In a case closely watched by
bar organizations and legal services programs, the Supreme Judicial Court will
consider what should
REBA joined with the BBA and
the MBA in an amicus brief supporting the position of the IOLTA Committee (the
Committee) that it should be the recipient of the unidentified funds. As REBA notes in the joint amicus brief, a
substantial amount of IOLTA revenue comes from real estate practitioners,
making this issue especially relevant for REBA members. The Board of Bar Overseers (BBO) and the
Clients’ Security Board and Fund (CSB) also filed amicus briefs.
The case arises out of disciplinary
proceedings against Gregory Olchowski.
As a part of his disbarment, the SJC ordered Olchowski to close his
IOLTA accounts and return the funds to their owners. Olchowski could not identify the owners of
funds in his IOLTA accounts. After
extensive efforts by his accountant, his attorney, and the Office of Bar
Counsel to identify the owners failed, Olchowski’s attorney filed a motion in
the Single Justice session to remit the unidentified IOLTA funds to the IOLTA
Committee. The Treasurer intervened and
opposed the motion. The Single Justice
then reported the matter to the full Court.
Central to the case is whether
unidentified IOLTA funds meet Chapter 200A’s definition of abandoned property
and, therefore, must be turned over to the Treasurer under the law. The Committee argues that because there is no
known owner of the funds and there is a regular transfer of interest from the
account, the unidentified funds do not meet the statutory definition of
abandoned property. The Treasurer
counters that the broad language of Chapter 200A should be interpreted to cover
the unidentified funds in IOLTA account.
According to the Treasurer, the Committee’s interpretation is
inconsistent with the statue as a whole and would result in an ineffective
statute that excludes numerous kinds of accounts, beyond just IOLTA, that the
act is clearly intended to cover.
Also, at issue is the SJC’s
authority over the practice of law and that authority’s interplay with the
legislature’s power. The Committee
contends the SJC’s inherent authority to regulate the practice of law extends
to controlling the disposition of unidentified IOLTA funds. It follows then, the Committee claims, that
the Treasurer’s attempt to control an aspect of the IOLTA program is a
violation of the separation of powers under the Massachusetts Constitution and
in conflict with the Court’s authority.
The Treasurer responds that there is no separation of power concern if
the statute is interpreted to cover unidentified IOLTA funds. Because neither Rule 1.15, nor any other SJC
rule, specifies the disposition of unidentified IOLTA funds, there is no
conflict with the SJC’s rules. And
without such a conflict, the Treasurer argues, there is no violation of the
separation of powers.
In addition to the legal
issues, the parties dispute who, as a practical matter, is best-suited to find
the owner of unidentified IOLTA funds.
The Treasurer points to its existing resources for helping people find
their abandoned and unclaimed property.
These resources include a website that allows people to search for
property that has been turned over to the Treasury, as well as advertising
campaigns that encourage people to consult the website. The Treasurer notes it currently holds funds
from 572 IOLTA accounts and has returned IOLTA funds to 58 owners on prior
occasions. The Committee argues the
organizations under the judiciary, i.e.,
the BBO, CSB, and the Committee, have experience reviewing lawyers’ files,
financial records, and other resources to locate the owners of IOLTA funds,
making them the better choice to search for and handle claims by owners. This approach, the Committee claims, is far
more likely to find the owners than the Treasurer’s website, which only has the
attorney’s or law firm’s name for the IOLTA account, not the funds’ owners’
name.
The amicus briefs raise several
additional points. The REBA, BBA, and
MBA brief stresses the importance of attorney-client confidences to the
practice of law and argues that interpreting Chapter 200A to cover unidentified
funds in IOLTA accounts would open the door to significant intrusion by
Treasurer into attorney-client confidences.
The joint bar brief explains that the Treasurer’s extensive audit rights
under the statute would threaten those confidences. The brief posits that investigation into, and
administration of, the unidentified funds by entities under the judiciary would
not raise the same concerns.
The BBO’s brief points out that
a lawyer’s inability to identify IOLTA funds’ owners may raise disciplinary
issues, which are the exclusive province of the Court and handled by the
BBO. If the unidentified IOLTA funds are
turned over to the Treasurer without notice to the BBO, it cannot investigate
and take appropriate disciplinary action.
The Committee, on the other hand, is uniquely situated to recognize and
notify the BBO of these issues.
The CSB encourages the Court to
amend Rule 1.15 to require reporting unidentified IOLTA funds to an appropriate
authority to investigate the funds’ owners and, provided no owner is
identified, specify the funds then go to the IOLTA Committee.
In addition to the amicus
briefs, the Massachusetts Law Reform Institute submitted an amicus letter,
joined by twelve other legal services programs, supporting the joint bar brief. Driving home the substantial need for legal
services funding and the importance of the IOLTA program, the letter notes that
due to the lack of funding, legal aid programs in Massachusetts are forced to
turn away 60% of income-eligible clients.
Oral argument in Olchowski was held on, February 11, 2020
and a decision is pending. Those
involved with the management of IOLTA accounts will want to keep an eye out for
the decision as it could change the requirements under Rule 1.15 for maintaining
and closing IOLTA accounts.
A founding co-chair of the REBA environmental
law section, Mary Ryan is a partner in the litigation department of the Boston
law firm of Nutter, McClennen & Fish LLP, and a member of the land use
group. Her practice includes substantial trial and appellate cases in the state
and federal court, particularly in environmental litigation, as well as
administrative hearings and proceedings.
Her email contact is mryan@nutter.com.
Micah Miller is a partner in
Nutter’s litigation department. Clients rely on Micah’s guidance in a variety
of litigation matters, particularly in intellectual property litigation. Micah
is well-versed in assisting clients at all stages of litigation, including
pre-filing investigations, document collection and production, technical expert
discovery, claim construction, and trial. Micah’s email address is mmiller@nutter.com.
