation under rule 5.3, the Association may conduct an appropriate audit of the lawyer's or firm's books and records, including verification of the information in those records from available sources.
(a) Authorization. The Office of Disciplinary Counsel is authorized to examine the books and records of any lawyer or law firm selected at random to determine whether the lawyer or law firm is complying with RPC 1.15A, 1.15B, and other Rules of Professional Conduct referencing RPC 1.15A or RPC 1.15B. As used in this Title, the term law firm has the same meaning as prescribed in RPC 1.0(c).
(b) Selection.
(1) Method. The selection of the lawyers or law firms to be examined will be limited to lawyers on active status and will utilize the principle of random selection by Bar Number of all active status lawyers.
(2) Law firms. If the number drawn is that of a lawyer who is an employee or member of a law firm, the entire law firm will be examined. If the lawyer or law firm has been randomly examined under this rule within seven years preceding the drawing, the lawyer or law firm will not be subject to random examination.
(3) Exclusions. If the number drawn is that of a lawyer employed by the Association, a hearing officer, a conflicts review officer or conflicts review officer pro tem, a member of the Disciplinary Board, a staff attorney or judicial officer of the Supreme Court, or a lawyer who has been assigned a case as an adjunct disciplinary counsel, special disciplinary counsel, or appointed counsel in a disability matter pursuant to rule 8.2 (c)(2), the lawyer will not be subject to random examination.
(c) Examination and Re-examination. An examination denotes the initial review following a lawyer or law firm being selected at random. A re-examination denotes a further examination as may be ordered by a review committee under section (e) of this rule. Examinations and re-examinations under this rule will entail a review and testing of the internal controls and procedures used by the lawyer or law firm to receive, hold, disburse and account for money or property as required by RPC 1.15A, and a review of the records of the lawyer or law firm required by RPC 1.15B. A lawyer or law firm is required to cooperate with the examination or re-examination as set forth in rule 15.2.
(d) Conclusion. At the conclusion of an examination or re-examination, the Office of Disciplinary Counsel may:
(1) Conclude the examination by issuing a report to the lawyer and/or law firm summarizing the Office of Disciplinary Counsel's findings and taking no further action;
(2) Issue a report to the lawyer and/or law firm summarizing the Office of Disciplinary Counsel's findings and either:
(A) report the matter to a review committee with a recommendation to order corrective action by the lawyer and/or law firm and a re-examination of the books and records of the lawyer and/or law firm to commence within one year; or
(B) report the matter to a review committee with a recommendation to order a disciplinary grievance be opened under rule 5.3.
(e) Review Committee Action. In reviewing matters under this rule, a review committee has the following authority:
(1) In reviewing reports of the Office of Disciplinary Counsel under section (d) of this rule, including any response by a lawyer examined or re-examined under this rule, a review committee may:
(A) dismiss the matter;
(B) order corrective action and a re-examination to commence within one year; or
(C) order that the Office of Disciplinary Counsel open a disciplinary grievance under rule 5.3 regarding the matter.
(2) A review committee may review a challenge to the selection of a lawyer or law firm in section (b) of this rule if review is requested by a lawyer or law firm within 30 days of mailing of the notice of selection.
(3) The action of a review committee under this rule is not reviewable.
RULE 15.2 COOPERATION OF LAWYER AND LAW FIRM
Any lawyer or firm who is subject to examination, investigation, or audit under rule 5.3 or rule 15.1 must cooperate with the person conducting the examination, investigation, or audit, subject only to the proper exercise of any privilege against self incrimination, by:
(a) producing forthwith all evidence, books, records, and papers requested for the examination, investigation, or audit;
(b) furnishing forthwith any explanations required for the examination, investigation, or audit;
(c) producing written authorization, directed to any bank or depository, for the person to examine, investigate, or audit trust and general accounts, safe deposit boxes, and other forms of maintaining trust property by the lawyer in the bank or depository.
(a) Cooperation Required. Any lawyer or law firm who is subject to examination or re-examination under rule 15.1, and any lawyer employed by or a member of such a law firm, must cooperate with the person conducting the examination or re-examination, subject only to the proper exercise of any privilege against self-incrimination, by:
(1) producing forthwith all evidence, books, records, and papers requested for the examination or re-examination;
(2) furnishing forthwith any explanations required for the examination or re-examination; and
(3) producing written authorization, directed to any bank or depository, for the person to examine or re-examine trust and general accounts, safe deposit boxes, and other forms of maintaining trust property by the lawyer or law firm in the bank or depository.
