Supreme Court Adopts Rule for Unclaimed and Unidentifiable Trust Account Funds

The Arkansas Supreme Court has adopted changes to Arkansas Rule of Professional Conduct 1.15 to lay out a mechanism by which attorneys or estates of deceased attorneys can deal with unclaimed or unidentifiable funds in client trust accounts. The opinion, issued November 5, also moved provisions of the rule that deal with bank compliance and interest rate comparability to an administrative order.

The new provision addresses situations where an attorney, law firm, or estate of a deceased attorney (1) winds up in possession of client or third party funds and the client or third party cannot be located, despite diligent efforts to locate the rightful owner; or (2) is in possession of funds in a client trust account that cannot be traced back to a particular client.

The Arkansas Access to Justice Foundation, which administers the IOLTA program, has updated its Guidebook for Attorneys and Financial Institutions to include guidance for compliance with the new rule and has adopted forms for attorneys to use to report and remit such funds to the Foundation and to return the funds to the rightful owner if a claim for the funds is made.

The Arkansas rule change addresses these scenarios by providing a simple process for attorneys to dispose of unclaimed and unidentifiable funds consistent with applicable ethical obligations, while generating additional revenue for the IOLTA Program of the Arkansas Access to Justice Foundation, which will use the funds to make grants supporting the provision of free civil legal aid to the poor.