On June 17, 2014, the Colorado Supreme Court amended and readopted Colorado Rule of Professional Conduct 1.15, which, among other things, governs lawyers’ trust accounts and the COLTAF program. Under the revised Rule, lawyers are required, as they have been in the past, to maintain their COLTAF accounts at Approved Financial Institutions.
Under the new rule, an Approved Financial Institution agrees (1) to report any overdraft to the Office of Attorney Regulation Counsel, (2) to respond to subpoenas issued by Regulation Counsel, and (3) to pay on its COLTAF accounts the highest interest or dividend rate generally available to its similarly situated non-COLTAF account holders (so-called rate comparability requirements).
Lawyers are not required to make independent determinations as to whether their banks satisfy the new comparability requirements. Once the new Rule has been fully implemented, only those banks that satisfy the comparability requirements will be on the list of Approved Financial Institutions. Lawyers need only check that list to insure their accounts are maintained at an eligible depository.
A COLTAF account is for those client funds that are nominal in amount or are expected to be held for a short period of time, and as such would not be expected to earn interest or pay dividends for such clients in excess of the reasonably estimated cost of establishing, maintaining, and accounting for trust accounts for the benefit of such clients.
If a lawyer or a law firm discovers that client funds have mistakenly been held in a COLTAF account in a sufficient amount or for a sufficiently long time so that interest or dividends on the funds exceeds the reasonably estimated cost of establishing, maintaining, and accounting for a trust account for the benefit of such client, the lawyer or law firm should request a refund from COLTAF for the benefit of such client.