(b) Failure To Cooperate.
(1) Noncooperation Deposition. If a lawyer has not complied with any request made under this rule for more than 30 days, the Office of Disciplinary Counsel may notify the lawyer that failure to comply within ten days may result in the lawyer's deposition or subject the lawyer to interim suspension under rule 7.2. Ten days after this notice, disciplinary counsel may serve the lawyer with a subpoena for a deposition. Any deposition conducted after the ten day period and necessitated by the lawyer's continued failure to cooperate may be conducted at any place in Washington State.
(2) Costs and Expenses.
(A) Regardless of the underlying matter's ultimate disposition, a lawyer who has been served with a subpoena under this rule is liable for the actual costs of the deposition, including but not limited to service fees, court reporter fees, travel expenses, and the cost of transcribing the deposition, if ordered by disciplinary counsel. In addition, a lawyer who has been served with a subpoena for a deposition under this rule is liable for a reasonable attorney fee of $500.
(B) The procedure for assessing costs and expenses is as follows:
(i) The Office of Disciplinary Counsel applies to a review committee by itemizing the cost and expenses and stating the reasons for the deposition.
(ii) The lawyer has ten days to respond to the Office of Disciplinary Counsel's application.
(iii) The review committee by order assesses appropriate costs and expenses.
(iv) Rule 13.9(f) governs Board review of the review committee order.
(3) Grounds for Discipline. A lawyer's failure to cooperate fully and promptly with an examination as required by this rule is also grounds for discipline.
RULE 15.3 DISCLOSURE CONFIDENTIALITY
The examination or audit report is only available to the Board, disciplinary counsel, and the lawyer or firm examined, investigated, or audited, unless a disciplinary proceeding is commenced in which case the disclosure provisions of title 3 apply.
(a) Maintaining Client Confidentiality. In the course of conducting examinations and re-examinations under this Title, the Office of Disciplinary Counsel receives, reviews and holds attorney-client privileged and other confidential client information under and in furtherance of the Supreme Court's authority to regulate the practice of law. Disclosure of information to the Office of Disciplinary Counsel is not prohibited by RPC 1.6 or RPC 1.9, and such disclosure does not waive any attorney-client privilege. Notwithstanding any other provision of these rules, if the lawyer identifies specific client information that is privileged or confidential and requests that it be treated as confidential, the Office of Disciplinary Counsel must maintain the confidentiality of the information unless the client consents to disclosure.
(b) Disclosure. All information related to an examination or re-examination under rule 15.1, including any docket maintained under rule 3.6(d), is confidential and is held by the Office of Disciplinary Counsel under the authority of the Supreme Court. Information under rule 15.1 is only available to the Office of Disciplinary Counsel, the lawyer or law firm examined or re-examined, and the Board or any review committee considering the matter under this Title. When a disciplinary grievance is opened under rule 15.1, the disclosure provisions of Title 3 apply to all information related to the examination and/or re-examination that relates to the disciplinary grievance. Nothing in these rules waives or requires waiver of any lawyer's own privilege or other protection as a client against the disclosure of confidences or secrets.
RULE 15.4 TRUST ACCOUNT OVERDRAFT NOTIFICATION
(a) Overdraft Notification Agreement Required.
[No Change]
(b) Overdraft Reports.
[No Change]
(c) Costs.
[No Change]
(d) Notification by Lawyer. Every lawyer or law firm who receives notification that any instrument presented against a trust account of the lawyer or law firm that was presented against insufficient funds, whether or not the instrument was honored, must promptly notify the Office of Disciplinary Counsel of the Association of the information required by section (b). The lawyer or law firm must include a full explanation of the cause of the overdraft.
RULE 15.5 No Change
[No Change]
RULE 15.6 REGULATIONS RESERVED
The Disciplinary Board may adopt regulations regarding the powers in this title subject to the approval of the Board of Governors and the Supreme Court.
RULE 15.7
[No Change]
RULE 3.6 MAINTENANCE OF RECORDS
(a) Permanent Records. In any matter in which a disciplinary sanction or admonition has been imposed or the lawyer has resigned in lieu of discipline under rule 9.3, the bar file and transcripts of the proceeding are permanent records. Related file materials, including investigative files, may be maintained in disciplinary counsel's discretion. Exhibits may be returned to the party supplying them, but copies should be retained where possible.
