IOLTA Trust Old Refunds Procedure

The following is a summary of the IOLTA Trust procedure for handling Unidentified and Unclaimed client funds.  A good example of this is the receipt of a Clerk of Court refund where the client cannot be found or will not accept or cash your refund to the client.

The Office of Disciplinary Counsel (ODC) has no de minimis safe harbor rule for refund checks.  We know from previous cases against attorneys that a series of deposits of somewhat small refund checks had attorneys’ licenses suspended and one revoked.  There should be some practical way to handle these but the ODC has not issued a method other than below.

The rules are as follows.

1. If the client owes the firm (attorney) an amount equal to or more than the amount of the refund, the firm (attorney) can place the money in the firm operating bank account.
2. If not, the firm is to refund the money to the client.
3. If the client cannot be found (Unidentified), the amount is to be placed in the firm’s IOLTA bank account and held for 2 years.
4. If the client is known but will not accept the funds (Unclaimed), the amount is to be placed in the firm’s IOLTA bank account and held for 1 year.
5. After that period of time, the firm is to send the funds to the Louisiana Bar Foundation with the appropriate form.

With a good computer system that has the client trust details, I recommend you deposit the funds in your trust, create a “client” called “IOLTA Unidentified” and a client called “IOLTA Unclaimed”.  Then identify the funds in the Trust bank account with the received date and as much detail that you have.  When the prescribed time period has past, submit the funds in bulk to the Louisiana Bar Foundation.

You can find the forms under the IOLTA tab on the Louisiana Bar Foundation’s website (https://raisingthebar.org/iolta-2/).  Scroll down to see the rules and forms.

We know that doing this for small amounts is not all that practical.  However, the ODC said these are the rules.

If you only receive a few checks per year, I personally used the rule of $25, calling it de minimis, and deposited in the operating bank account.  But this was my answer and this is without the ODC’s blessing.