Trust Accounting Takes No Holidays
A reprimand from the Massachusetts Board of Bar Overseers
The respondent, Nicholas H. Babanikas, received a public reprimand for violating Mass. R. Prof. C. 1.15. The respondent maintains a practice focused on personal injury, worker’s compensation, and civil litigation and managed his law firm’s IOLTA account. On December 23, 2022, the respondent’s law firm deposited a settlement check received in a personal injury matter to the firm’s IOLTA account. On the same day, the firm issued a check to the client for the client’s portion of the settlement. Due to holiday bank closures, the funds did not become available until the day after the client negotiated the check, which caused the bank to send an insufficient funds notice to bar counsel.
From at least January 1, 2023, through December 31, 2023, the respondent failed to reconcile his law firm’s IOLTA account at least every sixty days and failed to maintain compliant records as required by Mass. R. Prof. C. 1.15(f), including (1) individual client ledgers with every transaction listed and a running balance after each transaction, (2) a bank fees and charges ledger for personal or firm funds to cover anticipated bank fees, and (3) three-way reconciliation reports at least every sixty days. From at least January 1, 2020, through May 1, 2023, the respondent failed to remove earned fees relating to at least one client matter at the earliest reasonable time after the law firm’s portion became fixed.
Due to the inadequate recordkeeping, it was discovered the respondent’s law firm’s IOLTA account had been short by $22,000 for more than ten years. The respondent deposited firm funds to cover the shortage, and, pursuant to bar counsel’s suggestion, stopped using the existing IOLTA account, and opened a new IOLTA account to become compliant with the recordkeeping rules. The respondent worked to reconcile the old IOLTA account and disbursed all funds except for a nominal amount that did not belong to a client or third party.
(Mike Frisch)