(b) Destruction of Grievance and Investigation Files. In any matter in which a grievance or investigation has been dismissed without the imposition of a disciplinary sanction or admonition, whether following a hearing or otherwise, file materials relating to the matter may be destroyed three years after the dismissal first occurred, and must be destroyed at that time on the respondent lawyer's request unless the files are being used in an ongoing investigation or unless other good cause exists for retention. However, file materials on a matter dismissed after a diversion must be retained at least five years after the dismissal. If disciplinary counsel opposes a request by a respondent for destruction of files under this rule, the Board rules on that request.
(c) Retention of Docket. If a file on a matter has been destroyed under section (b), the Association may retain a docket record of the matter for statistical purposes only. That docket record must not include the name or other identification of the respondent.
(d) Destruction of Random Examination Files. In any random examination matter concluded under rule 15.1 without a disciplinary grievance being ordered, the file materials relating to the matter may be destroyed three years after the matter was concluded, and must be destroyed at that time on the respondent lawyer's request unless the files are being used in an ongoing investigation or unless other good cause exists for retention. In any random examination matter that a review committee directs be made the subject of a disciplinary grievance, the materials related to the random examination will be made part of the disciplinary grievance. A docket, limited to the name of the lawyer and any law firm examined or re-examined under rule 15.1, together with the date the examination or re-examination was concluded, will be maintained for a period of seven years for the purpose of determining prior examinations under rule 15.1(b).
(e) Review. If disciplinary counsel opposes a request by a respondent for destruction of files under this rule, the Board rules on that request.
(df) Deceased Lawyers. Records and files relating to a deceased lawyer, including permanent records, may be destroyed at any time in disciplinary counsel's discretion.
RULE 7.2 INTERIM SUSPENSION IN OTHER CIRCUMSTANCES
(a) Types of Interim Suspension.
(1) Risk to Public. Disciplinary counsel may petition the Supreme Court for an order suspending the respondent lawyer during the pendency of any proceeding under these rules if:
(A) it appears that a respondent's continued practice of law poses a substantial threat of serious harm to the public and a review committee recommends an interim suspension; or
(B) a review committee orders a hearing on the capacity of a lawyer to practice law under rule 8.2 (d)(1); or
(C) when a hearing officer or the chief hearing officer orders supplemental proceedings on a respondent lawyer's capacity to defend a disciplinary proceeding under rule 8.3.
(2) Board Recommendation for Disbarment. When the Board enters a decision recommending disbarment, disciplinary counsel must file a petition for the respondent's suspension during the remainder of the proceedings. The respondent must be suspended absent an affirmative showing that the respondent's continued practice of law will not be detrimental to the integrity and standing of the bar and the administration of justice, or be contrary to the public interest. If the Board's decision is not appealed and becomes final, the petition need not be filed, or if filed may be withdrawn.
(3) Failure To Cooperate with Investigation. When any lawyer fails without good cause to comply with a request under rule 5.3(g) or rule 15.2(a) for information or documents, or with a subpoena issued under rule 5.3(h) or rule 15.2(b), or fails to comply with disability proceedings as specified in rule 8.2(d), disciplinary counsel may petition the Court for an order suspending the lawyer pending compliance with the request or subpoena. A petition may not be filed if the request or subpoena is the subject of a timely objection under rule 5.5(e) and the hearing officer has not yet ruled on that objection. If a lawyer has been suspended for failure to cooperate and thereafter complies with the request or subpoena, the lawyer may petition the Court to terminate the suspension on terms the Court deems appropriate.
(b) Procedure.
(1) Petition. A petition to the Court under this rule must set forth the acts of the lawyer constituting grounds for suspension, and if filed under subsection (a)(2) must include a copy of the Board's decision. The petition may be supported by documents or affidavits. The Association must serve the petition by mail on the day of filing. In addition, a copy of the petition must be personally served on the lawyer no later than the date of service of the show cause order.
(2) Show Cause Order. Upon filing of the petition, the Chief Justice orders the lawyer to appear before the Court on a date set by the Chief Justice, and to show cause why the petition for suspension should not be granted. Disciplinary counsel must have a copy of the order to show cause personally served on the lawyer at least ten days before the scheduled show cause hearing. Subsection (b)(5) notification requirements must be included in the show cause order.
(3) Answer to Petition. The lawyer may answer the petition. An answer may be supported by documents or affidavits. Failure to answer does not result in default or waive the right to appear at the show cause hearing.
(4) Filing of Answer. A copy of any answer must be filed with both the Court and disciplinary counsel by the date specified in the show cause order, which will be at least five days before the scheduled show cause hearing.
