Have you ever had to deal with an IOLTA account when the owner of all or a portion of the funds in an IOLTA account cannot be identified or located? Or the attorney who opened the IOLTA account has died, been disciplined, or disappeared? If so, we have helpful news to share with you.
Article V, Rule 1.15 pertaining to Interest on Lawyers Trust Accounts (IOLTAs) has been amended by the Rhode Island Supreme Court and is available on the Court’s website.
Among other things, the amended Rule 1.15 provides a procedure so that if, after the exercise of reasonable diligence, the owner of funds deposited in an IOLTA account cannot be identified or located, those funds will now be remitted to the Bar Foundation.
Below are some of the common problems this amendment resolves:
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An attorney is holding funds in an IOLTA account for a client he or she has not been able to locate for a while.
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An attorney has been appointed under Article III, Rule 18 of the Supreme Court Rules as substitute counsel for an attorney who has died, suffers from incapacity or disability, has been suspended or disbarred, or has disappeared. The substitute counsel has control of that attorney’s IOLTA account but has been unable to locate the owner or owners of all or some of the funds in that account.
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An attorney is appointed executor of the estate of a deceased attorney or has been hired to represent an executor of a deceased attorney’s estate and locates an IOLTA account of the deceased attorney with funds that cannot be traced to a particular client.
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An attorney receives a retainer from a client that is deposited into his or her IOLTA account, but the matter never went forward or became dormant. The client is owed a refund, but the attorney has not been able to contact the client, despite best efforts.
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An attorney and law partner maintain separate IOLTA accounts. A partner dies with a substantial sum in his or her IOLTA account, but the living partner does not have access to the account records or is unable to identify the owner of the funds in the account.
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An attorney is planning to retire soon, and as part of wrapping up his or her practice, when attempting to reconcile the IOLTA account, the funds in the account exceed what the office records show as belonging to identifiable clients.
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An attorney represents a bank that has been approached by an executor or beneficiary of a deceased lawyers’ estate, seeking to have funds in an IOLTA account at that bank released to the executor or beneficiary.
When remitting the funds, the Foundation must be provided with a statement of the last known address of the owner of the funds, if known, the amount remitted, a description of the efforts taken to find the owner, and, if the owner of the funds cannot be determined and identified, a description of the efforts taken to identify the owner of the remitted funds.
The Bar Foundation is required to maintain records regarding the funds remitted. The rule provides a procedure to follow if, within three years of the remission of the funds, the original owner of the funds is located or a putative owner makes a claim for the funds. The Rule also provides that if no claim to the remitted funds is made within three years, the remission will be treated as final.
For additional information, please refer to Bar Foundation President Michael McElroy’s Bar Foundation President’s Message which appeared in the January/February 2023 issue of the Rhode Island Bar Journal.