Update for Northern Trust Customers

The Lawyers Trust Fund is aware that Northern Trust Bank recently has contacted many of its lawyer customers about the status of their IOLTA accounts. The bank’s written communications have stated that Northern Trust will cease offering IOLTA accounts without a broader banking and investment relationship between the customer and the bank.

In response, LTF has contacted Northern Trust for clarification. The bank has confirmed that as part of a larger business strategy, Northern Trust seeks to have customers with only IOLTA accounts (or limited business in addition to IOLTA) build a larger relationship with Northern Trust. Alternately the bank explains that it will close the IOLTA accounts of customers who decline to expand their relationship. LTF is continuing to investigate details of follow-up telephone conversations from Northern Trust representatives to individual customers that may have differed from what Northern Trust communicated in writing.

Although these developments are disappointing (especially in light of the concern and disruption they are creating for lawyers and firms that have been long-time customers of Northern Trust), as a general matter LTF has no authority to challenge the market-based business decisions of banks that offer IOLTA accounts or to interfere in the decision of any individual lawyer or firm to continue to do business at Northern Trust or to transfer an IOLTA account to another financial institution.

As it learns more about this situation, however, LTF will work to ensure that Northern Trust is not treating IOLTA accounts (and their owners) in a manner that contradicts the “eligible financial institution” requirements contained in Rule of Professional Conduct 1.15. We will also continue to advocate with Northern Trust for the interests of the IOLTA program and affected lawyers.

Northern Trust has stated that it will close the affected IOLTA accounts effective October 3, 2014. During the next two months LTF will:

  • Continue to communicate with Northern Trust to understand the full situation
  • Ensure the bank understands the impact of its business decisions on the affected lawyers
  • Assist affected lawyers seeking alternative banks for their IOLTA accounts
  • Provide updates regarding further developments as they arise

LTF’s website (www.ltf.org) is the most accessible source of information about the IOLTA program and the requirements for establishing an IOLTA account at an eligible financial institution. You can find detailed instructions and the forms needed for opening a new IOLTA account on the “Establishing an IOLTA Account” page (www.ltf.org/lawyers/establishing-an-iolta-account).

If you need any assistance or if you would like to discuss this matter directly, please feel free to contact one of the following members of LTF’s staff:

Even in the current environment of ultra-low interest rates, IOLTA continues to be a vital source of financial support for legal aid programs in Illinois. LTF’s Board of Directors thanks you for your participation in the IOLTA program and asks for your patience and continued support during this time of transition.

 

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