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SUPREME COURT OF ARKANSAS

IN RE AMENDMENT OF ARKANSAS

RULE OF PROFESSIONAL

CONDUCT 1.15 AND

ADMINISTRATIVE ORDER NO. 22 – 

IOLTA PROGRAM RELATIONSHIP

WITH ELIGIBLE AND MEMBER

INSTITUTIONS

Opinion Delivered November 5, 2015

PER CURIAM

We published for comment the proposed addition of subsection (d) to Rule 1.15 of

the Arkansas Rules of Professional Conduct. In re Amendment of Arkansas Rule of Professional

Conduct 1.15, 2015 Ark. 297 (per curiam). The comment period has expired, and we thank

those who submitted comments. We adopt the amendment, with two minor revisions, and

republish the rule as set forth below. In addition, current subsection (c) of the rule is hereby

deleted from the rule1 and incorporated into new Administrative Order No. 22, with revisions

noted. Administrative Order No. 22 is published below. These changes are effective

immediately. 

 Rule 1.15. Safekeeping property and trust accounts

(a) Safekeeping property.

(1) A lawyer shall hold property of clients or third persons, including prospective

clients, that is in a lawyer's possession in connection with a representation separate from the

lawyer's own property.

1Thus, proposed new subsection (d) regarding unclaimed or unidentifiable trust

account funds will be subsection (c) of Rule 1.15.
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(2) Property, other than funds of clients or third persons, shall be identified as such and

appropriately safeguarded.

(3) Complete records of trust account funds and other property shall be kept by the

lawyer and shall be preserved for a period of five years after the termination of the

representation or the last contact with a prospective client.

(4) A lawyer shall maintain on a current basis books and records in accordance with

generally accepted accounting practice and comply with any record keeping rules established

by law, rule, or court order.

(5) Upon receiving funds or other property in which a client or third person has an

interest, a lawyer shall promptly notify the client or third person in writing. Except as stated

in this Rule or otherwise permitted by law or by agreement with the client, a lawyer shall

promptly deliver to the client or third person any funds or other property that the client or

third person is entitled to receive and, upon request by the client or third person, shall

promptly render a full written accounting regarding such property to the client or third

persons.

(6) When in the course of representation a lawyer is in possession of property in which

two or more persons (one of whom may be the lawyer) claim interests, the property shall be

kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute

all portions of the property as to which the interests are not in dispute.

(b) Trust Accounts: IOLTA trust accounts and non-IOLTA trust accounts.

(1) Funds of a client shall be deposited and maintained in one or more separate, clearly

identifiable trust accounts in the state where the lawyer's office is situated, or elsewhere with

the consent of the client or third person.

(2) A lawyer shall deposit into a client trust account legal fees and expenses that have

been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses

incurred.

(3) A lawyer may deposit funds belonging to the lawyer or the law firm in a client trust

account for the sole purposes of paying bank services charges on that account, or to comply

with the minimum balance required for the waiver of bank charges, but only in the amount

necessary for those purposes, but not to exceed $500.00 in any case. Such funds belonging to

the lawyer or law firm shall be clearly identified as such in the account records.

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(4) Each trust account referred to in section (b)(1) shall be an interest- or dividendbearing account held at an eligible institution.

(5) Each such trust account shall provide overdraft notification to the Executive

Director of the Office of Professional Conduct for the purpose of reporting whenever any

properly payable instrument is presented against a lawyer trust account containing insufficient

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

report simultaneously with its notice to the lawyer the following information:

(i) In the case of a dishonored instrument, the report shall 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;

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

which instruments are honored, the report shall identify the financial institution, the

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

date paid, as well as the amount of overdraft created thereby.

