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.] Reporting forms may be found here.
What If I Need to Remit Funds Early?
What if you are retiring before October and want to report and remit unclaimed funds now 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 provides an “early reporting request form” here, but this isn’t necessarily the procedure you should follow.
Before the redesign of its website, the DSL instructed lawyers to send a request for early remittance to the Oregon State Bar, along with an explanation and a description of the attempts made to locate owners of the funds. This language has disappeared with the 2017 site redesign, but since abandoned IOLTA funds are paid over to the OSB, your best bet is to ask the OSB General Counsel’s Office.
What If I Am Not in Compliance?
The same caveat applies if you need an extension of time (are not in compliance). The DSL offers an extension request form, but before you fill it out, call the OSB. Previously, lawyers requesting an extension to report and remit abandoned IOLTA funds were told to contact the bar at its mailing address:
Oregon State Bar
P.O. Box 231935
Tigard, OR 97281-1935
This may (or may not) be the current procedure. It is unfortunate the new DSL website does not offer clarification. To be safe, speak with OSB General Counsel.
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 previously failed to report and remit funds, contact the bar. This will take some courage – no doubt. However, continuing to put the task off will only make the situation worse.
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.
If you are distressed by the potential of disciplinary action, contact the confidential Oregon Attorney Assistance Program. OAAP attorney counselors can be a resource and know of ethics attorneys who are available on a pro bono basis if you cannot afford to hire private counsel.
Don’t let allow a misunderstanding or mistake to become an insurmountable burden. Pick up the phone, get help, and make a plan to move forward.
All Rights Reserved 2017 Beverly Michaelis