On this day came the Court, on its own motion and proceeded to consider the proposed amendments. Upon consideration whereof, the Court is of opinion to and does hereby adopt said amendments, effective April 15, 2009. Deletions are indicated by strikethroughs and insertions are indicated by underscoring, to read as follows:
“RULE 1.15. SAFEKEEPING PROPERTY.
(a) A lawyer shall hold property of clients or third persons that is in a lawyer's
possession in connection with a representation separate from the lawyer's own property.
Funds shall be kept in a separate account designated as a “client's trust account” in an
institution whose accounts are federally insured and maintained in the state where the
lawyer's office is situated, or in a separate account elsewhere with the consent of the client
or third person. Other property shall be identified as such and appropriately safeguarded.
Complete records of such account funds and other property shall be kept by the lawyer and
shall be preserved for a period of five years after termination of the representation.
(b) 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. 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 accounting regarding such property.
(c) When in the course of representation a lawyer is in possession of property in
which both the lawyer and another person claim interests, the property shall be kept separate
by the lawyer until there is an accounting and severance of their interests. If a dispute arises
concerning their respective interests, the portion in dispute shall be kept separate by the
lawyer until the dispute is resolved.
(d) IOLTA (Interest on Lawyers Trust Accounts). A lawyer who receives client
funds that are nominal in amount or are expected to be held for a brief period shall establish
and maintain a pooled, interest or dividend-bearing, federally-insured depository account for
the deposit of such funds, at an eligible financial institution which carries federal deposit
insurance, in compliance with the following provisions:
(1) Tthe account shall include only such client funds that are so nominal in amount
or are expected to be held for such a brief period of time that administrative expenses would
exceed interest earned from the investment thereof; such that the funds cannot earn income
for the client in excess of the costs of securing that income. In determining whether a
client's funds can earn income in excess of costs, the lawyer or law firm shall consider the
following factors:
(i) The amount of the funds to be deposited;
(ii) The expected duration of the deposit, including the likelihood of delay in the
matter for which the funds are held;
(iii) The rates of interest or yield at financial institutions where the funds are to be
deposited;
(iv) The cost of establishing and administering non-IOLTA accounts for the client's
benefit, including service charges, the costs of the lawyer's services, and the costs of
preparing any tax reports required for income accruing to the client's benefit;
(v) The capability of financial institutions, lawyers or law firms to calculate and pay
income to individual clients;
(vi) Any other circumstances that affect the ability of the client's funds to earn a net
return for the client.
(2) no interest from such account shall be made available to the lawyer;
(3) funds deposited in such account must be available for withdrawal or transfer on
demand, subject only to any notice period which the depository institution is required to
observe by law or regulation;
(4) the lawyer shall direct the depository institution:
(i) to remit interest, on at least a quarterly basis, net any customary service charges
or fees in accordance with the depository institution's standard accounting practice, to the
West Virginia Bar Foundation, Inc.; and
(ii) to transmit with each remittance to the West Virginia Bar Foundation, Inc., a
statement showing the name of the lawyer or law firm on whose account the remittance is
sent and the rate of interest applied, with a copy of such statement to be transmitted to such
lawyer or law firm; and,
(5) the lawyer shall review the account at reasonable intervals to determine whether
circumstances warrant further action with respect to the funds of any client.
(2) The lawyer shall review the account at reasonable intervals to determine whether
circumstances warrant further action with respect to the funds of any client.
(3) Lawyers may only establish and maintain an IOLTA Trust Account at an eligible
financial institution. To qualify as eligible, the financial institution must:
(i) be certified by the West Virginia Bar Foundation to be in compliance with this
Rule; and
(ii) be a federally-insured and state or federally-regulated financial institution
authorized by federal or state law to do business in West Virginia, or an open-end
investment company registered with the federal Securities and Exchange Commission and
authorized by federal or state law to do business in West Virginia.
(4) Participation by banks, savings and loan associations, and investment companies
in the IOLTA program is voluntary. An eligible financial institution that elects to offer and
maintain IOLTA accounts shall meet the following requirements:
(i) The eligible financial institution shall pay no less on its IOLTA accounts than the
highest interest rate or dividend generally available from the institution to its non-IOLTA
customers when the IOLTA account meets or exceeds the same minimum balance or other
eligibility qualifications on its non-IOLTA accounts. Interest and dividends shall be
calculated in accordance with the eligible institution's standard practices for non-IOLTA
customers. In determining the highest interest rate or dividend generally available from the
institution to its non-IOLTA customers, an eligible institution may consider, in addition to
the balance in the IOLTA account, factors customarily considered by the institution when
setting interest rates or dividends for its non-IOLTA customers, provided that such factors
do not discriminate between IOLTA accounts and non-IOLTA accounts and that these
factors do not include the fact that the account is an IOLTA account. Nothing in this rule
shall preclude an eligible institution from paying a higher interest rate or dividend than
described above or electing to waive any fees and service charges on an IOLTA account.
(ii) An eligible institution may choose to pay the highest interest or dividend rate in
(d)(4)(i), less allowable reasonable fees as set forth in (d)(4)(iv), if any, on an IOLTA
account in lieu of establishing it as a higher rate product.
(iii) The IOLTA Trust Account shall be an interest or dividend-bearing account.
