Supreme Court Rules - Rule 4 - Rules Governing the Missouri Bar and the Judiciary - Rules of Professional Conduct: Definitions

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Supreme Court Rules

		Section/Rule:	4- 1.145
Subject:	Rule 4 - Rules Governing the Missouri Bar and the Judiciary - Rules of Professional Conduct	Publication / Adopted Date:	July 1, 2013
Topic:	Definitions - Safekeeping Property and IOLTA Accounts	Revised / Effective Date:	January 1, 2017

4-1.145 DEFINITIONS - SAFEKEEPING PROPERTY AND IOLTA ACCOUNTS

(a) As used in Rules 4-1.145 to 4-1.155, the following terms mean:

(1) "Allowable reasonable fees," per check charges, per deposit charges, a fee in lieu of minimum balance, sweep fees, and a reasonable IOLTA account administrative fee calculated in accordance with an eligible institution's standard practice for non-IOLTA customers.

(2) "Approved institution,"

(A) an eligible institution in which an IOLTA account

or a non-IOLTA trust account is held, or

(B) a financial institution in which an exempt trust account is held that has been approved by the advisory committee pursuant to regulations adopted by the advisory committee and approved by this Court.

(3) "Client trust account," an account denominated as such or by words of similar import in which a lawyer or law firm holds funds on behalf of a client or third person and on which withdrawals or transfers can be made on demand, subject only to any notice period that the financial institution is required to observe by law or regulation. Every client trust account shall be either an IOLTA account, a non-IOLTA trust account, or an exempt trust account.

(4) "Daily overnight financial institution repurchase agreement," an agreement established only with an institution that is deemed to be "well capitalized" or "adequately capitalized" as defined by applicable federal statutes and regulations.

(5) "Eligible institution," one of the following entities choosing to offer and maintain IOLTA accounts to its lawyer and law firm customers:

(A) a bank, savings and loan association, or credit union authorized by federal or state law to do business in Missouri, the deposits of which are insured by an agency of the federal government, or

(B) an open-end investment company registered with the Securities and Exchange Commission authorized by federal or state law to do business in Missouri.

To be an "eligible institution," the foundation also must determine that the institution:

(A) pays no less on IOLTA accounts than the lesser of:

(i) the highest interest rate or dividend generally available from the institution to its non-IOLTA customers for each IOLTA account that meets the same minimum balance or other eligibility qualifications, if any. In determining the highest interest rate or dividend generally available from the institution to its non-IOLTA customers, the institution may consider factors, in addition to the IOLTA account balance, customarily considered by the institution when setting interest rates or dividends for its customers if such factors do not discriminate between IOLTA accounts and accounts of non-IOLTA customers and these factors do not include that the account is an IOLTA account. The institution also shall consider all product option types for an IOLTA account offered by the financial institution to its non-IOLTA customers by either using the available account option as an IOLTA account or paying the comparable interest rate or dividend on the IOLTA checking account in lieu of actually establishing the comparable highest interest rate or dividend product; or

(ii) an amount on funds that would otherwise

qualify for the investment options noted at Rule 4-145(a)(9)(B) to (D)

equal to the greater of 60% of the federal funds target rate as of the first business day of the quarter or other IOLTA remitting period or 0.60%, which amount is deemed to be already net of allowable reasonable fees;

(B) only deducts allowable reasonable fees from the interest or dividends on an IOLTA account;

(C) remits at an established IOLTA remitting period the interest or dividends earned on each IOLTA account, net of allowable reasonable fees, if any, to the foundation, which shall be the sole beneficial owner of the interest or dividends earned on the IOLTA account;

(D) transmits with each remittance a report, on a form and through any manner of transmission approved by the foundation, that identifies each lawyer or law firm for whose IOLTA account the remittance is sent, the amount of the remittance attributable to each IOLTA account, the rate and type of interest or dividends applied, the amount of interest or dividends remitted, the amount and type of charges or fees deducted, if any, and the average account balance for the period in which the report is made; and

(E) transmits to the depositing lawyer a report in accordance with normal procedures for reporting to its depositors.

(6) "Exempt trust account," an account maintained by a lawyer or law firm whom the foundation, for the current reporting period, exempts from the requirement of maintaining an IOLTA account because the lawyer:

(A) maintains an IOLTA account that has not and cannot reasonably be expected to produce interest or dividends in excess of allowable reasonable fees; or

(B) establishes that no eligible institution within reasonable proximity to his, her, or its office offers IOLTA accounts.

The foundation may establish criteria and procedures by which an exemption under Rule 4-1.145(a)(6) may be obtained.

An exempt account shall be non-interest-bearing, except that such accounts shall be interest-bearing if funds held for particular clients or matters warrant one or more non-IOLTA trust accounts.

(7) "Financial institution," a bank, savings and loan association or credit union authorized by federal or state law to do business in Missouri the deposits of which are insured by an agency of the federal government or an open-end investment company registered with the Securities and Exchange Commission authorized by federal or state law to do business in Missouri.

(8) "Foundation," the Missouri lawyer trust account foundation described in this Court's order of October 23, 1984.

(9) "IOLTA account," a pooled client trust account held at an eligible and approved institution that is comprised of client and third person funds that cannot otherwise earn income for the client or third person in excess of the costs incurred to secure such income, and which is:

(A) an interest-bearing checking account;

(B) a money market account with or tied to check-writing;

(C) a sweep account that is a government money market fund or daily overnight financial institution repurchase agreement invested solely in or fully collateralized by United States government securities; or

(D) an open-end money market fund solely invested in or fully collateralized by United States government securities.

(10) "Non-IOLTA customers" includes all of the customers of the financial institution other than those who maintain IOLTA accounts.

(11) "Non-IOLTA trust account," an interest-bearing client trust account established at an approved financial institution as:

(A) a separate client trust account for the deposit of the funds of a particular client or third person, the net earnings of which will be paid to the client or third person who owns the deposited funds; or

(B) a pooled trust account with sub accounting by the financial institution or by the lawyer or law firm that will provide for computation of the net interest or dividend earned by the funds of each client or third person and also will provide for the payment thereof to the client or third person.

(12) "Open-end money market fund," a fund holding itself out as a money market fund as defined by applicable federal statutes and regulations under the Investment Act of 1940 and, at the time of the investment, having total assets of at least $250,000.000.

(13) "United States government securities," United States treasury obligations and obligations issued or guaranteed as to principal and interest by the United States or any agency or instrumentality thereof.

(Adopted Oct. 30, 2012, eff. July 1, 2013. Amended Dec. 14, 2016, eff. Jan. 1, 2017.)