This newsletter provides updates on legal industry happenings and a pilot program in Philadelphia Municipal Court. It urges opposing a proposal to assess Pennsylvania sales tax on legal services, which would burden clients and create uncertainties. Recent changes to PA IOLTA regulations require lawyers to maintain detailed records of client funds held in trust, including individual ledgers and monthly reconciliations. Compliance with accounting and record-keeping rules is important.

1. The cold months of winter are now behind
us so we can all come out from hibernation.
Obviously, nobody was really hibernating.
Joann Needleman has been hard at work
getting a pilot program off the ground with
Consumer Legal Services and Philadelphia
Municipal Court. Three firms have volunteered
to participate in the program. This should begin
sometime over the summer. It was modeled after some of the other counties like
Blair and Butler but will have many of the same requirements that has always
been in place with Municipal Court.
This edition of the newsletter will include some updates of what is
happening in our industry. As always, if you would like to become more
active in the association please contact me. More active members allows us tackle
more issues. Let us know what we can do for you as an organization or what we
are not doing.
A
Message
from your
President
Yale D.
Weinstein
April 2015Volume 1, Issue 5
Inside This
Issue:
President’s
Message
1
Please Oppose the
Proposed
Assessment of
Pennsylvania Taxes
on Legal Services
1,
2
Are You Aware of
the Recent
Changes to the PA
IOLTA Regula-
tions?
2,
3
PACBA Enews
Please Oppose the Proposed Assessment of Pennsylvania Taxes
on Legal Services
Jeffrey A. Sheare, Shapiro Law Office, PC
The proposal to subject legal services to state sales taxes in Pennsylvania
has been made before, and has always been rejected. Replacing school property
taxes with a sales tax in part assessed on legal services will result in a current
funding source lost to schools from both residential and commercial properties.
Law offices collecting fees on a contingency basis may struggle with added frustra-
tion because the entity subject to imposition of any proposed sales tax is less
clear. Moreover, this tax places an additional burden on clients and creates un-
certainties of which services to tax.
Lifting the Pennsylvania sales tax exemption on legal services ignores the
fact that communication between the attorney and client regarding fees may be-
come more ambiguous. The sales tax would be added to the cost of legal services
and is required to be paid by the client. This creates frustration and possible con-
flict between the attorney and client, and adds to the underlying problem associ-
ated with the acquired legal services. Furthermore, a sales tax on a contingency
fee increases the vagueness of the taxing entity and attorneys may be forced to
pay a tax on their own legal services. Thus, attorneys may be forced to pay a
sales tax on top of assuming the financial risk of litigation.
Continued on Page 2...

2. Page 2 PACBA Enews
(Continued) Please Oppose the Proposed Assessment of Pennsylvania Taxes
on Legal Services Jeffrey A. Sheare, Shapiro Law Office, PC
The Pennsylvania sales tax proposal on legal services should be opposed because it places an
additional burden – taxation – upon people already facing a multitude of problems; clients dealing with
criminal charges, injury, death, divorce, domestic abuse, foreclosure, credit disputes and bankruptcy.
Law offices that focus on creditors’ rights are dealing with clients that do not have a choice of securing
legal services, thus making it unfair to tax these individuals. Therefore, debtors may be forced to defend
themselves in civil matters without counsel due to the tax on legal services and increase of legal fees.
Lastly, it would be an administrative nightmare to determine which services performed in Penn-
sylvania and elsewhere are subject to the tax. Unlike goods, it is difficult to say with certainty where
services are used, generated, or delivered. Goods are delivered in an exact location, which makes it
easier to determine taxability. The tax generates more administrative time and taxpayer funds used to
determine which transactions should be taxed in Pennsylvania. Taxing legal services does not necessarily
solve the underlying problem affecting schools – it just replaces one tax with another.
We encourage you to immediately contact your elected officials to stop the Pennsylvania pro-
posal to tax legal services.
Are You Aware of the Recent Changes to the PA IOLTA Regulations?
Jeffrey A. Sheare, Shapiro Law Office, PC
The Supreme Court of Pennsylvania recently adopted a series of changes to the disciplinary
rules that became effective on March 2, 2015.
The primary changes are that lawyers must maintain on a current basis books and records in
accordance with sound accounting practices and consistently apply and comply with any recordkeeping
rules established by law or court order. The other changes to the disciplinary rules are outlined as
follows:
A lawyer must maintain the writings required by rule 1.5 (b) and 1.5 (c):
 Writing which communicates the basis or rate of the fee, and
 Written fee agreement in a contingent fee matter, and
 Distribution statement in a contingent fee matter
The check register or separately maintained ledger must include:
 Purpose
(In addition to payee, date, amount of each check, withdrawal and transfer, payor, date, and amount of
each deposit, and the matter involved for each transaction.)
If the account holds funds of more than one (1) client, then the lawyer must maintain an individual
ledger for each trust client, which shows:
 Source
 Amount
 Nature of all funds received from or on behalf of the client
 Description
 Amount of Charges or withdrawals
 Names of all persons or entities that the funds were disbursed to
Continues on Page 3...

3. Page 3 PACBA Enews
(Continued) Are You Aware of the Recent Changes to the PA IOLTA Regulations?
Jeffrey A. Sheare, Shapiro Law Office, PC
 Dates of all deposits
 Transfers
 Withdrawals, and
 Disbursements
Records required by Rule 1.15, Safekeeping Property, may be maintained in:
 Electronic
 Photographic, or
 Other media (as long as, the record complies with Rule 1.15)
Printed copies must be able to be produced, and backup of the records must be secured and al-
ways available.
If the records are kept in Electronic Form, then then records must be backed up on a separate electronic stor-
age device on a monthly basis. At the end of each day, entries must be entered into the records. These records
must be readily accessible to the lawyer and available for production to the Pennsylvania Lawyers Fund for Cli-
ent Security, or The Office of Disciplinary Counsel in a timely manner upon request, or demand by either
agency made pursuant to the:
 Pennsylvania Rules of Disciplinary Enforcement
 The Disciplinary Board Rules
 The Pennsylvania Lawyers Fund for Client Security Board Rules and Regulations
 Agency practice, or
 Subpoena
A regular trial balance of the individual client trust ledgers must be maintained.
The total trial balance must agree with the control figure computed by. The total trial balance must agree with
the control figure computed by:
 Adding the beginning balance to the total money received in trust for the client, and deducting the
total of all money disbursed.
(Beginning balance + total money received in trust for the client - total of all moneys disbursed =
total trial balance (control figure))
Lawyers must conduct a reconciliation for each fiduciary account on a:
 Monthly Basis
The reconciliation is not complete, if the reconciled total cash balance does not agree with the total of the
client balance listing.
Copies of all records and computations sufficient to prove compliance with the requirement of maintaining a
regular trial balance must be preserved for:
 A period of five (5) years
Additionally, the changes clarify that the responsibility for identifying an account must be that of a law-
yer in whose name the account is held, and only a lawyer admitted to practice law or a person under the direct
supervision of a lawyer can be authorized to sign or transfer from a trust Account or an account which is main-
tained by a fiduciary, held pursuant to Rule 1.15(1.)
These recent changes apply to every active attorney in Pennsylvania that maintains funds held in es-
crow for others. Please review these recent amendments with other members of your staff to ensure contin-
ued compliance with the Pennsylvania disciplinary rules, guidelines, and regulations.