(5) Notification. The lawyer must inform the court no less than 7 days prior to the show cause hearing, whether the lawyer will appear for the show cause hearing, or the hearing will be stricken and the Court will decide the matter without oral argument.
(6) Application of Other Rules. If the Court enters an order suspending the lawyer, the rules relating to suspended lawyers, including title 14, apply.
Clean-Copy Version of Suggested Amendments
TITLE 15 TRUST ACCOUNT EXAMINATIONS, OVERDRAFT NOTIFICATION, AND IOLTA
[CLEAN COPY]
RULE 15.1 RANDOM EXAMINATION OF BOOKS AND RECORDS
(a) Authorization. The Office of Disciplinary Counsel is authorized to examine the books and records of any lawyer or law firm selected at random to determine whether the lawyer or law firm is complying with RPC 1.15A, RPC 1.15B, and other Rules of Professional Conduct referencing RPC 1.15A or RPC 1.15B. As used in this Title, the term law firm has the same meaning as prescribed in RPC 1.0(c).
(b) Selection.
(1) Method. The selection of the lawyers or law firms to be examined will be limited to lawyers on active status and will utilize the principle of random selection by Bar Number of all active status lawyers.
(2) Law firms. If the number drawn is that of a lawyer who is an employee or member of a law firm, the entire law firm will be examined. If the lawyer or law firm has been randomly examined under this rule within seven years preceding the drawing, the lawyer or law firm will not be subject to random examination.
(3) Exclusions. If the number drawn is that of a lawyer employed by the Association, a hearing officer, a conflicts review officer or conflicts review officer pro tem, a member of the Disciplinary Board, a staff attorney or judicial officer of the Supreme Court, or a lawyer who has been assigned a case as an adjunct disciplinary counsel, special disciplinary counsel, or appointed counsel in a disability matter pursuant to rule 8.2 (c)(2), the lawyer will not be subject to random examination.
(c) Examination and Re-examination. An examination denotes the initial review following a lawyer or law firm being selected at random. A re-examination denotes a further examination as may be ordered by a review committee under section (e) of this rule. Examinations and re-examinations under this rule will entail a review and testing of the internal controls and procedures used by the lawyer or law firm to receive, hold, disburse and account for money or property as required by RPC 1.15A, and a review of the records of the lawyer or law firm required by RPC 1.15B. A lawyer or law firm is required to cooperate with the examination or re-examination as set forth in rule 15.2.
(d) Conclusion. At the conclusion of an examination or re-examination, the Office of Disciplinary Counsel may:
(1) Conclude the examination by issuing a report to the lawyer and/or law firm summarizing the Office of Disciplinary Counsel's findings and taking no further action;
(2) Issue a report to the lawyer and/or law firm summarizing the Office of Disciplinary Counsel's findings and either:
(A) report the matter to a review committee with a recommendation to order corrective action by the lawyer and/or law firm and a re-examination of the books and records of the lawyer and/or law firm to commence within one year; or
(B) report the matter to a review committee with a recommendation to order a disciplinary grievance be opened under rule 5.3.
(e) Review Committee Action. In reviewing matters under this rule, a review committee has the following authority:
(1) In reviewing reports of the Office of Disciplinary Counsel under section (d) of this rule, including any response by a lawyer examined or re-examined under this rule, a review committee may:
(A) dismiss the matter;
(B) order corrective action and a re-examination to commence within one year; or
(C) order that the Office of Disciplinary Counsel open a disciplinary grievance under rule 5.3 regarding the matter.
(2) A review committee may review a challenge to the selection of a lawyer or law firm in section (b) of this rule if review is requested by a lawyer or law firm within 30 days of mailing of the notice of selection.
(3) The action of a review committee under this rule is not reviewable.
[CLEAN COPY]
RULE 15.2 COOPERATION OF LAWYER AND LAW FIRM
(a) Cooperation Required. Any lawyer or law firm who is subject to examination or re-examination under rule 15.1, and any lawyer employed by or a member of such a law firm, must cooperate with the person conducting the examination or re-examination, subject only to the proper exercise of any privilege against self-incrimination, by:
(1) producing forthwith all evidence, books, records, and papers requested for the examination or re-examination;
(2) furnishing forthwith any explanations required for the examination or re-examination; and
(3) producing written authorization, directed to any bank or depository, for the person to examine or re-examine trust and general accounts, safe deposit boxes, and other forms of maintaining trust property by the lawyer or law firm in the bank or depository.
(b) Failure To Cooperate.