(6) A lawyer who receives client funds which, in the judgment of the lawyer, are

nominal in amount, or are expected to be held for such a short period of time that it is not

practical to earn and account for income on individual deposits, shall create and maintain an

interest-bearing, multi-client trust account ("IOLTA" account) for such funds. The account

shall be maintained in compliance with the following requirements:

(i) The trust account shall be maintained in compliance with sections (b)(1) -

(b)(5) of this Rule and the funds shall be subject to withdrawal upon request and

without delay;

(ii) No earnings from the account shall be made available to the lawyer or law

firm; and,

(iii) The interest accruing on this account, net of allowable reasonable fees, shall

be paid monthly to the IOLTA Program of the Arkansas Access to Justice Foundation,

Inc. All other fees and transaction costs shall be paid by the lawyer or law firm. 

Payment must be made by Automated Clearing House (ACH) method, wire transfer,

or other electronic transfer.

(7) All client funds shall be deposited in the account specified in section (b)(6), unless

they are deposited in a separate interest-bearing account ("non-IOLTA" account) for a specific

and individual matter for a particular client. There shall be a separate account opened for each

such particular client matter. Interest so earned must be held in trust as property of each client

in the same manner as is provided in this Rule.

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(8) The decision whether to use an "IOLTA" account specified in section (b)(6) or a

“non-IOLTA” account specified in section (b)(7) is within the discretion of the lawyer. In

making this determination, consideration should be given to the following:

(i) The amount of interest which the funds would earn during the period they

are expected to be deposited; and,

(ii) The cost of establishing and administering the account, including the cost

of the lawyer's or law firm's services.

(9) Every lawyer practicing or admitted to practice in this State shall, as a condition

thereof, be conclusively deemed to have consented to the reporting requirements mandated

by this rule. All lawyers shall certify annually that they, their law firm or professional

corporation is in compliance with all sections and subsections of this Rule.

(10) A lawyer shall certify, in connection with the annual renewal of the lawyer’s

license, that the lawyer is complying with all provisions of this rule. Certification shall be

made on a form provided by and in a manner designated by the Clerk of the Supreme Court.

(11) A lawyer or a law firm may be exempt from the requirements of this rule if the

Arkansas Access to Justice Foundation's Board of Directors, on its own motion, has exempted

the lawyer or law firm from participation in the IOLTA Program for a period of no more

than two years when service charges on the lawyer's or law firm's trust account equal or

exceed any interest generated.

(c) IOLTA Foundation relationship with eligible and member institutions.

(1) DEFINITIONS. As used in this rule, the terms below shall have the following

meaning:

(i) “IOLTA account” means an interest- or dividend-bearing trust account benefiting

the Arkansas Access to Justice Foundation, Inc., established in an eligible institution for the

deposit of nominal or short-term funds of clients or third persons, which may be withdrawn

upon request as soon as permitted by law.

(ii) “Eligible institution” for IOLTA accounts means a depository bank or savings and

loan association or credit union authorized by federal or state laws to do business in Arkansas,

whose deposits are insured by an agency of the federal government, or any open-end

investment company registered with the Securities and Exchange Commission and authorized

by federal or state laws to do business in Arkansas. In addition, an eligible institution must

either (1) maintain a physical office in the state of Arkansas or (2) be owned by a bank holding

company regulated by the Federal Reserve System, of which a subsidiary federally-insured

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depository bank or savings and loan association or credit union maintains a physical office in

the state of Arkansas. Eligible institutions must meet the requirements set out in section (b)

above.

(iii) “Interest- or dividend-bearing trust account” means a federally insured checking

account or an investment product, including a sweep product and a daily (overnight)

financial-institution repurchase agreement or an open-end money market fund. A daily

financial-institution repurchase agreement must be fully collateralized by U.S. Treasury

Securities; an open-end money-market fund must invest primarily in U.S. Treasury Securities

or repurchase agreements fully collateralized by U.S. Treasury Securities. A daily financialinstitution repurchase agreement may be established only with an eligible institution that is

“well capitalized” or “adequately capitalized” as those terms are defined by applicable federal

statutes and regulations. An open-end money-market fund must hold itself out as a moneymarket fund as defined by applicable federal statutes and regulations under the Investment

Company Act of 1940 and, at the time of investment, have total managed assets of at least

$250,000,000. The funds covered by this rule shall be subject to withdrawal upon request and

without delay.

