By Joseph R. Marconi[1]
The Rules of Professional Conduct now requires attorneys to provide consent for the banks holding client funds to automatically report overdraws to the ARDC. This is an early detection system for possible financial malfeasance and a call for more discipline in managing and accounting for client funds.
Illinois Rule of Professional Conduct 1.15 requires attorneys to hold client property in an interest-bearing trust account separate from the attorney’s own property. These accounts include Interest on Lawyers Trust Accounts (IOLTAs) and non-IOLTA trust accounts. In an article from last year, In “Eligible” IOLTAs We Trust, we noted some of the September 2011 changes to this rule. One of the more significant changes to Rule 1.15 is the automatic overdraft notification provision, Rule 1.15(h). The rule requires the financial institution at which the trust account is established to promptly notify the ARDC if a trust account is overdrawn, regardless of whether or not the instrument is honored.
To implement the reporting requirement, the rule mandates that all attorneys admitted to practice in Illinois “shall, as a condition thereof, be conclusively deemed to have consented to the reporting and production requirements mandated by this Rule.” Likewise, to be eligible to offer client trust accounts, financial institutions must agree to comply with the reporting requirement.