(1) Noncooperation Deposition. If a lawyer has not complied with any request made under this rule for more than 30 days, the Office of Disciplinary Counsel may notify the lawyer that failure to comply within ten days may result in the lawyer's deposition or subject the lawyer to interim suspension under rule 7.2. Ten days after this notice, disciplinary counsel may serve the lawyer with a subpoena for a deposition. Any deposition conducted after the ten day period and necessitated by the lawyer's continued failure to cooperate may be conducted at any place in Washington State.
(2) Costs and Expenses.
(A) Regardless of the underlying matter's ultimate disposition, a lawyer who has been served with a subpoena under this rule is liable for the actual costs of the deposition, including but not limited to service fees, court reporter fees, travel expenses, and the cost of transcribing the deposition, if ordered by disciplinary counsel. In addition, a lawyer who has been served with a subpoena for a deposition under this rule is liable for a reasonable attorney fee of $500.
(B) The procedure for assessing costs and expenses is as follows:
(i) The Office of Disciplinary Counsel applies to a review committee by itemizing the cost and expenses and stating the reasons for the deposition.
(ii) The lawyer has ten days to respond to the Office of Disciplinary Counsel's application.
(iii) The review committee by order assesses appropriate costs and expenses.
(iv) Rule 13.9(f) governs Board review of the review committee order.
(3) Grounds for Discipline. A lawyer's failure to cooperate fully and promptly with an examination as required by this rule is also grounds for discipline.
[CLEAN COPY]
RULE 15.3 CONFIDENTIALITY
(a) Maintaining Client Confidentiality. In the course of conducting examinations and re-examinations under this Title, the Office of Disciplinary Counsel receives, reviews and holds attorney-client privileged and other confidential client information under and in furtherance of the Supreme Court's authority to regulate the practice of law. Disclosure of information to the Office of Disciplinary Counsel is not prohibited by RPC 1.6 or RPC 1.9, and such disclosure does not waive any attorney-client privilege. Notwithstanding any other provision of these rules, if the lawyer identifies specific client information that is privileged or confidential and requests that it be treated as confidential, the Office of Disciplinary Counsel must maintain the confidentiality of the information unless the client consents to disclosure.
(b) Disclosure. All information related to an examination or re-examination under rule 15.1, including any docket maintained under rule 3.6(d), is confidential and is held by the Office of Disciplinary Counsel under the authority of the Supreme Court. Information under rule 15.1 is only available to the Office of Disciplinary Counsel, the lawyer or law firm examined or re-examined, and the Board or any review committee considering the matter under this Title. When a disciplinary grievance is opened under rule 15.1, the disclosure provisions of Title 3 apply to all information related to the examination and/or re-examination that relates to the disciplinary grievance. Nothing in these rules waives or requires waiver of any lawyer's own privilege or other protection as a client against the disclosure of confidences or secrets.
[CLEAN COPY]
RULE 15.4 TRUST ACCOUNT OVERDRAFT NOTIFICATION
(a) Overdraft Notification Agreement Required.
[No Change]
(b) Overdraft Reports.
[No Change]
(c) Costs.
[No Change]
(d) Notification by Lawyer. Every lawyer or law firm who receives notification that any instrument presented against a trust account of the lawyer or law firm that was presented against insufficient funds, whether or not the instrument was honored, must promptly notify the Office of Disciplinary Counsel of the information required by section (b). The lawyer or law firm must include a full explanation of the cause of the overdraft. [CLEAN COPY]
RULE 15.5 [No Change]
[CLEAN COPY]
RULE 15.6 RESERVED
[CLEAN COPY]
RULE 15.7 [No Change]
[CLEAN COPY]
RULE 3.6 MAINTENANCE OF RECORDS
(a) Permanent Records. In any matter in which a disciplinary sanction or admonition has been imposed or the lawyer has resigned in lieu of discipline under rule 9.3, the bar file and transcripts of the proceeding are permanent records. Related file materials, including investigative files, may be maintained in disciplinary counsel's discretion. Exhibits may be returned to the party supplying them, but copies should be retained where possible.
(b) Destruction of Grievance and Investigation Files. In any matter in which a grievance or investigation has been dismissed without the imposition of a disciplinary sanction or admonition, whether following a hearing or otherwise, file materials relating to the matter may be destroyed three years after the dismissal first occurred, and must be destroyed at that time on the respondent lawyer's request unless the files are being used in an ongoing investigation or unless other good cause exists for retention. However, file materials on a matter dismissed after a diversion must be retained at least five years after the dismissal.
