Mass Iolta Account Rules
(2) On or before the day a payment is made from an escrow account for the purpose of paying a lawyer`s fee, the lawyer shall provide the client in writing with (i) a detailed invoice or other accounting for the services provided, (ii) written notice of the amount and date of withdrawal, and (iii) a statement of the balance of the client`s funds in the escrow account after disbursement. [13] Paragraph (f)(4), as well as rule 1.17(e), provide for the retention of a lawyer`s fiduciary accounts in the event of the dissolution or sale of a law firm. These provisions reflect members` oversight obligations under Rule 5.1. Regardless of the agreements that partners enter into with each other for the maintenance of customer trust records, each partner can be held responsible for the availability of these records. For definitions of “law firm”, “partner” and “adequate”, see Rule 1.0(e), (i) and (l). (1) In the event of a final distribution of the assets of the trust or at the request of the client or third parties on whose behalf the lawyer holds trust assets, the lawyer shall immediately submit a complete written statement of those assets. The IOLTA Account is established with any bank, savings and loan association, or credit union authorized under federal or state law to carry on business in Massachusetts and insured by the Federal Deposit Insurance Corporation or similar state insurance programs for state-chartered institutions. At the request of the lawyer, IOLTA account funds in excess of $100,000 may be temporarily reinvested in repurchase agreements fully secured by U.S. government bonds.
Funds from the IOLTA account can be withdrawn upon request and immediately. (ii) Trust funds, some of which belong to a client or third party and others currently or potentially to the lawyer, shall be deposited in an escrow account, but the part belonging to the lawyer shall be withdrawn as soon as practicable after the lawyer`s interest in that part has been determined. A lawyer who knows that the right of the lawyer or law firm to obtain such a party is disputed cannot withdraw the funds until the dispute is resolved. If the right of the lawyer or law firm to receive this part is contested within a reasonable time after notification that the funds have been withdrawn, the disputed part must be returned to an escrow account until the dispute is resolved. 3. For each escrow account opened, the lawyer shall submit a written notification to the bank or other custodian where the escrow account is held confirming to the custodian that the account will contain trust funds within the meaning of this rule. The lawyer keeps a copy made by the bank and the lawyer for his own records. The notification shall specify the bank, account and type of account, whether they are pooled accounts with interest paid to the IOLTA committee (IOLTA account) or to the individual account with interest paid to the client or third party on whose behalf the trust is held.
For the purposes of this rule, a notification for a master account or an umbrella account with individual sub-accounts is sufficient. (2) `escrow account` means an account with a financial institution in which trust funds are deposited; Escrow accounts must comply with the requirements of this rule. (i) return to the IOLTA Committee interest or dividends less service charges or charges on the average monthly balance of the account or calculated in accordance with the usual accounting practices of an institution at least quarterly; Where can I learn more about IOLTA accounts for Massachusetts lawyers? (1) All fiduciary accounts must be held in the State in which the law firm is located or elsewhere with the consent of the client or third party on whose behalf the trust is held, except that all funds required to be deposited in an IOLTA account under this rule must be held in that Commonwealth. Any lawyer receiving escrow funds must maintain at least one bank account other than the escrow account for funds received and paid outside the lawyer`s fiduciary capacity. Massachusetts attorneys and law firms must open an IOTTA account if (a) the attorney has a law firm and practices law in Massachusetts, (b) the attorney holds client funds (e.g., advances, certain advances, settlement proceeds, real estate transfers, third-party funds, advances, and fees) on behalf of his or her clients, and (c) the Client`s funds are nominal or substantial but are held for a short period of time. Lawyers who create and maintain an IOLTA account ask the depositary authority to do so. [11] Regular reconciliation of escrow accounts is also required. In general, escrow accounts should be reconciled monthly so that any errors can be corrected quickly.
High-volume active accounts may require more frequent reconciliations. A lawyer must reconcile all escrow accounts at least every sixty days. The tripartite reconciliation described in paragraph (f)(1)(E) must be performed for each account where funds are held in relation to more than one client business. The reconciliation described in paragraph (f)(1)(E)(iii) should not be performed for accounts containing only the funds of an individual client or third party, but the lawyer should ensure that the balance in that account corresponds to the balance in the individual book held for that client or third party. The method of preparation and the format of the periodic reconciliation report depend on the volume of transactions made on the accounts during the reporting period and whether the lawyer maintains the account records manually or electronically. For example, in the case of an inactive individual client account for which the lawyer manually maintains records, a written document may be sufficient to indicate that the lawyer has reconciled the financial institution`s statement with the lawyer`s cheque log. [12] Lawyers who maintain records electronically should regularly back up their data. For medium to high volume accounts, weekly or even daily backups may be appropriate. A general ledger or other record of the attorney`s funds deposited in escrow in accordance with paragraph (b)(2)(i) of this rule to reflect reasonably expected bank charges.
This ledger documents each deposit and spends lawyer`s funds in the account and balance. [6A] Paragraph (d)(2) provides that no later than the date of any withdrawal from an escrow account for the payment of fees owing, lawyers must provide the client in writing, among other things, with itemized invoices or other accounting showing the services provided. Since the definition of “trust” in paragraph (a)(1) also includes funds held in trust, lawyers who hold themselves out as trustees (for example, personal representatives, executors, trustees, guardians or trustees) must comply with paragraph (d)(2) by establishing, before or concurrently with a fee withdrawal, invoices or accounts required under the rule to support payment. Such accounts may consist of detailed written time statements, formal written invoices or other simultaneous written statements indicating the services provided and the method used to calculate the fees. The lawyer is also required to keep all escrow account records referred to in paragraphs (e) and (f) of this rule. [10] The “cheque ledger”, the “individual customer ledger” and the “bank fees and charges ledger” required in paragraph (f)(1) are chronological records of transactions. Each entry in the cheque register must include a corresponding entry in one of the books. This requirement is consistent with manual registration and is also compatible with most software packages.
In addition to the data required under point (f)(1)(B), the origin of the deposit and the purpose of payment must be recorded in the cheque register and in the corresponding general ledger. For accounts other than IOLTA, the dates and amounts of accrued interest and disbursements, including accrued interest payments to cover the cost of maintaining the account, are among the transactions that must be recorded. Cheque and general ledger balances must be calculated and recorded after each transaction or series of related transactions. A lawyer who maintains a computer escrow register must maintain the cheque book, client books and reconciliation reports in a form that can be reproduced in printed form. Electronic records must be regularly backed up by an appropriate storage medium. The purpose of IOLTA is several things. It is a place where clients` funds are kept before the lawyer actually earns them. If you earn it, you can transfer the money from IOLTA to your operating account. Your operating account is used for your own business use and can be used to pay for everything from office supplies to salary to rent. You may not use money from the IOLTA Account for business or personal purposes. The money in IOLTA is the customer`s money and does not belong to you at all. [2A] Prepaid attorneys` fees and costs to be used as compensation for subsequent services rendered or expenses are trust assets and must be deposited in an escrow account in accordance with paragraphs (b)(1) and (b)(3).