Funds held in your IOLTA account are deemed abandoned (unclaimed) if the owner has not accepted payment of the funds, corresponded in writing about the funds, or otherwise indicated interest in the funds within two years after the funds are payable or distributable to the owner.

Assess in June – Report and Remit in October

The normal cycle for assessing, reporting, and remitting unclaimed funds occurs annually in June and October.  Funds that are unclaimed as of June 30 of each year are reported and remitted during the month of October.  The Department of State Lands receives the original paperwork.  The Oregon State Bar receives the funds and a copy of the reports.  [Assuming the owner’s last known address is in Oregon, or a state with whom we have a reciprocal arrangement.]

What If I Am Not in Compliance?

The DSL website instructs lawyers who are not in compliance to contact the Oregon State Bar for an extension to file the report.  Therefore, if you had unclaimed funds as of June 30, 2016, but missed the October 2016 reporting and remittance deadline, contact the bar. The site provides a mailing address only:

Oregon State Bar
P.O. Box 231935
Tigard, OR  97281-1935

Presumably, the best method for requesting an extension is to send a letter to the above PO box.

What If I Need to Remit Funds Early?

As noted above, remittance normally occurs in the month of October.  What if you are retiring before October and want to report and remit unclaimed funds so you can close your IOLTA account?  Or perhaps you need to close your law office for health reasons and it isn’t feasible to hold off reporting and remitting funds?  The DSL website instructs lawyers in these situations to send a request to remit early to the Oregon State Bar. Include the reason for remitting early and describe your attempts to locate the owners of the funds.  As with an extension, it appears the most appropriate contact method is to send a letter to the bar’s PO box.

What Happens If a Client Contacts Me After I’ve Reported Her Funds as Abandoned?

Clients or other owners of abandoned funds may make a claim for return of their money. The DSL website provides the following advice:

If the property is not listed on the DSL/UP owner search, you can direct owner inquiries to the Oregon State Bar. Once DSL/UP has added the names to the owner search database, claimants may file their claim inquiry via DSL/UP. Inquiries against LTA (lawyer trust account) or IOLTA property will be referred to the Oregon State Bar for review and approval.

Will I Get in Trouble If I Don’t Report and Remit Unclaimed Funds?

A civil penalty is possible, but unlikely.  ORS 98.992 provides:

A person who willfully fails to render any report, to pay or deliver property or to perform other duties required may be required to pay a civil penalty.

• This penalty shall be assessed only after at least one reporting cycle
• Only after the department has provided the person with written instructions, including copies of applicable laws and policies.
• The department may waive any penalty due under this section with appropriate justification.

Bar discipline?  That’s a horse of a different color.

OSB Formal Opinion 2005-48 makes clear that lawyers “must comply” with the provisions of the Uniform Disposition of Unclaimed Property Act.  Given the ethical duty to safeguard client funds, this makes sense: obeying the statute is the highest level of protection you can offer once a client has walked away from his money.

Additionally, Oregon RPC 1.15-2(e) provides “The lawyer or law firm shall review the IOLTA account at reasonable intervals to determine whether circumstances have changed that require further action with respect to the funds of a particular client.”

If you are fulfilling this responsibility, you should notice whether you are holding funds that are abandoned and take appropriate action.  (In this case, report and remit on a timely basis.)

What Should I Do Now?

I am a believer that it is never too late to do the right thing.

If you failed to report and remit funds in October, write to the bar as instructed above. Putting off reporting and remitting unclaimed funds because you fear potential discipline will only make the situation worse, not better.  If you are concerned about the consequences of your noncompliance, get help. The names of top-notch lawyers who specialize in ethics defense are readily available. These specialists regularly write and speak on ethics topics.  Pick up the phone, schedule a consultation, and make a plan to move forward.  Don’t let allow a misunderstanding or mistake to become an insurmountable problem.

All Rights Reserved 2016 Beverly Michaelis