(c) Retention of Docket. If a file on a matter has been destroyed under section (b), the Association may retain a docket record of the matter for statistical purposes only. That docket record must not include the name or other identification of the respondent.
(d) Destruction of Random Examination Files. In any random examination matter concluded under rule 15.1 without a disciplinary grievance being ordered, the file materials relating to the matter may be destroyed three years after the matter was concluded, and must be destroyed at that time on the respondent lawyer's request unless the files are being used in an ongoing investigation or unless other good cause exists for retention. In any random examination matter that a review committee directs be made the subject of a disciplinary grievance, the materials related to the random examination will be made part of the disciplinary grievance. A docket, limited to the name of the lawyer and any law firm examined or re-examined under rule 15.1, together with the date the examination or re-examination was concluded, will be maintained for a period of seven years for the purpose of determining prior examinations under rule 15.1(b).
(e) Review. If disciplinary counsel opposes a request by a respondent for destruction of files under this rule, the Board rules on that request.
(f) Deceased Lawyers. Records and files relating to a deceased lawyer, including permanent records, may be destroyed at any time in disciplinary counsel's discretion.
[CLEAN COPY]
RULE 7.2 INTERIM SUSPENSION IN OTHER CIRCUMSTANCES
(a) Types of Interim Suspension.
(1) Risk to Public. Disciplinary counsel may petition the Supreme Court for an order suspending the respondent lawyer during the pendency of any proceeding under these rules if:
(A) it appears that a respondent's continued practice of law poses a substantial threat of serious harm to the public and a review committee recommends an interim suspension; or
(B) a review committee orders a hearing on the capacity of a lawyer to practice law under rule 8.2 (d)(1); or
(C) when a hearing officer or the chief hearing officer orders supplemental proceedings on a respondent lawyer's capacity to defend a disciplinary proceeding under rule 8.3.
(2) Board Recommendation for Disbarment. When the Board enters a decision recommending disbarment, disciplinary counsel must file a petition for the respondent's suspension during the remainder of the proceedings. The respondent must be suspended absent an affirmative showing that the respondent's continued practice of law will not be detrimental to the integrity and standing of the bar and the administration of justice, or be contrary to the public interest. If the Board's decision is not appealed and becomes final, the petition need not be filed, or if filed may be withdrawn.
(3) Failure To Cooperate with Investigation. When any lawyer fails without good cause to comply with a request under rule 5.3(g) or rule 15.2(a) for information or documents, or with a subpoena issued under rule 5.3(h) or rule 15.2(b), or fails to comply with disability proceedings as specified in rule 8.2(d), disciplinary counsel may petition the Court for an order suspending the lawyer pending compliance with the request or subpoena. A petition may not be filed if the request or subpoena is the subject of a timely objection under rule 5.5(e) and the hearing officer has not yet ruled on that objection. If a lawyer has been suspended for failure to cooperate and thereafter complies with the request or subpoena, the lawyer may petition the Court to terminate the suspension on terms the Court deems appropriate.
(b) Procedure.
(1) Petition. A petition to the Court under this rule must set forth the acts of the lawyer constituting grounds for suspension, and if filed under subsection (a)(2) must include a copy of the Board's decision. The petition may be supported by documents or affidavits. The Association must serve the petition by mail on the day of filing. In addition, a copy of the petition must be personally served on the lawyer no later than the date of service of the show cause order.
(2) Show Cause Order. Upon filing of the petition, the Chief Justice orders the lawyer to appear before the Court on a date set by the Chief Justice, and to show cause why the petition for suspension should not be granted. Disciplinary counsel must have a copy of the order to show cause personally served on the lawyer at least ten days before the scheduled show cause hearing. Subsection (b)(5) notification requirements must be included in the show cause order.
(3) Answer to Petition. The lawyer may answer the petition. An answer may be supported by documents or affidavits. Failure to answer does not result in default or waive the right to appear at the show cause hearing.
(4) Filing of Answer. A copy of any answer must be filed with both the Court and disciplinary counsel by the date specified in the show cause order, which will be at least five days before the scheduled show cause hearing.
(5) Notification. The lawyer must inform the court no less than 7 days prior to the show cause hearing, whether the lawyer will appear for the show cause hearing, or the hearing will be stricken and the Court will decide the matter without oral argument.
(6) Application of Other Rules. If the Court enters an order suspending the lawyer, the rules relating to suspended lawyers, including title 14, apply.
