IOLTA RESOURCES FOR ATTORNEYS
Rule 1.15 Amendments Information for Lawyers
Under the amendments to Rule 1.15 that take effect September 1, 2011, there are only two options for the deposit of client funds:
- an IOLTA account, with interest remitted to the Lawyers Trust Fund, or
- an interest-bearing client trust account established to hold the funds of the client, with the client receiving the interest.
The amendments also instruct that all client funds must be held in interest-bearing accounts.
The amended rule also establishes new trust account recordkeeping requirements for lawyers and creates a trust account overdraft notification system, under which banks that hold client trust accounts must agree to notify the ARDC in the event the account is overdrawn.
Questions & Answers for Lawyers
What is an IOLTA account?
- An IOLTA account is a pooled interest- or dividend-bearing client trust account, held at an eligible financial institution, with the Lawyers Trust Fund of Illinois designated as income beneficiary, for the deposit of nominal or short-term funds of clients or third persons. Amended Rule 1.15(i)(2).
When do I need to deposit funds in an IOLTA account?
- Amended Rule 1.15(f) requires that all nominal or short-term client funds be deposited in an IOLTA account. Rule 1.15(g) identifies factors to consider in determining whether client funds should be deposited in an IOLTA account or an interest-bearing client trust account established to hold the funds of the client.
Do I need an IOLTA account?
- Under the amended rule, all nominal or short-term client funds must be deposited in an IOLTA account. If you handle nominal or short-term client funds, you will need an IOLTA account.
How do I set up an IOLTA account?
I already have an IOLTA account. Do I need to do anything further?
- If you have a properly established IOLTA account, you need only follow the requirements of Rule 1.15(a), (f) and (g) regarding when client funds should be deposited in an IOLTA account, and when they should be deposited in separate account with interest paid to the client.
- Through no fault of the lawyer, banks occasionally can make an error and fail to establish an account as an IOLTA account. You can confirm that your bank has properly set up your IOLTA account and verify that the account is generating interest that is remitted to the Lawyers Trust Fund. You can also verify that your name or your law firm’s name is printed on checks drawn on the account, and that the account uses the Lawyers Trust Fund’s tax identification number.
I am licensed in more than one state. Do I need to establish an Illinois IOLTA account?
- The location of your IOLTA account is determined not by where you are licensed, but by the state where your office is situated, where you practice, and where your clients reside or do business, unless otherwise directed by your client.
- For example, a Missouri lawyer whose sole office is in Missouri but who occasionally represents clients in Illinois need not establish an Illinois IOLTA account to handle client funds. However, the lawyer should handle client funds as required by the safekeeping of property rules in Missouri, including participation in that state’s IOLTA program as appropriate. In contrast, a lawyer or law firm with bona fide offices situated in both Florida and Illinois would require an IOLTA account in each state.
What is an eligible financial institution?
- Under the new amended rule, an eligible institution is one that:
- Has agreed to report trust account overdrafts to the Attorney Registration & Disciplinary Commission (see Rule 1.15(h)), and
- Regarding IOLTA deposits, has agreed to comply with certain requirements for holding IOLTA deposits (such as paying comparable interest rates and charging reasonable fees)
- More about the trust account overdraft notification requirement is available on the ARDC web site.
- Please note: An updated list of eligible institutions under the amended rule will be posted on this site and on www.iardc.org beginning in August.
How do I learn more about the new recordkeeping requirement?
How can I get more help?
- Contact LTF with questions:
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