(a) A lawyer or law firm shallcreate and maintain an interest or dividend-bearing trust account for clientfunds ("IOLTA account"). All client funds shall be placed into this accountexcept those funds which can earn net income for the client in excess of thecosts to secure such income, except as provided in paragraph (g).
(b) In determining whether aclient's funds can earn net income in excess of the costs of securing that incomefor the benefit of the client, the lawyer or law firm shall consider thefollowing factors:
(b)(1) theamount of the funds to be deposited;
(b)(2) theexpected duration of the deposit, including the likelihood of delay in thematter for which funds are held;
(b)(3) therates of interest or yield at financial institutions where the funds are to bedeposited;
(b)(4) the costs ofestablishing and administering non-IOLTA accounts for the client's benefit,including service charges, and the costs of preparing any tax reports requiredfor income accruing to the client's benefit; and
(b)(5) thecapability of financial institutions, lawyers or law firms to calculate and payincome to individual clients and any other circumstances that may affect theability of the client's funds to earn net income.
(c) The lawyer or law firmshall review its IOLTA account at reasonable intervals, but not less thanannually, to determine whether changed circumstances require further actionwith respect to the funds of a particular client.
(d) The lawyer or law firmshall:
(d)(1) notallow earnings from an IOLTA account to be made available to a lawyer or lawfirm;
(d)(2) placein the IOLTA account all client funds which cannot earn net income for theclient in excess of the costs of securing that income;
(d)(3) establishan IOLTA account with an eligible financial institution that has voluntarilychosen to offer and maintain IOLTA accounts, and:
(d)(3)(A) isauthorized by federal or state law to do business in Utah;
(d)(3)(B) isinsured by the Federal Deposit Insurance Corporation or its equivalent;
(d)(3)(C) complieswith Rule 1.15 (a) of the Utah Rules of Professional Conduct; and
(d)(4) directthe depository institution where the IOLTA account is established:
(d)(4)(A) to remit all interestor dividends, net of allowable reasonable service charges or fees, if any, onthe average monthly balance in the account, or as otherwise computed inaccordance with the institution's standard practice, at least quarterly, solelyto the Utah Bar Foundation ("Foundation"). When feasible, thedepository institution shall remit the interest or dividends on all of itsIOLTA accounts in a lump sum, however, the depository institution must provide,for each individual IOLTA account, the information to the Foundation requiredby subparagraphs (d)(4)(B) and (d)(4)(C) of this rule;
(d)(4)(B) to report in a formand through any manner of transmission approved by the Foundation showing thename of the lawyer or law firm and the amount of the remittance attributable toeach, account number for each account, the rate and type of interest ordividend applied, the amount and type of allowable reasonable service chargesor fees deducted, the average account balance for the reporting period and suchother information as is reasonably required by the Foundation;
(d)(4)(C) toreport in accordance with normal procedures for reporting to depositors;
(d)(4)(D) that allowablereasonable service charges or fees in excess of the interest earned on theaccount for any period shall not be taken from interest earned on other IOLTAaccounts or any principal balance of the accounts; and
(d)(4)(E) tocomply with all other administrative rules for IOLTA accounts as promulgated bythe Foundation or the Supreme Court.
(e) The determination ofwhether or not an institution is an eligible institution and whether it ismeeting the requirements of this rule shall be made bythe Utah Bar Foundation. The Foundation shall maintain a list of participatingeligible financial institutions, and shall provide a copy of the list to anyUtah lawyer upon request.
(f) Lawyers may only maintainIOLTA accounts in eligible financial institutions. Eligible financialinstitutions are those that voluntarily offer IOLTA accounts and comply withthe requirements of this rule, including maintaining IOLTA accounts which paythe highest interest rate or dividend generally available from the institutionto its non-IOLTA account customers when IOLTA accounts meet or exceed the sameminimum balance or other account eligibility qualifications, if any. Indetermining the highest interest rate or dividend generally available from theinstitution to its non-IOLTA accounts, eligible institutions may considerfactors, in addition to the IOLTA account balance, customarily considered bythe institution when setting interest rates or dividends for its customers,provided that such factors do not discriminate between IOLTA accounts andaccounts of non-IOLTA customers, and that these factors do not include that theaccount is an IOLTA account.