Interest- or dividend-bearing account means: (a) an interest-bearing checking account; (b)
a checking account paying preferred interest rates, such as money market or indexed rates;
(c) a government interest-bearing checking account such as accounts used for municipal
deposits; (d) a business checking account with an automated investment sweep feature
which is a daily (overnight) financial institution repurchase agreement or an open-end
money market fund; or (e) any other suitable interest or dividend-bearing account offered
by the institution to its non-IOLTA customers. A daily financial institution repurchase
agreement must be fully collateralized by or invested in Securities and 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 be invested in U.S. Government Securities or repurchase agreements fully
collateralized by or invested in U.S. Government Securities and must hold itself out as a
money-market fund as that term is defined by federal statutes and regulations under the
Investment Company Act of 1940, and, at the time of the investment, must have total assets
of at least $250,000,000. United States Government Securities are defined to include debt
securities of Government Sponsored Enterprises, such as, but not limited to, debt securities
of, or backed by, the Federal National Mortgage Association, the Government National
Mortgage Association, and the Federal Home Loan Mortgage Corporation.
(iv) Allowable reasonable fees are the only fees and service charges that may be
deducted by an eligible institution from interest or dividends earned on an IOLTA account.
Allowable reasonable fees are defined as per check charges, per deposit charges, a fee in lieu
of minimum balances, sweep fees, FDIC insurance fees, and a reasonable IOLTA account
administrative fee. Allowable reasonable fees may be deducted from interest or dividends
on an IOLTA account only at the rates and in accordance with the customary practices of
the eligible institution for non-IOLTA customers. No fees or service charges other than
allowable reasonable fees may be assessed against the accrued interest or dividends on an
IOLTA account. No fees or service charges shall be collected from the principal balance
deposited in an IOLTA account. Any fees and service charges other than allowable
reasonable fees shall be the sole responsibility of, and may only be charged to, the lawyer
or law firm maintaining the IOLTA account, including bank overdraft fees and fees for
check returns for insufficient funds. Fees and service charges in excess of the interest or
dividends earned on one IOLTA account for any period shall not be taken from interest or
dividends earned on any other IOLTA account or accounts or from the principal of any
IOLTA account.
(v) As an alternative to the rates required under (d)(4)(i), an eligible institution may
choose to pay on IOLTA accounts an amount equal to 65% of the Federal Funds Target Rate
as reported in the Wall Street Journal on the first calendar day of the month. The amount
is net of all allowable reasonable fees under (d)(4)(iv). This initial benchmark rate of 65%
of the Federal Funds Target Rate may be adjusted once a year by the Foundation, upon 90
days' written notice to financial institutions participating in the IOLTA program at which
time financial institutions may elect to pay the new benchmark amount or may choose
among the other options at (d)(4)(i).
(5) The lawyer shall direct the depository institution:
(i) To remit interest or dividends, on at least a quarterly basis, net of allowable
reasonable service charges or fees, if any, to the West Virginia Bar Foundation, Inc; and
(ii) To transmit with each remittance to the West Virginia Bar Foundation, Inc., a
statement in any form and through any manner of transmission approved by the Foundation
showing the name of the lawyer or law firm on whose account the remittance is sent and the
amount of the remittance attributable to each, the account number for each account, the rate
and type of interest or dividend, the amount and type of allowable reasonable service charges
or fees, and the average account balance for the reporting period; and
(iii) To transmit to the depositing lawyer or law firm a report in accordance with the
institution's normal procedures for reporting to depositors.
(6) An attorney or the law firm with which the attorney is associated may be exempt
from the requirements of this Rule if:
(i) the nature of the attorney's or law firm's practice is such that the attorney or law
firm never receives client funds that would require a Trust Account;
(ii) the attorney is a full-time judge, government attorney, military attorney, or
inactive attorney; or
(iii) The West Virginia Bar Foundation's Board of Directors, having received a
petition requesting an exemption, may exempt the attorney or law firm from participation
in the program for a period of no more than 2 years when service charges on the attorney's
or law firm's Trust Account equal or exceed any interest generated or when compliance with
this Rule would create an undue hardship on the lawyer and would be extremely impractical.
(e) A lawyer may not be charged with any breach of the Rules of Professional
Conduct or other ethical violation with regard to either the good faith determination of
whether client funds are nominal in amount or are expected to be held for a brief period or
the failure to establish and maintain a pooled, interest or dividend-bearing, federally-insured
depository account for the deposit of such funds in accordance with Rule 1.15(d).
(f) All interest transmitted to the West Virginia Bar Foundation, Inc., shall be
distributed by that entity as follows: (1) an annual fee not to exceed fifty thousand dollars
shall be retained by the West Virginia Bar Foundation, Inc., for administration of the fund,
with a detailed annual accounting of services performed in consideration for such fee to be
filed for public inspection with the Supreme Court of Appeals; (2) special grants not to
exceed fifteen percent of the fund's annual receipts to WV CASA Network, coordinating
agency for court-appointed special advocate programs, in the amount of 43.5 percent of
special grant funds available; to the West Virginia Fund for Law in the Public Interest, Inc.,
to provide summer legal interns to West Virginia's four legal services organizations, in the
amount of 19.3 percent of special grant funds available; to the Appalachian Center for Law
and Public Service, a West Virginia University College of Law public service program
providing legal services for the poor, in the amount of 7.72 percent of special grant funds
available; to the Elder Law Program of the North Central West Virginia Legal Aid Society,
Inc., in the amount of 24.125 percent of special grant funds available; and to ChildLaw
Services of Mercer County 5.355 percent of special grant funds available; and (3) the
remaining funds to West Virginia's four legal services organizations in accordance with their
percentage of poor population served using the most recent Bureau of the Census statistics
Seventy-five percent (75%) of the remaining funds to Legal Aid of West Virginia and
twenty-five percent (25%) of the remaining funds to Mountain State Justice or such other
method of distribution as may hereinafter be adopted by order of the Supreme Court of
Appeals. Any funds distributed by the West Virginia Bar Foundation, Inc., pursuant to this
subdivision shall not be used by the recipient organization to support any lobbying
activities.”
A True Copy
Attest: ________________________________________
Deputy Clerk, Supreme Court of Appeals