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

Clerk Handbooks

Supreme Court Rules

		Section/Rule:	4- 1.155
Subject:	Rule 4 - Rules Governing the Missouri Bar and the Judiciary - Rules of Professional Conduct	Publication / Adopted Date:	July 1, 2013
Topic:	IOLTA Accounts	Revised / Effective Date:

4-1.155 IOLTA ACCOUNTS

(a) IOLTA accounts shall be maintained in compliance with the following provisions:

(1) no earnings from such account shall be made available to the lawyer or law firm, and the lawyer or law firm shall have no right or claim to such earnings;

(2) a lawyer or law firm shall deposit in an IOLTA account all funds of clients and third persons from whom no income could be earned for the client or third person in excess of the costs incurred to secure such income, and all other client or third person funds shall be deposited into a non-IOLTA trust account;

(3) in determining whether client or third person funds should be deposited in an IOLTA account or non-IOLTA trust account, a lawyer shall take into consideration the following factors.

(A) the amount of interest that the funds would earn during the period they are expected to be deposited;

(B) the cost of establishing and administering a non-IOLTA trust account for the benefit of the client or third person, including the cost of the lawyer's services and the cost of preparing any tax reports required for interest accruing to the benefit of a client or third person;

(C) the capability of financial institutions or lawyers or law firms to calculate and pay interest to individual clients or third persons;

(D) any other circumstance that affects the ability of the client or third person funds to earn income in excess of the costs incurred to secure such income for the client or third person;

(4) the determination of whether the funds of a client or third person can earn income in excess of costs as provided in Rule 4-1.155(c)(3) shall rest in the sound judgment of the lawyer or law firm, and no lawyer shall be charged with an ethical impropriety or breach of professional conduct based on the good faith exercise of such judgment;

(5) the lawyer or law firm shall review the account at reasonable intervals to determine if changed circumstances require further action with respect to the funds of any client or third person; and

(6) a lawyer or law firm required to establish and maintain an IOLTA account under

Rules 4-1.145 to 4-1.155

shall maintain IOLTA accounts only at an approved and eligible institution that voluntarily chooses to offer such accounts.

(b) Allowable reasonable fees may be deducted from interest or dividends earned on an IOLTA account. Fees or charges in excess of the interest or dividends earned on the IOLTA account, for any month or quarter, shall not be taken from interest or dividends of any other IOLTA account. No fees or charges may be assessed against or deducted from the principal of any IOLTA account. All other fees are the responsibility of the lawyer or law firm and may be charged to the lawyer or law firm. Eligible institutions may elect to waive any or all fees on IOLTA accounts.

(c) The advisory committee may refuse to approve a financial institution and may revoke approval as provided in the regulations approved by this Court.

(1) any financial institution that is refused approval by the advisory committee may petition this Court, within 30 days of receiving notice of the action, for review of the advisory committee's decision. This Court may direct that the issues raised in the petition be briefed and argued as though a petition for an original remedial writ has been sustained. This Court may sustain, modify, or vacate the action of the advisory committee or dismiss the petition.

(2) any lawyer or law firm receiving notification from a financial institution that the institution's approval as a trust account depository has been revoked or that the financial institution is canceling its agreement shall remove all trust accounts from the financial institution within 30 days of receipt of such notice or by such later date as is required for the payment of all outstanding items payable from the trust account. Within the same time, written notice of compliance with this Rule 4-1.155(c)(2) shall be sent to the chief disciplinary counsel. The notice shall include the name and address of the new trust account depository institution.

Comment

[1] Lawyers must maintain an IOLTA account unless they have been exempted by the foundation or all of their trust accounts are non-IOLTA accounts. Funds of a client or third party must be placed in an IOLTA account if the funds are of such a nominal amount or are expected to be held by the lawyer for such a short period of time that the funds cannot earn interest or dividend income for the client or third party in excess of the costs incurred to secure such income. Otherwise, the funds must be placed in a non-IOLTA account to earn interest for the client or third party.

[2] It is expected that a lawyer or law firm will exercise good faith judgment in determining whether funds of a client or third party should be placed in an IOLTA account or non-IOLTA account. All relevant factors should be considered in this determination, including, for example, the cost of establishing and maintaining accounts for the benefit of clients or third persons, service charges, accounting fees and tax reporting procedures, the nature of the transactions involved, and the likelihood of delay. It is also expected that placement of the funds will be reviewed at reasonable intervals if the funds remain on hand to determine if changed circumstances require further action with respect to such funds.

[3] The IOLTA requirements conform with the decision in Brown v. Legal Foundation a/Washington, 538 U.S. 216 (2003). IOLTA funds must be deposited with institutions paying interest and dividends comparable to rates paid to the institution's own other similarly-situated non-IOLTA customers. This recognizes that additional options have developed and are being offered in the marketplace by financial institutions from which qualifying IOLTA balances should also benefit. Apart from the important goal of fairness in the treatment of IOLTA funds, the most recent rule changes are important to the purposes of the IOLTA program: providing a source of funds to support civil legal services to the poor, improving the administration of justice, and promoting other programs for the benefit of the public as are specifically approved from time to time by this Court.

(Adopted Oct 30, 2012, eff. July 1, 2013.)