Ill. R. Prof'l Conduct (2010) R. 1.15B

(a) Use of IOLTA Accounts. A lawyer must deposit all funds belonging to a client or third

person into an IOLTA account unless the funds can otherwise earn net income for the client or

third person. Net income means interest that exceeds the costs incurred to secure such interest. A

lawyer must deposit client or third-person funds that can earn net income for the benefit of the

client or third person in a separate, interest- bearing non-IOLTA client trust account, with the

client or third person designated as the recipient of net interest generated on that account. A

lawyer must not deposit any client or third-person funds into an account that does not bear

interest or pay dividends.

(b) Account Determination. A lawyer must consider the following factors in determining

whether the client or third-person funds can earn net income for the benefit of the client or third

person:

(1) The amount of client or third-person funds to be deposited;

(2) The expected duration of the deposit, including the likelihood of delay in the matter

for which the funds are held;

(3) The rate of interest at the financial institution where the funds are to be deposited;

(4) The cost of establishing and administering a non-IOLTA client trust account for the

benefit of the client, including the cost of the lawyer’s services, financial institution fees and

service charges, and the cost of preparing tax reports;

(5) The capability of the financial institution, through sub-accounting, to calculate and

pay interest earned by each client’s funds, net of any transaction costs, to the individual

client; and

(6) Any other circumstances that affect the ability of the client’s funds to earn net interest

for the client.

The lawyer must review the lawyer’s IOLTA account(s) at reasonable intervals to determine

whether changed circumstances require further action regarding the deposited client or third-person funds. A lawyer who exercises reasonable judgment in determining whether to deposit

client or third-person funds into an IOLTA account or a non-IOLTA client trust account pursuant

to this rule will not be subject to a charge of ethical impropriety or other breach of professional

conduct on the basis of that determination.

(c) Eligible Financial Institutions.

(1) A lawyer must use an IOLTA account established at an eligible financial institution

that is authorized by federal or state law to do business in the state of Illinois; that has

complied with the Overdraft Notification provisions of Rule 1.15B(e); and that offers IOLTA

accounts within the comparable rate, remittance, and reporting requirements of this

paragraph (c) as administered by the Lawyers Trust Fund of Illinois.

(2) To be eligible to hold IOLTA funds deposited by Illinois lawyers, a financial

institution must offer IOLTA accounts that pay no less than the highest interest rate or

dividend generally available from the institution to its non-IOLTA account customers when

the IOLTA account meets or exceeds the same minimum balance or other account eligibility

guidelines.

(3) To meet the requirements of paragraph (c)(2), an eligible financial institution must

offer one or more of the account product options identified in this paragraph (c)(3). For all

account product options, IOLTA funds must be subject to withdrawal upon request and

without delay as soon as permitted by law.

(i) An eligible financial institution may hold IOLTA funds in a checking account

paying preferred interest rates, such as money market or indexed rates.

(ii) An eligible financial institution may use alternative account products for IOLTA

accounts with higher balances, including:

(A) A government (such as for municipal deposits) checking account;

(B) A business checking account with an automated investment feature, such as

an overnight sweep and investment in repurchase agreements fully collateralized by

U.S. Government securities;

(C) A money market fund with, or tied to, check-writing capacity, that must be

solely invested in U.S. Government securities or securities fully collateralized by U.S.

Government securities, and that has total assets of at least $250 million; or

(D) Any other suitable interest-bearing deposit account offered by the eligible

financial institution to its non-IOLTA customers.

(iii) An eligible financial institution may pay on its existing IOLTA accounts the

highest rates it offers on the account product options in paragraph (c)(3)(ii) in lieu of

moving the funds into those products.

(iv) As an alternative to the account product options in paragraph (c)(3)(i-iii), an

eligible financial institution may pay on IOLTA deposits a “safe harbor” yield equal to

70% of the current Federal Funds Target Rate, or a rate of 1.0% (100 basis points),

whichever is higher. An eligible financial institution that pays the safe harbor yield must

agree to pay the rate and then ensure that the monthly IOLTA interest it remits to the

Lawyers Trust Fund meets the safe harbor threshold.

(v) An eligible financial institution periodically may be required to certify to the

Lawyers Trust Fund that the rates it pays on IOLTA deposits, regardless of account type,

meet the requirements of this paragraph (c).

(4) An eligible financial institution must remit monthly earnings on each IOLTA account

directly to the Lawyers Trust Fund.

(i) For each individual IOLTA account, the eligible financial institution must provide:

a statement transmitted with each remittance showing the name of the lawyer or law firm

directing that the remittance be sent, the account number, the remittance period, the rate

of interest applied, the account balance on which the interest was calculated, the

reasonable service fee(s) if any, the gross earnings for the remittance period, and the net

amount of earnings remitted.

(ii) Remittances must be sent to the Lawyers Trust Fund electronically unless

otherwise agreed.

(iii) The financial institution may assess only allowable reasonable fees, as defined in

Rule 1.15C(i). Fees in excess of the earnings accrued on an individual IOLTA account

for any month must not be taken from earnings accrued on other IOLTA accounts or

from the principal of the account.

