News Release
For Immediate Release: 04/04/16
Contact: Dennette Young
Office: 504-561-1046 Mobile: 504-450-1874 dennette@raisingthebar.org
Rule Change Addresses Unidentified Funds in IOLTA Accounts
On March 23, the Louisiana Supreme Court amended the Louisiana Rules of Professional Conduct 1.15 concerning how lawyers and law firms should handle unidentified funds accumulated in their IOLTA accounts. The amended rule directs lawyers who discover unidentified funds defined as funds in an IOLTA account for at least one year that after reasonable due diligence cannot be documented as belonging to a client, a third person or the lawyer or law firm, to be remitted to the Louisiana Bar Foundation. The amended rule, which can be viewed here, took effect March 23.
The heart of the changes to the rule is in new paragraphs (g7) and (h), which instruct lawyers about what to do after discovering unidentified funds in an IOLTA account. The rule provides that “no charge of misconduct shall attend to a lawyer’s exercise of reasonable judgment under this paragraph (h). Paragraph (h) also includes a provision regarding the refund of unidentified funds remitted to the Louisiana Bar Foundation in error.
Unidentified funds in IOLTA accounts commonly result from bookkeeping errors, mistaken bank interest payments, or failures to collect earned fees in a timely manner. The resulting unidentified fund balances cannot be traced to a client or third party owner. The amendments to Rule 1.15 provide a mechanism for lawyers or their successors to remove unidentified funds from IOLTA accounts after making diligent efforts to identify the owner and secure their return. Funds remitted to the Louisiana Bar Foundation will support grants made to non-profit organizations providing civil legal aid to the poor throughout Louisiana.
The rule does not provide for the remittance of unclaimed funds, whose owner is known but to whom payment cannot be effected (typically because the owner cannot be located or will not cash a check). Unclaimed funds should be handled in accordance with the provisions of the Louisiana Unclaimed Property Act.
The Louisiana Bar Foundation will publish additional guidance for lawyers, including detailed instructions for remitting unidentified funds and claiming refunds on its website: http://raisingthebar.org/iolta/IOLTAAttorneys.asp. Questions about the unidentified funds rule should be directed to LBF Executive Director Donna Cuneo (via email or phone at 504-561-1046).
It’s not Justice If It’s Not Equal Louisiana Bar Foundation (LBF) is a non-profit 501 (c) (3) entity organized under the state of Louisiana. As the largest state funder of legal aid, the LBF supports programs providing free legal services for the poor in all 64 parishes. Since 1989, the LBF has distributed more than $65 million throughout Louisiana to help address the legal needs of indigent citizens, provide a basic understanding of the law, and assist with improvements to the justice system.
The LBF exists to preserve, honor and improve our system of justice by funding, developing or otherwise promoting efforts which enhance the legal profession, increase public understanding of the legal system and advance the reality of equal justice under the law.
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