(iv) “Allowable reasonable fees” means: (1) per check charges, (2) per deposit charges,

(3) a fee in lieu of minimum balance, (4) federal deposit insurance fees, (5) sweep fees, 12b-1

fees, and subaccounting fees, and (6) a reasonable IOLTA account administrative fee.

(v) “U.S. Treasury Securities” means direct obligations of the federal government of

the United States.

(vi) “Repurchase agreements” means transactions in which a fund buys a security from

a dealer or bank and agrees to sell the security back at a mutually agreed-upon time and price.

The repurchase price exceeds the sale price, reflecting the fund's return on the transaction.

This return is unrelated to the interest rate on the underlying security. Repurchase agreements

are subject to credit risks.

(2) Participation in the IOLTA Program of the Arkansas Access to Justice Foundation

is voluntary for banks, savings and loan associations, and investment companies. Any eligible

institution that elects to provide and maintain IOLTA accounts shall do so according to the

following terms:

(i) Determination of Interest Rates and Dividends. Eligible institutions that maintain

IOLTA accounts that are, or are invested in, interest-bearing deposits or daily financialinstitution repurchase agreements shall pay no less than the highest rate and dividend generally

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

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

determining the highest rate or dividend generally available from the institution to its non5
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IOLTA accounts, eligible institutions may consider factors, in addition to the balance in the

IOLTA account, customarily considered by the institution when setting interest rates or

dividends for it s customers, provided that such factor do not discriminate between IOLTA

accounts and accounts of non-IOLTA customers, and that these factors do not include the fact

that the account is an IOLTA account. The eligible institution may offer, and the lawyer may

accept, a sweep account that provides a mechanism fo rthe overnight investment of balances

in the IOLTA account into a daily financial institution repurchase agreement or a moneymarket fund. However, this Rule shall not require any eligible institution to offer or

otherwise make available sweep accounts for IOLTA accounts.

(ii) Written Agreements. There shall be a written agreement between the lawyer and

the eligible institution, designating interest on the IOLTA account be remitted to the

Arkansas Access to Justice Foundation, Inc., on a monthly basis.

(iii) Interest Rates and Dividends. Eligible institutions shall maintain IOLTA accounts

that pay the highest interest rate or dividend generally available from the institution to its nonIOLTA account customers when IOLTA accounts meet or exceed the same minimum

balance or other account eligibility qualifications, if any.

(iv) Reasonable Fees. Reasonable fees means (1) per check charges, (2) per deposit

charges, (3) a fee in lieu of minimum balances, (4) federal deposit insurance fees, (5) sweep

fees, 12b-1 fees, and subaccounting fees, and (6) a reasonable IOLTA account administrative

fee. Reasonable fees are the only service charges or fees permitted to be deducted from

interest earned on IOLTA accounts. Reasonable fees may be deducted from interest on an

IOLTA account only at such rates and under such circumstances as is the eligible institution's

customary practice for all of its customers with interest-bearing accounts. All other fees and

charges shall not be assessed against the accrued interest on the IOLTA account but rather

shall be the responsibility of, and may be charged to, the lawyer maintaining the IOLTA

account.

(v) Negative Netting Prohibited. Fees or charges in excess of the interest earned on the

account for any month shall not be taken from interest earned on other IOLTA accounts or

from the principal of the account.

(vi) Reporting Requirements. A statement should be transmitted monthly to the

Arkansas Access to Justice Foundation, Inc., with each remittance showing the period for

which the remittance is made, the name of the lawyer or law firm from whose IOLTA

account the remittance is being sent, the IOLTA account number, the average daily rate

applied, the gross interest or dividend earned during the period, the amount and description

of any service charges or fees assessed during the remittance period, and the net amount of

interest or dividend remitted for the period. The Foundation supplies a monthly remittance

form tailored to each bank listing the required information; however, should the bank elect

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to generate its own report, the requirements in the section must be addressed.

(3) In addition to the attorney trust account “automatic overdraft” notification

procedures set out in Section 28 of the Procedures of the Arkansas Supreme Court regulating

professional conduct of attorneys at law:

(i) Banks may only be removed from the IOLTA Program after notice from the

Foundation to the bank of the action needed to correct or implement any needed changes and

a timely response from the bank.

