RPC 1.15A - Safeguarding Property

• Proposed Changes to RPC 1.15A - Safeguarding Property (in Word Format)
• Comments Received for RPC 1.15A - Safeguarding Property

GR 9 COVER SHEET

SUGGESTED AMENDMENTS TO
ADMISSION TO PRACTICE RULE (APR) 12 – LIMITED PRACTICE RULE FOR CLOSING OFFICERS
APPENDIX APR 12. REGULATIONS OF THE APR 12 LIMITED PRACTICE BOARD
DISCIPLINARY REGULATIONS APPLICABLE TO APR 12.1
AND
CONTINUING EDUCATION REGULATIONS OF THE LIMITED PRACTICE BOARD
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AND SUGGESTED NEW RULES
RULES OF PROFESSIONAL CONDUCT FOR LIMITED PRACTICE OFFICERS (LPORPC)
AND
RULES FOR ENFORCEMENT OF LIMITED PRACTICE OFFICER CONDUCT (ELPOC)
To Replace Current Disciplinary Rules for Limited Practice Officers (LPO)
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AND RELATED AMENDMENTS TO
RULES FOR THE ENFORCEMENT OF LAWYER CONDUCT (ELC)
ELC 15.4
AND
THE RULES OF PROFESSIONAL CONDUCT (RPC)
RPC 1.15A

Submitted by the Limited Practice Board

Purpose: This proposal is a substantial revision of the entire body of administrative rules that cover Limited Practice Officers (LPOs). It also includes the suggested adoption of a new set of rules governing the professional conduct of LPOs, and the replacement of the existing disciplinary rules for LPOs with a new set of disciplinary rules. This proposal is the result of approximately three years of work by the Limited Practice Board (LP Board), which undertook a complete review of the administration of the LPO licensing system, from the examination, through the administrative rules governing admission and continued licensing, and continuing through the disciplinary process.

The LP Board is made up of lawyer and non-lawyer representatives of groups involved in the real estate industry in Washington, and by its makeup, it is intended to receive and include input from all areas of that industry. The LP Board created a Rules Committee to review existing rules and develop a proposal to present to this Court. The proposals developed by that Committee and ultimately adopted by the full LP Board were broadcast to all licensed LPOs in Washington and to major employers in Washington’s real estate industry, with a request for input and feedback. Information about the report was also disseminated to members of the WSBA through its Sections, Committees and Boards, and to the Legal Foundation of Washington (LFW) and the Access to Justice Board, and through the WSBA website.

The report of the LP Board Rules committee was first presented to the Washington State Bar Association (WSBA) Board of Governors in June of 2007 (for first reading), then presented again (for action) in September of 2007. At the September 2007 WSBA Board of Governors meeting, the LFW expressed its support of this proposal. Also at the September 2007 meeting, the Board of Governors voted to approve this proposal. The final materials submitted to the WSBA Board of Governors in September for action – consisting of the cover memo, the LP Board Rules Committee Report providing detailed explanations of the suggested rule changes and reasons for the suggestions, and red-lined and clean versions of the suggested amendments and new rules and regulations - accompany this proposal.

Significant elements of the submission are the following:

• Addition of Comments to Rules - In keeping with the Rules of Professional Conduct (RPC) for lawyers, these suggested rules, regulations and amendments contain some Comments. These Comments have been suggested where it appeared that guidance to LPOs about the application of the rules would be helpful. Where Comments exist in the RPCs but are not included in the suggested LPORPCs, the omission is deliberate and intentional based on the LP Board’s determination that the comments do not and should not apply to the limited practice of LPOs.

  Comments are distinguished from the “Explanatory/Purpose Statements” contained in the LP Board Rules Committee final report, which were are not intended to be included with the rules and regulations. The Explanatory/Purpose Statements are intended to provide insight into the considerations weighed by the LP Board and Rules Committee when discussing and developing these suggestions.

• Amendments to Admission to Practice Rules for Closing Officers (APR 12) - The suggested amendments to APR 12 contain fewer items of significance. They replace the term “certified closing officer” with “limited practice officer”; add preparation of powers of attorney in anticipation of a real estate transaction to the authorized functions of LPOs; and add a comment to APR 12(g) that discusses the standard of care applicable to LPOs.

