In 2015, the rule governing lawyers’ use of IOLTA and other client trust accounts was changed to address unidentified funds in IOLTA accounts. The change to Rule of Professional Conduct 1.15 defines unidentified funds as “amounts accumulated in an IOLTA account that cannot be documented as belonging to a client, a third person, or the lawyer or law firm”. The rule directs lawyers to make periodic efforts over a period of 12 months to identify the owner and return the unidentified funds. If after 12 months the lawyer believes that continued efforts will not succeed, the unidentified funds are to be remitted to the Lawyers Trust Fund.
A resource for lawyers
The amended rule provides a new resource that banks can highlight for their lawyer customers. The requirement to deal with accumulated balances that are unidentified is particularly relevant for lawyers who are nearing retirement or transition from the active practice of law. By taking proactive steps to manage the IOLTA account and either return or remit unidentified funds, a lawyer can avoid leaving a dormant account with a balance on deposit that ultimately will be administered by an executor or heir, or become the responsibility of the bank to remit to the state treasurer as unclaimed property.
What does this mean for banks?
The new rule applies to lawyers and has no direct impact on financial institutions. Management of each IOLTA account is left to the lawyer, and banks must continue to follow the requirements of the Uniform Disposition of Unclaimed Property Act (765 ILCS secs. 1025/1 et seq.) when holding accounts that are unclaimed or abandoned.
Unclaimed or unidentified funds?
The new rule only addresses only funds that cannot be documented as belonging to a client, a third person, or the lawyer or law firm. If the lawyer knows the accumulated funds belong to someone who cannot be located or who will not cash a check for payment of the funds, the funds are unclaimed. Under the Uniform Disposition of Unclaimed Property Act, funds in an IOLTA account that remain unclaimed for five years should be remitted by the lawyer to the treasurer through the I-CASH program. Lawyers should not remit unclaimed funds to LTF.
Instructions for remitting unidentified funds
Lawyers should remit unidentified funds to LTF by (1) submitting a completed Unidentified Funds Remittance Report (PDF) and (2) sending a check for the amount of the funds payable to the Lawyers Trust Fund of Illinois. Use of the reporting form is required in all cases. LTF cannot accept remittances made via ACH or wire transfer.
- Unidentified Funds Remittance Report (PDF)
- Amended Rule 1.15 (PDF)
- For lawyers: Handling unidentified funds
Do you need assistance? Contact LTF if you have any questions about handling and remitting unidentified funds: Terri L. Smith-Ashford, Director of Banking & Operations: 312-938-3001 David Holtermann, Associate Director & General Counsel: 312-938-3076
ISBA Quick Take Video regarding Unidentified Funds