Rule 1.15 Amended for Undistributable IOLTA Funds.
The Supreme Judicial Court (SJC) has approved of the Rules of Professional Conduct to establish procedures for lawyers to follow when they discover that the owner of funds in an IOLTA account cannot be identified or located, and to provide for the transfer of those funds to the IOLTA Committee. The IOLTA Committee will use the transferred funds to support legal help for Massachusetts residents who cannot afford a lawyer and to improve the administration of justice in the Commonwealth. The amendments go into effect on September 1, 2024.
Why are Rules 1.15 and 1.15A being amended?
The amendments were adopted in response the SJC’s decision in Matter of Olchowski, 485 Mass. 807 (2020), in which the SJC concluded that undistributable IOLTA funds are not governed by the state’s abandoned property fund and that such funds should be transferred to the IOLTA Committee. Following Olchowski, the IOLTA Committee and several other stakeholders submitted public comments on two draft proposals by the SJC Standing Advisory Committee on the Rules of Professional Conduct, which was tasked with proposing amendments. Nearly all the changes proposed by the IOLTA Committee were incorporated in the final proposal to the SJC.
What will the amendments mean for lawyers?
- Attorneys may remit undistributable funds to the IOLTA Committee at any time after making reasonable efforts to identify or locate the client to whom the IOLTA funds belong. Attorneys must make reasonable efforts and remit undistributable funds within three years after discovering them.
- If an attorney remits more than $500 of undistributable funds to the IOLTA Committee within a twelve-month period, the attorney must notify the Board of Bar Overseers (BBO) of the transfer of funds to the Committee.
- Attorneys must retain files related to the ownership of funds transferred to the IOLTA Committee for 10 years.
What will the amendments mean for financial institutions?
- Financial institutions will be required to enter an IOLTA account inactivity notification agreement with the BBO.
- After two-and-a-half years of inactivity on an IOLTA account, the financial institution will notify the lawyer (and law firm, if known) that the account is inactive and if the inactivity continues for six more months, the account will be reported to the BBO.
- After three years of inactivity, the financial institution will notify the BBO (with copies to the lawyer and law firm) that the account is inactive.
- After receiving a copy of the BBO inactive account notice, the lawyer may close the account and remit funds to the IOLTA Committee or the clients. Alternatively, the lawyer can inform the BBO and the financial institution that the account does not contain undistributable funds and should remain open.
- If the financial institution receives no instruction from the attorney for one year after the inactive account notice to the BBO, the financial institution will close the account and transfer the funds to the IOLTA Committee.
What happens next?
Prior to September 1, 2024, lawyers who wish to transfer undistributable funds to the IOLTA Committee should utilize the established by the BBO.
Financial institutions will be receiving further instructions from the IOLTA Committee in the near future and should not remit any undistributable funds until instructed to do so.
In the coming months, the IOLTA Committee will develop the necessary forms and procedures to implement the amendments. The Committee will provide updates on its website, via social media, and in other communications with financial institutions and lawyers. Questions may be directed to the IOLTA Committee at 617-723-9093 or This email address is being protected from spambots. You need JavaScript enabled to view it..