GR 9 Cover Sheet – Appendix
REGULATIONS 101 – 106 [Adopted effective March 29, 1990. Amended effective July 8, 2009. Superseded by amendment to Rule for Enforcement of Lawyer Conduct 15.6 effective _____.]
REGULATION 101. DEFINITIONS
As used in these Regulations the following definitions shall apply:
(a) An "active member" shall mean any person licensed to practice law in the State of Washington as an active member of the Washington State Bar Association.
(b) The "Board" shall mean the Disciplinary Board established pursuant to RLD 2.3.
(c) The term "Chairperson" shall mean the chairperson of the Board.
(d) The term "firm" means any attorney or group of attorneys practicing law in the State of Washington, regardless of the form or legal entity under which such practice is conducted.
(e) The "Auditor" shall mean the person or accounting firm conducting the audits and examinations specified in RLD Title 13.
(f) The "Association" shall mean the Washington State Bar Association.
(g) The "Director" shall mean the Executive Director of the Association.
(h) "Examination" shall mean a review and testing by the audit of the internal controls and procedures used by an attorney or firm to receive, hold, disburse and account for money or property in which a client or other person has an interest using generally accepted auditing standards, to the extent they apply, without, however, making outside confirmations. In order to conduct such review and testing, the auditor shall have access to all of the internal books and records kept by the attorney or firm of attorneys which comprise the attorney's or firm's financial records showing financial transactions involving the receipt of client's funds for fees, costs or other purposes, either from the client or third persons and all expenditures by the firm or attorney for the firm or attorney, for clients or third persons and all distributions to the attorney or attorneys including but not necessarily limited to all journals, ledgers, books of account, cancelled checks, deposit slips, bank statements, check registers, cash accounts, receipts, correspondence, records of accounts receivable, income and expense statements, balance sheets, tax returns of all types, federal, state, county, and city excepting, however, income tax returns.
(i) "Audit" shall encompass "examination" but in addition may include positive or negative confirmation from external sources.
REGULATION 102. PERSONS AUTHORIZED TO CONDUCT AUDITS
(a) The Director may from time to time select such person or persons or accounting firm as the Director deems qualified to conduct the audits and examinations specified in RLD Title 13. The selection of the auditor or auditors shall be subject to confirmation by the Board of Governors.
(b) The auditor need not be a Certified Public Accountant but must be qualified under the laws of the State of Washington to practice public accountancy. The auditor may be an accounting firm or individual or individuals.
(c) The auditor or auditors may, but need not be, in the employ of the Association. If the auditor is the employee of the Association the auditor need not be qualified under the laws of the State of Washington to practice public accountancy.
(d) If the Director selects as auditor or auditors person who are independent contractors, they may be hired to perform all or some examinations or audits or solely for the performance of a particular examination or audit. No auditor shall perform an audit or examination of a firm or attorney for whom the auditor has performed accounting work in the two (2) years preceding the date of the proposed examination or audit. The auditor, as a condition of employment, shall agree that neither the auditor nor any accounting firm with which the auditor is associated, will perform accounting work for any attorney or firm which the auditor audits or examines for a period of not less than two years (2) years following the date of said audit or examination, whichever is later; however, this shall not preclude performances of accounting work for clients of the attorney or firm, nor preclude the auditor from being a lay or expert witness on behalf of a client of the attorney or firm.
(e) Compensation of the auditor or auditors shall be as determined by the Director subject to confirmation by the Board of Governors.
REGULATION 103. EXAMINATION AND AUDIT REPORTS
(a) The auditor shall furnish a written report of each examination or audit to the Board.
(b) The report shall contain the date of the audit or examination, the name of the firm or attorney, and a statement of the scope of the examination or audit. In respect to each examination, it shall include a statement to the effect that either (i) as a result of the examination, an audit or further examination is indicated or, (ii) during the course of the examination, the auditor has not observed anything which would indicate a need for further examination or audit at this time. In respect to each audit, the report shall state either (i) as a result of the audit, the auditor concludes that RPD 1.14 has not been complied with (stating the particulars), or (ii) as a result of the audit, the auditor has not observed anything which would indicate RPC 1.14 has not been complied with. The auditor shall further state an opinion, whether the attorney or firm has cooperated as required by RLD 13.2, giving particulars if lack of cooperation is claimed.
(c) Upon request by the Chairperson, the auditor shall make available the working papers in respect to particular examinations or audits, for review by the Board and shall consult with the Board in respect to particular examinations and audits. Upon request the auditor shall similarly make available the working papers to and consult with the Board of Governors.
(d) Upon conclusion of the examination or audit, the auditor shall make available to the attorney or firm a copy of the audit report.