(ii) Should a bank be removed from the IOLTA Program, the Foundation will give

attorneys sufficient notice and time in order to move their IOLTA accounts to another

participating bank. 

(d) (c) Unclaimed or Unidentifiable Trust Account Funds.

(1) When a lawyer, law firm, or estate of a deceased lawyer cannot, using reasonable

efforts, identify or locate the owner of funds in its Arkansas IOLTA or non-IOLTA trust

account for a period of at least two (2) years, it shall pay the funds to the Arkansas Access to

Justice Foundation. At the time such funds are remitted, the lawyer shall submit to the

Arkansas Access to Justice Foundation and the Office of the Committee on Professional

Conduct the name and last known address of each person appearing from the lawyer’s or law

firm’s records to be entitled to the funds, if known; a description of the efforts undertaken to

identify or locate the owner; and the amount of any unclaimed or unidentified funds.

(2) If, within two (2) years of making a payment of unclaimed or unidentified funds

to the Arkansas Access to Justice Foundation, the lawyer, law firm, or deceased lawyer’s estate

identifies and locates the owner of funds paid, the Arkansas Access to Justice Foundation shall

refund the sum to the lawyer, law firm, or deceased lawyer’s estate. The lawyer, law firm, or

deceased lawyer’s estate shall submit to the Foundation a verification attesting that the funds

have been returned to the owner. The Arkansas Access to Justice Foundation shall maintain

sufficient reserves to pay all claims for such funds.

ADMINISTRATIVE ORDER NO. 22

IOLTA Program Relationship with Eligible and Member Institutions.

Section 1. DEFINITIONS. As used in Rule 1.15 of the Arkansas Rules of Professional

Conduct, the terms below shall have the following meaning:

(a) "IOLTA account" means an interest- or dividend-bearing trust account benefiting the

Arkansas Access to Justice Foundation, Inc., established in an eligible institution for the

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deposit of nominal or short-term funds of clients or third persons, which may be withdrawn

upon request as soon as permitted by law.

(b) "Eligible institution" for IOLTA accounts means a depository bank or savings and loan

association or credit union authorized by federal or state laws to do business in Arkansas,

whose deposits are insured by an agency of the federal government, or any open-end

investment company registered with the Securities and Exchange Commission and authorized

by federal or state laws to do business in Arkansas. In addition, an eligible institution must

either (1) maintain a physical office in the state of Arkansas or (2) be owned by a bank holding

company regulated by the Federal Reserve System, of which a subsidiary federally-insured

depository bank or savings and loan association or credit union maintains a physical office in

the state of Arkansas. Eligible institutions must meet the requirements set out in section (b)

above.

(c) "Interest- or dividend-bearing trust account" means a federally insured checking

account or an investment product, including a sweep product and a daily (overnight)

financial-institution repurchase agreement or an open-end money market fund. A daily

financial-institution repurchase agreement must be fully collateralized by U.S. Treasury

Securities; an open-end money-market fund must invest primarily in U.S. Treasury Securities

or repurchase agreements fully collateralized by U.S. Treasury Securities. A daily financialinstitution repurchase agreement may be established only with an eligible institution that is

"well capitalized" or "adequately capitalized" as those terms are defined by applicable federal

statutes and regulations. An open-end money-market fund must hold itself out as a moneymarket fund as defined by applicable federal statutes and regulations under the Investment

Company Act of 1940 and, at the time of investment, have total managed assets of at least $

250,000,000. The funds covered by this rule shall be subject to withdrawal upon request and

without delay.

(d) "Allowable reasonable fees" means: (1) per check charges, (2) per deposit charges, (3)

a fee in lieu of minimum balance, (4) federal deposit insurance fees, (5) sweep fees, 12b-1 fees,

and subaccounting fees, and (6) a reasonable IOLTA account administrative fee.

(e) "U.S. Treasury Securities" means direct obligations of the federal government of the

United States.

(f) "Repurchase agreements" means transactions in which a fund buys a security from a

dealer or bank and agrees to sell the security back at a mutually agreed upon time and price.