(d) Unidentified Funds. A lawyer who learns of unidentified funds in an IOLTA account

must make periodic efforts to identify and return the funds to the rightful owner. If, after 12

months from the discovery of the unidentified funds, the lawyer determines that further efforts to

ascertain the ownership or secure the return of the funds will not succeed, the lawyer must remit

the funds to the Lawyers Trust Fund of Illinois. A lawyer who remits funds in error or

subsequently identifies the owner of the remitted funds may make a claim for a refund to the

Lawyers Trust Fund. The Lawyers Trust Fund will return the funds to the lawyer after verifying

the claim. A lawyer who exercises reasonable judgment in making a determination under this

paragraph will not be subject to a charge of ethical impropriety or other breach of professional

conduct on the basis of that determination.

(e) Overdraft Notification. All trust accounts, whether IOLTA or non-IOLTA, must be

established in compliance with the following provisions on overdraft notification:

(1) A lawyer must maintain a client trust account only at an eligible financial institution

that has agreed to notify the Attorney Registration and Disciplinary Commission in the event

any properly payable instrument is presented against a client trust account containing

insufficient funds, irrespective of whether or not the instrument is honored. The financial

institution must file an agreement using a form provided by the ARDC. Any such agreement

must apply to all branches of the financial institution and must not be canceled except upon

advance notice of 30 days or more made in writing to the ARDC. The ARDC must annually

publish a list of financial institutions that have agreed to comply with this paragraph and

shall establish rules and procedures governing amendments to the list.

(2) The overdraft notification agreement must provide that all reports made by the

financial institution to the ARDC will be in the following format:

(i) In the case of a dishonored instrument, the financial institution’s report must be

identical to the overdraft notice customarily forwarded to the depositor and should

include a copy of the dishonored instrument, if such a copy is normally provided to

depositors; and

(ii) In the case of instruments that are presented against insufficient funds but which

instruments are honored, the financial institution’s report must identify the financial

institution, the lawyer or law firm, the account number, the date of presentation for

payment and the date paid, and the amount of the resulting overdraft. Such reports shall

be made simultaneously with, and within the time provided by law for, notice of

dishonor, if any. If an instrument presented against insufficient funds is honored, then the

report shall be made within five banking days of the date of presentation for payment

against insufficient funds.

(3) Every lawyer admitted to practice in this jurisdiction is conclusively deemed to have

consented to the reporting and production requirements mandated by this Rule.

(4) Nothing in this paragraph (e) may preclude a financial institution from charging a

particular lawyer or law firm for the reasonable cost of producing the reports and records

required by this paragraph. Fees charged for the reasonable cost of producing the reports and

records required by paragraph (e) are the sole responsibility of the lawyer or law firm and are

not allowable reasonable fees for IOLTA accounts as those are defined in Rule 1.15C(i).

(f) Disbursement of Real Estate Transaction Funds. In the closing of a real estate

transaction, a lawyer’s disbursement of funds deposited but not collected shall not violate his or

her duty pursuant to this Rule 1.15B if, prior to the closing, the lawyer has established a

segregated Real Estate Funds Account (REFA) maintained solely for the receipt and

disbursement of such funds, has deposited such funds into a REFA, and:

(1) is acting as a closing agent pursuant to an insured closing letter for a title insurance

company licensed in the State of Illinois and uses for such funds a segregated REFA

maintained solely for such title insurance business; or

(2) has met the “good-funds” requirements. The good-funds requirements shall be met if

the bank in which the REFA was established has agreed in a writing directed to the lawyer to

honor all disbursement orders drawn on that REFA for all transactions up to a specified

dollar amount not less than the total amount being deposited in good funds. Good funds shall

include only the following forms of deposits:

(i) a certified check;

(ii) a check issued by the State of Illinois, the United States, or a political

subdivision of the State of Illinois or the United States;

(iii) a cashier’s check, teller’s check, bank money order, or official bank check

drawn on or issued by a financial institution insured by the Federal Deposit Insurance

Corporation or a comparable agency of the federal or state government;

(iv) a check drawn on the trust account of any lawyer or real estate broker

licensed under the laws of any state;

(v) a personal check or checks in an aggregate amount not exceeding $5,000 per

closing if the lawyer making the deposit has reasonable and prudent grounds to believe

that the deposit will be irrevocably credited to the REFA;

(vi) a check drawn on the account of or issued by a lender approved by the United

States Department of Housing and Urban Development as either a supervised or a

nonsupervised mortgagee as defined in 24 C.F.R. § 202.2;

(vii) a check from a title insurance company licensed in the State of Illinois, or

from a title insurance agent of the title insurance company, provided that the title

insurance company has guaranteed the funds of that title insurance agent.

Without limiting the rights of the lawyer against any person, it shall be the responsibility of the

disbursing lawyer to reimburse the trust account for such funds that are not collected and for any

fees, charges and interest assessed by the paying bank on account of such funds being

uncollected.