(f)(1) An eligible financialinstitution may satisfy these comparability requirements by electing one of thefollowing options:
(f)(1)(A) establishthe IOLTA account as the comparable rate product; or
(f)(1)(B) paythe comparable rate on the IOLTA checking account in lieu of actuallyestablishing the comparable highest interest rate or dividend product;
(f)(1)(C) payan amount on funds that would otherwise qualify for the investment optionsnoted at (f)(3) equal to 70% of the federal funds targeted rate as of the firstbusiness day of the month or other IOLTA remitting period, which is deemed tobe already net of allowable reasonable service charges or fees. The safe harboryield rate may be adjusted once per year by the Foundation, upon 90 days?written notice to financial institutions participating in the IOLTA program; or
(f)(1)(D) paya yield rate specified by the Foundation, if the Foundation so chooses, whichis agreed to by the financial institution. The rate would be deemed to be alreadynet of allowable reasonable fees and would be in effect for and remainunchanged during a period of no more than twelve months from the inception ofthe agreement between financial institution and the Foundation.
(f)(2) IOLTA accounts may be establishedas:
(f)(2)(A) a business checkingaccount with an automated investment feature, such as an overnight andinvestment in repurchase agreements or money market funds invested solely in orfully collateralized by US government securities, including U.S. Treasuryobligations and obligations issued or guaranteed as to principal and interestby the United States or any agency or instrument thereof;
(f)(2)(B) achecking account paying preferred interest rates, such as money market orindexed rates;
(f)(2)(C) agovernment interest-bearing checking account such as accounts used formunicipal deposits;
(f)(2)(D) aninterest-bearing checking account such as a negotiable order of withdrawal(NOW) account, or business checking account with interest;
(f)(2)(E) anyother suitable interest-bearing deposit account offered by the institution toits non-IOLTA customers.
(f)(3) A daily financialinstitution repurchase agreement shall be fully collateralized by the UnitedStates Government Securities and may be established only with an eligibleinstitution that is "well capitalized" or "adequatelycapitalized" as those terms are defined by applicable federal statutes andregulations. An open-end money-market fund shall be invested solely in the UnitedStates Government Securities or repurchase agreements fully collateralized byUnited States Government Securities, shall hold itself out as a"money-market fund" as that term is defined by federal statutes andregulations under the Investment Company Act of 1940 and, at the time of theinvestment, shall have total assets of at least two hundred fifty milliondollars ($250,000,000).
(f)(4) Nothing in this ruleshall preclude a participating financial institution from paying a higherinterest rate or dividend than described above or electing to waive any servicecharges or fees on IOLTA accounts.
(f)(5) Interest and dividendsshall be calculated in accordance with the participating financialinstitution's standard practice for non-IOLTA customers.
(f)(6) "Allowablereasonable service charges or fees" for IOLTA accounts are defined as percheck charges, per deposit charges, a fee in lieu of minimum balances, sweepfees, FDIC insurance fees, and a reasonable IOLTA account administrative fee.
(f)(7) Allowable reasonableservice charges or fees may be deducted from interest or dividends on an IOLTAaccount only at the rates and in accordance with the customary practices of theeligible institution for non-IOLTA customers. No fees or service charges otherthan allowable reasonable fees may be assessed against the accrued interest ordividends on an IOLTA account. Any fees and service charges other thanallowable reasonable fees shall be the sole responsibility of, and may becharged to, the lawyer or law firm maintaining the IOLTA account.
(g) Any IOLTA account which hasor may have the net effect of costing the IOLTA program more in fees thanearned in interest over a period of any time, may at the discretion of theFoundation, be exempted from and removed from the IOLTA program. Exemption ofan IOLTA account from the IOLTA program revokes the permission to use theFoundation's tax identification number for that account. Exemption of suchaccount from the IOLTA program shall not relieve the lawyer and/or law firmfrom the obligation to maintain the property of client funds separately, asrequired above, in a non-interest bearing account and also will not relieve thelawyer of the annual IOLTA certification.
(h) In the event a lawyerdetermines that funds placed in an IOLTA account should have been placed in aninterest bearing account for the benefit of the client, the lawyer or law firmshall:
(h)(1) makea request for a refund in writing, in a timely manner, to the Foundation onfirm letterhead within a reasonable period of time after the interest wasremitted to the Foundation; and
(h)(2) provideverification from the financial institution of the interest amount. In no eventwill the Foundation refund more than the amount of net interest it received;remittance shall be made to the financial institution for transmittal to thelawyer or law firm, after appropriate accounting and reporting.
