Pennsylvania Code › Title 204 - JUDICIAL SYSTEM GENERAL PROVISIONS › Part V - PROFESSIONAL ETHICS AND CONDUCT › Subpart A - PROFESSIONAL RESPONSIBILITY › Chapter 81 - RULES OF PROFESSIONAL CONDUCT › Subchapter B - RULES FOR INTEREST ON LAWYERS TRUST ACCOUNTS › Section 81.109 - Exclusion and Exemptions from IOLTA Participation

Current through Register Vol. 54, No. 28, July 13, 2024
(a) A lawyer who does not receive Rule
					 1.15 Funds is excluded from
					 IOLTA. Examples include lawyers employed full time in a corporate capacity, by
					 local, state or federal government, as a law clerk, professor, or as a member
					 of the judiciary. A lawyer who does not have an office in Pennsylvania, does
					 not receive Rule
					 1.15 Funds in the Commonwealth,
					 and who is not otherwise required to maintain Rule
					 1.15 Funds in a Trust Account in
					 the Commonwealth is not subject to IOLTA. A lawyer who is retired or no longer
					 practices law need not maintain an IOLTA Account.
(b) Pa.R.P.C. 1.15(n) permits limited
					 exemptions from the requirement that all Qualified Funds must be maintained in
					 an IOLTA Account. No exemption is automatic, although exemptions will be
					 routinely granted under specified circumstances. The IOLTA Board may declare a
					 lawyer exempt from the requirement of maintaining an IOLTA Account;
					 alternatively, a lawyer may submit a written request for exemption.
(c) Nonqualified Funds are to be deposited in
					 a Non-IOLTA Account or in another investment vehicle specifically agreed upon
					 by the lawyer and Third Party Owner, and the IOLTA Board is without power to
					 grant an exemption from this requirement. If a lawyer is exempt from the
					 requirement of maintaining an IOLTA Account, the lawyer must still deposit
					 Qualified Funds in a Non-IOLTA Account or in another investment vehicle
					 specifically agreed upon by the lawyer and the Third Party Owner. Fiduciary
					 Funds remain subject to the provisions of Pa.R.P.C. 1.15(l) and Section
					 81.104(c).
(d) Under the following
					 circumstances, the IOLTA Board will routinely grant an exemption from the
					 requirement that a lawyer maintains all Qualified Funds in an IOLTA Account:
(i) Low balance account: Any Trust Account
					 which historically, generally based upon 12 consecutive months of activity, has
					 an average daily balance of $5,000 (or such other amount as the IOLTA Board
					 announces from time to time) will be exempt from being an IOLTA Account. The
					 IOLTA Board may exempt from IOLTA, without application, a low balance account.
					 A lawyer requesting an exemption based on a low balance account must, as a part
					 of the written request for exemption, include an account analysis or written
					 statement that demonstrates the amount of the average daily balance.
(ii) Account service charges routinely exceed
					 income: Some Trust Accounts may have an average daily balance of more than
					 $5,000, but because of the account service charges or the interest or dividend
					 rates of the Eligible Institution, the charges would routinely exceed income
					 earned on the Trust Account. In these cases, an exemption may be requested. A
					 lawyer requesting an exemption based on these circumstances must, as part of
					 the written request for exemption, include an account analysis or written
					 statement that clearly shows the income earned, or the income that would have
					 been earned, on the account each month for the past 12 months, plus the account
					 service charges imposed on the account for each of the last 12
					 months.
(iii) Extreme
					 impracticality or undue hardship: Under limited circumstances it would be
					 unduly burdensome for a lawyer to maintain a Trust Account as an IOLTA Account.
					 When claiming extreme impracticality or undue hardship, the lawyer should
					 provide appropriate details demonstrating undue hardship. An example includes
					 the lack of an Eligible Institution that offers IOLTA Accounts in the lawyer's
					 geographical location.
(iv) Other
					 compelling and necessitous reasons: There may be compelling and necessitous
					 reasons justifying an exemption from the requirement that the lawyer maintain a
					 Trust Account as an IOLTA Account. A lawyer who demonstrates a compelling and
					 necessitous reason for not complying with IOLTA may request an exemption. A
					 philosophical objection to IOLTA does not constitute a compelling and
					 necessitous reason for an exemption.