When you are entrusted with a client’s funds you are obligated under Massachusetts Rules of Professional Conduct 1.15 to hold it in trust. Money which is received from a client that has not been earned must be placed in either an IOLTA account or, depending on the amount held and the time held, a separate trust account. (However, note that Rule 1.15 does not require flat fees to be deposited into an IOLTA account. RPC 1.15, Cmt. 2A.) If you plan to hold client funds, open an account as soon as possible and certainly before you receive any money from a client.
You can find a list of approved banks at Board of Bar Overseers’s website: http://www.mass.gov/obcbbo/faq.htm#q9. An appropriate name for the account must be selected. The naming convention is governed by Mass. R. Prof. C. 1.15(e) which requires words such as “trust account”, “escrow account”, “client funds account”, “conveyance account”, or “IOLTA Account”. When opening an account, complete this form and send it to the Massachusetts IOLTA Committee along with a deposit slip or voided check. It is also helpful to: (1) order checks which are a different color from your operating account and (2) keep approximately $150.00 in the account for bank charges. This will keep you from inadvertently using client funds to pay for firm expenses.
For additional help with IOLTA, attend a free one-hour training (typically on the first Thursday, October through May at 8am), run by the Board of Bar Overseers at the Boston Bar Association. Advance registration is required. Just call the Office of Bar Counsel at (617) 728-8750 and ask for “trust account program registration.”
Uh Oh!! IOLTA Accounts and Escrow Accounts (James Bolan, Esq.)
Two-Minute Tips: How to Reconcile Your Trust Account [Video] (Beverly Michaelis)
BOARD OF BAR OVERSEERS ARTICLES
FURTHER READING FROM OUR LENDING LIBRARY
Law Practice Accounting Using QuickBooks (PC and Mac) (Lynette Benton, Forthcoming)
QuickBooks in One Hour for Lawyers (Lynette Benton, American Bar Association)