Effective today, July 1, 2023, Wisconsin trust account rules have sort-of caught up with the rest of the country, and finally acknowledge that electronic transactions really aren’t that scary.
Under the Rules applicable from 2016 to yesterday (which the Wisconsin Lawyer optimistically described as “modernizing” the way these things are handled), if lawyers wanted to accept electronic transactions (including credit cards) for advanced fees, they either had to set up a separate “e-banking trust account” or, if they wanted to use a primary trust account for electronic transactions (which has been described as an “all-in-one” trust account) comply with some additional security and insurance needs.
The June 2023 issue of Wisconsin Lawyer and State Bar “InsideTrack” publication have a good summaries of what’s different today—and, for some, absolutely nothing is different. You can continue to operate separate trust accounts or use the alternative scheme if you want; you are not obligated to change. However, you have some more options, including engaging in electronic transfers to and from trust accounts (disbursements as authorized by a lawyer with such authority, or someone under their supervision) without all of the rigamarole of the previous rule. If there is an overdraft, ACH reversal, or similar that leads to a shortfall, the lawyer must reimburse the trust fund within three business days of receiving notice, and may not disburse funds until the shortfall is remedied. This may operate to shift the risk to the lawyer, but I think for most of us it’s an acceptable risk.
Lawyers and law firms can also briefly keep advanced fees in a non-trust account (such as a business or operating account), so long as they transfer the funds into trust within two business days. This makes electronic payment a bit easier, particularly when a client pays for both advanced fees and earned fees in the same transaction.
I’m glad to see these changes; they’re not perfect but do reflect that electronic transactions (not just credit cards but platforms like PayPal and Square) are here to stay, and are secure enough. It’s nice to catch up to the 21st Century. (Now, if only the e-filing rule for disciplinary cases would follow suit…)