The repurchase price exceeds the sale price, reflecting the fund's return on the transaction.

This return is unrelated to the interest rate on the underlying security. Repurchase agreements

are subject to credit risks.

Section 2. PARTICIPATION. Participation in the IOLTA Program of the Arkansas

Access to Justice Foundation is voluntary for banks, savings and loan associations, and

investment companies. Any eligible institution that elects to provide and maintain IOLTA

accounts shall do so according to the following terms:

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(a) Determination of Interest Rates and Dividends. Eligible institutions that maintain

IOLTA accounts that are, or are invested in, interest-bearing deposits or daily financialinstitution repurchase agreements shall pay no less than the highest rate and dividend generally

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

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

determining the highest rate or dividend generally available from the institution to its nonIOLTA accounts, eligible institutions may consider factors, in addition to the balance in the

IOLTA account, customarily considered by the institution when setting interest rates or

dividends 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 the fact

that the account is an IOLTA account. The eligible institution may offer, and the lawyer may

accept, a sweep account that provides a mechanism for the overnight investment of balances

in the IOLTA account into a daily financial institution repurchase agreement or a moneymarket fund. However, this Rule shall not require any eligible institution to offer or

otherwise make available sweep accounts for IOLTA accounts.

(b) Written Agreements. There shall be a written agreement between the lawyer and the

eligible institution, designating interest on the IOLTA account be remitted to the Arkansas

Access to Justice Foundation, Inc. on a monthly basis.

(c) Interest Rates and Dividends. Eligible institutions shall maintain IOLTA accounts that

pay the highest interest rate or dividend generally available from the institution to its nonIOLTA account customers when IOLTA accounts meet or exceed the same minimum

balance or other account eligibility qualifications, if any.

(d) Reasonable Fees That May Be Deducted From Interest Earned. Reasonable fees means

(1) per check charges, (2) per deposit charges, (3) a fee in lieu of minimum balances, (4)

federal deposit insurance fees, (5) sweep fees, 12b-1 fees, and subaccounting fees, and (6) a

reasonable IOLTA account administrative fee. Reasonable Allowable reasonable fees are the

only service charges or fees permitted to be deducted from interest earned on IOLTA

accounts. Reasonable Allowable reasonable fees may be deducted from interest on an IOLTA

account only at such rates and under such circumstances as is the eligible institution's

customary practice for all of its customers with interest-bearing accounts. All other fees and

charges shall not be assessed against the accrued interest on the IOLTA account but rather

shall be the responsibility of, and may be charged to, the lawyer maintaining the IOLTA

account.

(e) Negative Netting Prohibited. Fees or charges in excess of the interest earned on the

account for any month shall not be taken from interest earned on other IOLTA accounts or

from the principal of the account.

(f) Reporting Requirements. A statement should be transmitted monthly to the Arkansas

Access to Justice Foundation, Inc., in an electronic format to be specified by the Foundation,

with each remittance showing the period for which the remittance is made, the name of the

lawyer or law firm from whose IOLTA account the remittance is being sent, the IOLTA

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account number, the average account balance, the average daily interest rate applied, the gross

interest or dividend earned during the period, the amount and description of any service

charges or fees assessed during the remittance period, and the net amount of interest or

dividend remitted for the period. The Foundation supplies a monthly remittance form tailored

to each bank listing the required information; however, should the bank elect to generate its

own report, the requirements in this section must be addressed. 

Section 3. REMOVAL OF FINANCIAL INSTITUTIONS FROM IOLTA

PROGRAM. In addition to the attorney trust account "automatic overdraft" notification

procedures set out in Section 28 of the Procedures of the Arkansas Supreme Court regulating

professional conduct of attorneys at law:

(a) Banks may only be removed from the IOLTA Program after notice from the

Foundation to the bank of the action needed to correct or implement any needed changes and

a timely response from the bank.

(b) Should a bank be removed from the IOLTA Program, the Foundation will give

attorneys sufficient notice and time in order to move their IOLTA accounts to another

participating bank.

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