Wash. R. for Enforcement of Lawyer Conduct 15.7

(a) Legal Foundation of Washington. The Legal Foundation of Washington (Legal

Foundation) was established by Order of the Supreme Court of Washington to administer

distribution of Interest on Lawyer’s Trust Account (IOLTA) funds to civil legal aid programs.

(1) Administrative Responsibilities. The Legal Foundation is responsible for assessing the

products and services offered by financial institutions operating in the state of Washington and

determining whether such institutions meet the requirements of this rule, ELC 15.4, and

ELPOC 15.4. The Legal Foundation must maintain a list of financial institutions authorized to

establish client trust accounts and publish the list on a web site maintained by the Legal

Foundation for public information. The Legal Foundation must provide a copy of the list to any

person upon request.

(2) Annual Report. The Legal Foundation must prepare an annual report to the Supreme

Court of Washington that summarizes the Foundation’s income, grants and operating expenses,

implementation of its corporate purposes, and any problems arising in the administration of the

IOLTA program.

(b) Definitions. The following definitions apply to this rule:

(1) United States Government Securities. United States Government Securities are defined

as direct obligations of the United States Government, or obligations issued or guaranteed as to

principal and interest by the United States or any agency or instrumentality thereof, including

United States Government-Sponsored Enterprises.

(2) Daily Financial Institution Repurchase Agreement. A daily financial institution

repurchase agreement must be fully collateralized by United States Government Securities and

may be established only with an authorized financial institution that is deemed to be “well

capitalized” under applicable regulations of the Federal Deposit Insurance Corporation and the

National Credit Union Association.

(3) Money Market Funds. A money market fund is an investment company registered

under the Investment Company Act of 1940, as amended, that is regulated as a money market

funder under Rules and Regulations adopted by the Securities and Exchange Commission

pursuant to said Act, and at the time of the investment, has total assets of at least five hundred

million dollars ($500,000,000). A money market fund must be comprised solely of United States

Government Securities or investments fully collateralized by United States Government

Securities.

(4) IOLTA. As used in these rules, the term IOLTA means interest on lawyer’s trust

accounts, interest on LLLT’s trust accounts, and interest on LPO’s trust accounts, as set forth in

RPC 1.15A, LLLT RPC 1.15A, and LPORPC 1.12A, respectively, and Title 15 of these rules

and ELPOC Title 15.

(c) Authorized Financial Institutions. Any bank, savings bank, credit union, savings and

loan association, or other financial institution that meets the following criteria is eligible to

become an authorized financial institution under this rule:

(1) is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit

Union Administration;

(2) is authorized by law to do business in Washington;

(3) complies with all requirements set forth in section (d) of this rule and in ELC 15.4; and

(4) if offering IOLTA accounts, complies with all requirements set forth in section (e) of

this rule.

The Legal Foundation determines whether a financial institution is an authorized financial

institution under this section. Upon a determination of compliance with all requirements of this

rule and ELC 15.4, the Legal Foundation must list a financial institution as an authorized

financial institution under section (a)(1). At any time, the Legal Foundation may request that a

listed financial institution establish or certify compliance with the requirements of this rule or

ELC 15.4. The Legal Foundation may remove a financial institution from the list of authorized

financial institutions upon a determination that the financial institution is not in compliance.

(d) Requirements of All Trust Accounts. All trust accounts established pursuant to

RPC 1.15A(i), LLLT RPC 1.15A(i), or LPORPC 1.12A(h) must be insured by the Federal

Deposit Insurance Corporation or the National Credit Union Administration up to the limit

established by law for those types of accounts or be backed by United States Government

Securities. Trust account funds must not be placed in stocks, bonds, mutual funds that invest in

stock or bonds, or similar uninsured investments.

(e) IOLTA Accounts. To qualify for Legal Foundation approval as an authorized financial

institution offering IOLTA accounts, in addition to meeting all other requirements set forth in

this Rule, a financial institution must comply with the requirements set forth in this section.

(1) Interest Comparability. For accounts established pursuant to RPC 1.15A or

LLLT RPC 1.15A, authorized financial institutions must pay the highest interest rate generally

available from the institutions to its non-IOLTA account customers when IOLTA accounts meet

or exceed the same minimum balance or other account eligibility qualifications, if any. In

determining the highest interest rate generally available to its non-IOLTA customers, authorized

financial institutions may consider factors, in addition to the IOLTA account balance,

customarily considered by the institution when setting interest rates for its customers, provided

that such factors do not discriminate between IOLTA accounts and accounts of non-IOLTA

customers and that these factors do not include that the account is an IOLTA account. An

authorized financial institution may satisfy these comparability requirements by selecting one of

the following options:

(i) Establish the IOLTA account as the comparable interest-paying product; or

(ii) Pay the comparable interest rate on the IOLTA checking account in lieu of actually

establishing the comparable interest-paying product; or

(iii) Pay a rate on IOLTA equal to 0.75% of the Federal Funds Targeted Rate as of the first

business day of the month or IOLTA remitting period, or 0.75%, whichever is higher, and which

rate is deemed to be already net of allowable reasonable service charges or fees.

(2) Remit Interest to Legal Foundation of Washington. Authorized financial institutions

must remit the interest accruing on all IOLTA accounts, net of reasonable account fees, to the

Legal Foundation monthly, on a report form prescribed by the Legal Foundation. At a minimum,

the report must show details about the account, including but not limited to the name of the

lawyer, law firm, LLLT, LPO, or Closing Firm for whom the remittance is sent, the rate of

interest applied, the amount of service charges deducted, if any, and the balance used to compute

the interest. Interest must be calculated on the average monthly balance in the account, or as

otherwise computed in accordance with applicable state and federal regulations and the

institution’s standard accounting practice for non-IOLTA customers. The financial institution

must notify each lawyer, law firm, LLLT, LPO, or Closing Firm of the amount of interest

remitted to the Legal Foundation on a monthly basis on the account statement or other written

report.

(3) Reasonable account fees. Reasonable account fees may only include per deposit

charges, per check charges, a fee in lieu of minimum balances, sweep fees, FDIC insurance fees,

and a reasonable IOLTA account administration fee. No service charges or fees other than the

allowable, reasonable fees may be assessed against the interest or dividends on an IOLTA

account. Any service charges or fees other than allowable reasonable fees must be the sole

responsibility of, and may be charged to, the lawyer, law firm, LLLT, LPO, or Closing Firm

maintaining the IOLTA account. Fees or charges in excess of the interest or dividends earned on

the account must not be deducted from interest or dividends earned on any other account or from

the principal.

(4) Comparable Accounts. Subject to the requirements set forth in sections (d) and (e), an

IOLTA account may be established as:

(i) A business checking account with an automated investment feature, such as a daily bank

repurchase agreement or a money market fund; or

(ii) A checking account paying preferred interest rates, such as a money market or indexed

rates; or

(iii) A government interest-bearing checking account such as an account used for municipal

deposits; or

(iv) An interest-bearing checking account such as a negotiable order of withdrawal (NOW)

account, business checking account with interest; or

(v) Any other suitable interest-bearing product offered by the authorized financial

institution to its non-IOLTA customers.

(5) Nothing in this rule precludes an authorized financial institution from paying an interest

rate higher than described above or electing to waive any service charges or fees on IOLTA

accounts.