• Amendments to Appendix APR 12 - Regulations of the APR 12 Limited Practice Board; and Amendments to the Regulations following LPO 11.5 (Disciplinary Regulations Applicable to APR 12.1, and Continuing Education Regulations of the Limited Practice Board) -

  The suggested amendments to the regulations in Appendix APR 12 and the regulations following LPO 11.5 are more in the nature of housekeeping and also have fewer matters of major significance. These suggested amendments are intended primarily to improve administration of LPO admissions, licensing, exams, continuing education requirements, etc., and to make adjustments to these regulations as would be necessary if the other rules in this submission are adopted. The suggested elimination of the LPO would suggest that all of the regulations be placed in Appendix APR 12 – Regulations of the APR 12 Limited Practice Board, with the Disciplinary Regulations and the Continuing Education Regulations following the other regulations.

• Suggested Rules of Professional Conduct for LPOs (LPORPC) – These suggested rules were developed after detailed consideration of the lawyer RPCs and discussion by the LP Board about how various ethical duties and responsibilities of lawyers do or do not apply to the limited practice of law by LPOs. A few of the suggested rules currently exist in some form in APR 12 and the LPO (Disciplinary Rules), and where appropriate the existing rules were consolidated into these suggested rules. Additional rules have been suggested based on a determination by the LP Board Rules Committee and the LP Board that guidance for LPOs is desirable in those areas.

  Of note (and a major topic of discussion, input and feedback from many groups) are the suggested revisions to the IOLTA rules applicable to LPOs. The suggested changes are intended to bring LPO IOLTA requirements more in line with current lawyer IOLTA requirements in RPC 1.15A and B (rather than the lawyer IOLTA rules as they existed several years ago), yet reflect the reality of limited practice as an LPO – hence the intentional omission of the Comments to RPC 1.15A, most notably Comment 15, from the corresponding LPORPC 1.12A. See suggested LPORPC 1.12A and B with the associated Explanatory/Purpose Statements, and the suggested amendments to RPC 1.15A with the associated Explanatory/Purpose Statements, contained in the LP Board Rules Committee report for an explanation of the reasoning behind this approach.

  The LP Board believes that in order to achieve the desired goals of the rule changes, all of the suggested rule changes need to be adopted as a “package”.

• Amendments to Rules for Enforcement of Lawyer Conduct (ELC 15.4), and Rules of Professional Conduct (RPC 1.15A), and Trust Account Regulations (Disciplinary Regulations Applicable to APR 12.1) – In addition to suggested changes to the IOLTA rules applicable to LPOs – as contained in suggested new LPORPC 1.12A and B - this submission also suggests amendments to ELC 15.4, regarding trust account overdraft reporting requirements for financial institutions, to specifically include IOLTA accounts covered by LPORPC 1.12A.

  This submission also suggests amendments to RPC 1.15A relating to IOLTA requirements for lawyers. Currently, LPOs must ensure that all funds for transactions in which the LPOs selected, prepared and completed documents are maintained in accordance with IOLTA rules even if the LPOs do not personally handle the funds. These amendments are being suggested in order to require the same of lawyers - lawyers who select, prepare and complete real estate transaction documents would be required to ensure that the funds for that transaction are maintained in accordance with IOLTA rules, even if the lawyers personally do not handle the funds. The reasoning behind this approach is set forth in the Explanatory/Purpose Statements in the Rules Committee report, related to LPORPC 1.12A and B, and related to the suggested changes to RPC 1.15A.

  In order to accomplish the intended objectives with respect to IOLTA requirements, it is important that these amendments be adopted as a package with the suggested new LPORPCs.

• Suggested Rules for Enforcement of LPO Conduct (ELPOC) – The LP Board and Rules Committee believe that a significant overhaul of the LPO discipline system is in order. In an attempt to prevent duplication of efforts, staffing and resources, the suggested rules essentially follow the Rules for Enforcement of Lawyer Conduct (ELC), and employ existing resources in the lawyer discipline system (investigators and disciplinary counsel from the WSBA Office of Disciplinary Counsel, and Hearing Officers from the WSBA Hearing Officer Panel) to investigate and prosecute apparently serious instances of LPO misconduct.

  The intent of these rules, however, is that the LP Board and/or the LP Board Discipline Committee is always involved in the “resolution” stages of any disciplinary grievance or proceeding, including dismissal, imposition of a disciplinary sanction, and appeals, and that the final authority rests with the Supreme Court.

• LPO (Disciplinary Rules for LPOs) to be Rescinded – If the suggested new Rules for the Enforcement of LPO Conduct (ELPOC) are adopted, the existing LPO (the existing disciplinary rules for LPOs) should be rescinded because they will be replaced by the ELPOC.