Who is entitled to the interest earned on a lawyer's trust account before Washington adopted its IOLTA rule?

Plain-English summary

The inquiry concerned interest that had accrued on a lawyer's trust account before the adoption of Washington's IOLTA rule, which directs interest on qualifying pooled trust accounts to a charitable program rather than to the lawyer. The question was who was entitled to interest that had already been earned before that rule took effect.

The committee was unanimous that interest earned on the trust account before the IOLTA rule was adopted had to be allocated and paid to the clients whose funds earned the interest. For any client to whom those funds would be payable but who had disappeared, the committee concluded the funds should be disposed of under the laws addressing abandoned property.

Currency note

This opinion was issued in 1986, before the 2006 revisions to the Washington Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Who gets interest that accrued on a trust account before the IOLTA rule?

A: Under this 1986 opinion, that interest must be allocated and paid to the clients whose funds earned it, not retained by the lawyer.

Q: What happens to a disappeared client's share of the interest?

A: The committee concluded those funds should be disposed of under the laws addressing abandoned property.

Q: Did the IOLTA rule reach interest earned before it was adopted?

A: No. The committee treated pre-adoption interest as belonging to the clients whose funds earned it, separate from the IOLTA program that applied going forward.

Background and rules framework

The opinion applied RPC 1.14, the Washington rule then governing a lawyer's duty to preserve and account for client funds held in trust (the subject of the inquiry). The corresponding current ABA Model Rule is Model Rule 1.15 (safekeeping property). The committee read the duty to require that interest a client's funds earned before the IOLTA rule be paid to that client.

Citations and references

Rules of Professional Conduct:

• ABA Model Rule 1.15 (safekeeping property)
• Washington RPC 1.14 (trust-account / client funds, pre-2006 numbering)

See also

• NY State Bar Op. 1188: Estate Funds in an Attorney Trust Account
• AL Ethics Op. 2008-03: Flat Fees in Trust and IOLTA

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=121

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

The Committee was of the unanimous opinion that interest earned on your trust account prior to the adoption of the IOLTA rule must be allocated and paid to the clients whose funds earned the interest. If any of the clients to whom those funds would be payable had disappeared, the Committee was of the opinion that those funds should be disposed of pursuant to the laws addressing abandoned property.