(e) The auditor shall preserve inviolate all confidences and secrets of clients of the examined attorney or firm. No client name or information which would permit identification of a particular client shall be revealed in working papers or the report of the auditor, except that the name or names of clients who have filed complaints with the Association may be released. As a condition of the auditor's employment, the Association shall require such undertakings of the auditor as may be required to insure compliance with this regulation.
(f) When the audit is concluded, if it is determined pursuant to Reg. 104(a) that no further investigation, examination or action is appropriate, the Association's copies of the audit report, working papers or other materials relating to the audit shall be destroyed, except that the Association shall maintain a record showing the identity of any attorney or firm audited and the dates of the audit to ensure that the restrictions of Reg. 105(a) are complied with.
REGULATION 104. DETERMINATION THAT FURTHER EXAMINATION AND AUDIT OR OTHER ACTIONS ARE WARRANTED.
(a) The Chairperson or a delegate shall review all reports of the auditor. After such review and upon such further investigation, which the Chairperson may direct, and after such consultation, if any, as the Chairperson deems appropriate with the Board, Director, Board of Governors, or Association counsel, the Chairperson shall make such order in respect to further examination and audit as the Chairperson deems appropriate, consistent with RLD 13.1. In addition, the Chairperson may order other actions by the attorney as are necessary to insure that the attorney's handling of client funds complies with the requirements of the Rules of Professional Conduct.
(b) In any case where the Chairperson orders the attorney to make payments in order to insure that the attorney's handling of client funds during the examination period complied with the Rules of Professional Conduct and the amount to be paid exceeds $1,500, the attorney may appeal the order requiring payment to a subcommittee of the Disciplinary Board consisting of three lawyers who are members of the Board appointed by the Chairperson. The subcommittee shall review the auditor's report, and any other materials submitted by the attorney and the auditor and shall have the authority to change or modify the Chairperson's order as a majority of the subcommittee deems appropriate. The subcommittee's order shall be final.
REGULATION 104A. AUDITOR'S OPINIONS ADVISORY ONLY.
(a) The opinions expressed in the report of the Auditor shall be advisory only. They shall not in and of themselves constitute findings of fact in any disciplinary proceedings against any attorney unless so stipulated by the attorney or the attorney's counsel.
REGULATION 105. METHOD OF SELECTION OF ATTORNEYS AND FIRMS TO BE EXAMINED.
(a) At such time and from time to time as the Board of Governors after consultation with the Board shall determine, random examination of attorneys or firms shall be conducted. Procedures shall be established by the Board, in consultation with the Board of Governors, for the selection of the attorneys or firms to be examined which (1) will utilize the principle of random selection and (2) will distribute the examinations among the congressional districts of the state substantially in the ratio that the number of attorneys in each district bears to the total number of active attorneys in the state. For example, the Board may (i) determine the total number of examinations which can be made during the time period in question by the auditor or auditors, (ii) allocate the number of examinations to each district substantially in the same ratio that the number of active attorneys therein bears to all active attorneys in the state and (iii) select attorneys by random within each group. If the number drawn is that of an attorney who is an employee or member of a firm, the firm shall be examined. If the number is that of an active member who is a sole proprietor, such active member shall be examined. If the number is that of an attorney who, either as an individual or as a firm member, has been audited in the twenty-four (24) months immediately preceding the drawing, the Chairperson may in the Chairperson's discretion excuse such attorney or firm from examination.
(b) Upon consent of an active member, the attorney's books and records or those of a firm may be examined even though the active member's number has not been selected randomly.
(c) The Chairperson may at all time upon receipt of information that a particular attorney of firm may not be in compliance with RPC 1.14 authorize an examination.
REGULATION 106. CONTENTS OF LAWYER TRUST ACCOUNT INFORMATION FORM
Annually, each active member must provide a trust account information form prescribed by the Association by the date specified by the Association. The information form shall be certified by the member, in such a manner as the Association prescribes, stating that the information is true and correct. The Association may require disclosure of the following information:
(i) Name, current address and bar number of the active member.
(ii) Whether the member (or firm) maintains either an IOLTA account or other client trust account(s) for the deposit of client funds received in connection with representations undertaken using the member's Washington license.
(iii) The name of the financial institution(s) and branch(es) where client funds are held, and the account numbers for each account.
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
Reviser's note: The typographical errors in the above material occurred in the copy filed by the State Supreme Court and appear in the Register pursuant to the requirements of RCW 34.08.040.