(i)On or before September 1 of each year, any lawyer admitted to practice in Utahshall certify to the Foundation, in such form as the Foundation shall provide("IOLTA Certification Form"), that the member is in compliance with,or is exempt from, the provisions of this rule. If the lawyer or law firmmaintains an IOLTA account, the lawyer shall certify the manner in which thelawyer accounts for the interest on clients' trust accounts. The IOLTACertification Form shall include the financial institution, account numbers,name of accounts and such other information as the Foundation shall require. Ifthe lawyer is exempt from the IOLTA program, the lawyer must still submit anIOLTA Certification Form annually to certify to the Foundation that he or sheis exempt from the provisions in this Rule. Each lawyer shall keep and maintainrecords supporting the information submitted in the IOLTA Certification Form.The lawyer shall maintain these records for a period of five years from the endof the period for which the IOLTA Certification Form is filed, and theserecords shall be submitted to the Foundation upon written request. Failure bythe lawyer to produce such records within thirty days after written request bythe Foundation constitutes a rebuttable presumption that the lawyer has notcomplied with these rules.
(j) A lawyer may be exempt fromhaving to maintain an IOLTA account for the following reasons:
(j)(1) the lawyer or law firm'sclient trust account has been exempted and removed from the IOLTA program bythe Foundation pursuant to paragraph (g) of this rule; or
(j)(2) thelawyer has certified in his or her most recent annual IOLTA Certification Formthat the lawyer:
(j)(2)(A) is not engaged in theprivate practice of law or does not manage or handle client trust funds anddoes not have a client trust account (e.g. corporate counsel, judge, employedby local, state or federal government who does not handle client trust funds orin private practice but does not handle client monies and has no client trustaccount);
(j)(2)(B) doesnot have an office within Utah and has the client's permission to hold thefunds out of state; or
(j)(2)(C) hasbeen exempted by an order of general or special application of this Court whichis cited in the certification;
(j)(3) the lawyer or law firmpetitions for and receives a written exemption from the Foundation thatcompliance with this rule would create an undue hardship on the lawyer andwould be extremely impractical, based on geographic distance between thelawyer's principal office and the closest depository institution which isparticipating in the IOLTA program.
(k) Lawyers licensed in Utahmust notify the Foundation in writing within thirty (30) days of any change inIOLTA status, including the opening or closing of any IOLTA accounts.
(l) The Foundation is the onlyentity authorized to receive and administer IOLTA funds in Utah.
(l)(1) The Foundation shall havegeneral supervisory authority over the administration of the IOLTA funds,subject to the continuing jurisdiction of the Supreme Court.
(l)(2) The Foundation shallreceive the net earnings from all IOLTA accounts and shall make appropriateinvestments of IOLTA funds. The Foundation shall maintain proper records of allIOLTA receipts and disbursements, which records shall be audited or reviewedannually by a certified public accountant. The Foundation shall annuallypresent to the Supreme Court a reviewed or audited financial statement of theIOLTA receipts and expenditures for the prior year and a summary thereof shallbe made available to anyone requesting copies.
(l)(3) The Foundation shall beresponsible to present annually to the Supreme Court a status report onactivities of the Foundation and compliance with these rules.
(l)(4) The Foundation shall beresponsible to make disbursements from the IOLTA program funds, includingcurrent and accumulated net earnings, by grants, appropriations and other appropriatemeasures, as outlined in the articles and by-laws for the organization.
(l)(5) The Foundation shallpromulgate such other rules, procedures, reports and forms that are necessaryor advisable for the proper implementation of the foregoing rules.
(m) All lawyers who maintainaccounts provided for in this rule must convert their client trust account(s)to interest-bearing account(s) with the interest paid to the Foundation nolater than six months from the date of order adopting this rule, unless thelawyer has been granted exemption from this Court as allowed in paragraphs (g)or (j) of this rule. Every lawyer practicing or admitted to practice in Utahshall, as a condition thereof, be conclusively deemedto have consented to the reporting requirements mandated by this rule.