Bar Rules

RULE 1.15(II) SAFEKEEPING PROPERTY- TRUST ACCOUNT AND IOLTA

Ethics & Discipline / Current Rules / Part IV (After January 1 / 2001) - Georgia Rules of Professional Conduct (also includes Disciplinary Proceedings and Advisory Opinion rules) / CHAPTER 1 GEORGIA RULES OF PROFESSIONAL CONDUCT AND ENFORCEMENT THEREOF

  1. Every lawyer who practices law in Georgia, whether said lawyer practices as a sole practitioner, or as a member of a firm, association, or professional corporation, and who receives money or property on behalf of a client or in any other fiduciary capacity, shall maintain or have available one or more trust accounts as required by these Rules. All funds held by a lawyer for a client and all funds held by a lawyer in any other fiduciary capacity shall be deposited in and administered from a trust account.
  2. No personal funds shall ever be deposited in a lawyer's trust account, except that unearned attorney's fees may be so held until the same are earned. Sufficient personal funds of the lawyer may be kept in the trust account to cover maintenance fees such as service charges on the account. Records on such trust accounts shall be so kept and maintained as to reflect at all times the exact balance held for each client or third person. No funds shall be withdrawn from such trust accounts for the personal use of the lawyer maintaining the account except earned attorney's fees debited against the account of a specific client and recorded as such.
  3. All client's funds shall be placed in either an interest-bearing account at an approved institution with the interest being paid to the client or an interest-bearing (IOLTA) account at an approved institution with the interest being paid to the Georgia Bar Foundation as hereinafter provided.
    1. With respect to funds which are not nominal in amount, or are not to be held for a short period of time, a lawyer shall, with notice to the clients, create and maintain an interest-bearing trust account in an approved institution as defined in Rule 1.15 (III) (c) (1), with the interest to be paid to the client.
      1.  No earnings from such an interest-bearing account shall be made available to a lawyer or law firm.
      2. Funds in such an interest-bearing account shall be available for withdrawal upon request and without delay, subject only to any notice period which the institution is required to  reserve by law or regulation.
    2. With respect to funds which are nominal in amount or are to be held for a short period of time, such that there can be no reasonable expectation of a positive net return to the client or third person, a lawyer shall, with or without notice to the client, create and maintain an interest-bearing, government insured trust account (IOLTA) at an approved institution as defined by Rule 1.15 (III) (c) (1) in compliance with the following provisions:
      1. No earnings from such an IOLTA account shall be made available to a lawyer or law firm.
      2. Funds in each IOLTA account shall be available for withdrawl upon request and without delay, subject only to any notice period which the institution is required to reserve by law or regulation.
      3. As required by Rule 15-1-3, the rate of interest payable on any IOLTA account shall not be less than the rate paid by the depositor institution to regular, non-lawyer depositors. Higher rates offered by the institution to customers whose deposits exceed certain time periods or quantity minimums, such as those offered in the form of certificates of deposit, may be obtained by a lawyer or law firm on some or all of the deposited funds so long as there is no impairment of the right to withdraw or transfer principal immediately.
      4. Lawyers or law firms shall direct the depository institution:
        1. to remit to the Georgia Bar Foundation interest or dividends, net of any allowable reasonable fees as defined  in Rule 15-102 (c), on the average monthly balance in that account, at least quarterly. Any allowable reasonable fees in excess of interest earned on that account for any month, and any charges or fees that are not allowable reasonable fees, shall be charged to the lawyer or law firm in whose names such account appears, if not waived by the approved institution;
        2. to transmit with each remittance to the Georgia Bar Foundation a statement showing the name of the lawyer or law firm for whom the remittance is sent, the applicable IOLTA account number, the rate of interest applied, the average monthly account balance against which the interest rate is being applied, the gross interest earned, the types and amounts of service charges of fees applied, and the amount of the net interest remittance;
        3. to transmit to the depositing lawyer or law firm periodic reports or statements in accordance with the approved institution’s normal procedures for reporting to depositors.
    3. No charge of ethical impropriety or other breach of professional conduct shall attend the determination that such funds are nominal in amount or to be held for a short period of time, or to the decision to invest clients' funds in a pooled interest-bearing account.
    4. Whether the funds are designated short-term or nominal or not, a lawyer or law firm may, at the request of the client, deposit funds into a seperate interest-bearing account and remit all interest earned, or interest earned net of charges, to the client or clients.

The maximum penalty for a violation of Rule 1.15 (II) (a) and Rule 1.15 (II) (b) is disbarment. The maximum penalty for a violation of Rule 1.15 (II) (c) is a public reprimand.

Comment

[1] The personal money permitted to be kept in the lawyer's trust account by this Rule shall not be used for any purpose other than to cover the bank fees and if used for any other purpose the lawyer shall have violated this Rule. If the lawyer wishes to reduce the amount of personal money in the trust account, the change must be properly noted in the lawyer's financial records and the monies transferred to the lawyer's business account.

[2] Nothing in this Rule shall prohibit a lawyer from removing from the trust account fees which have been earned on a regular basis which coincides with the lawyer's billing cycles rather than removing the fees earned on an hour-by-hour basis.

[3] In determining whether funds of a client or other beneficiary can earn income in excess of costs, the lawyer may consider the following factors:

  1. the amount of funds to be deposited;
  2. the expected duration of the deposit, including the likelihood of delay in the matter with respect to which the funds are held;
  3. the rates of interest or yield at financial institutions where the funds are to be deposited;
  4. the cost of establishing and administering a non-IOLTA trust account for the benefit of the client or other beneficiary, including service charges, the costs of the lawyer’s services and the costs of preparing any tax reports that may be required;
  5. the  capability of financial  institutions, lawyers, or law firms to calculate and pay earnings to individual clients; and
  6. any other circumstances that affect the ability of the funds to earn a net return for the client or other beneficiary.

[4] The lawyer or law firm should review the IOLTA account at reasonable intervals to determine whether changed circumstances require further action with respect to the funds of any client or third party.
 



GO TO RULE 1.15(I) SAFEKEEPING PROPERTY - GENERAL
GO TO RULE 1.15(III) RECORD KEEPING; TRUST ACCOUNT OVERDRAFT NOTIFICATION; EXAMINATION OF RECORDS
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