PA   IOLTA BOARD

Helping to Secure Equal Access to Justice

SUMMARY OF IOLTA AUTHORITY AND REGULATIONS

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The Supreme Court of Pennsylvania amended Rule 1.15 of the Rules of Professional Conduct (RPC) effective September 1, 1996 to require that lawyers place fiduciary funds entrusted to them as a result of the practice of law into interest bearing status to benefit the owner(s) of the funds, or for qualified funds to benefit the IOLTA program, unless an exemption from the IOLTA requirements is granted to the lawyer. Qualified funds are those that in the good faith judgement of the lawyer are nominal in amount or are reasonably expected to be held for such a short period of time that sufficient interest income will not be generated to justify the expense of administering a segregated account. Regulations governing the administration of the IOLTA Program are contained at 204 Pa. Code, Chapter 81.


Pa. RPC 1.15(e) permits limited exemptions from the IOLTA requirements. The IOLTA Board may declare a lawyer exempt from the requirement of maintaining an IOLTA account or alternatively, a lawyer may submit a written request for an exemption. Exemptions may be granted only with respect to the maintenance of an IOLTA account for qualified funds, and although no exemption is automatic, exemptions are routinely granted for pooled escrow accounts that do not maintain an average daily balance of $3,500 as measured for one year.


An "Enrollment Form for Lawyers and Law Firms" can be obtained from the IOLTA Board or a lawyer's bank and can be used to direct the financial institution to open or convert the lawyer's pooled escrow accounts to interest-bearing IOLTA accounts. A copy of the enrollment form, along with a list of all the lawyers who use the IOLTA account, should be sent to the IOLTA Board, PO Box 1025, Harrisburg, PA 17108-1025.


The lawyer's bank transfers the interest earned on IOLTA accounts to the IOLTA Board. Account service charges, such as account maintenance and transaction charges can be offset by the bank against IOLTA interest earnings. However, bank charges pertaining to a lawyers' practice such as check printing and costs billable to others, such as wire transfers and certified checks, cannot be offset against IOLTA interest earnings.



Lawyers are required by Rule 219 of the Rules of Disciplinary Enforcement (RDE) to annually report to the Administrative Office of Pennsylvania Courts the account number and name, and approved financial institution in which the lawyer holds funds of others that are subject to Pa. RPC 1.15 and IOLTA accounts must be identified as such. The statement must be signed and certify that the lawyer is familiar and in compliance with Rule 1.15 of the Pa. RPC.



The IOLTA Board will refer to the Office of Disciplinary Counsel the name, address and circumstances surrounding any lawyer who, not being exempted from the maintenance of an IOLTA account, fails or refuses to comply with the IOLTA rules and regulations.


When the Supreme Court of Pennsylvania amended Pa. RPC 1.15 in 1996, it also suspended the Act of April 29, 1988 (P.L. 373, No. 59) known as the Interest on Lawyers' Trust Accounts Act (RDE 601), which had provided statutory authority for the establishment and operation of a voluntary form of IOLTA in Pennsylvania from 1988 through 1996.

 

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