The Rhode Island Bar Foundation (Bar Foundation) and the Rhode Island Bar

Similar documents
Checkpoint Payroll Sources All Payroll Sources

Income from U.S. Government Obligations

Kentucky , ,349 55,446 95,337 91,006 2,427 1, ,349, ,306,236 5,176,360 2,867,000 1,462

State Individual Income Taxes: Personal Exemptions/Credits, 2011

Annual Costs Cost of Care. Home Health Care

Union Members in New York and New Jersey 2018

AIG Benefit Solutions Producer Licensing and Appointment Requirements by State

Pay Frequency and Final Pay Provisions

Federal Registry. NMLS Federal Registry Quarterly Report Quarter I

Motor Vehicle Sales/Use, Tax Reciprocity and Rate Chart-2005

Termination Final Pay Requirements

Sales Tax Return Filing Thresholds by State

Impacts of Prepayment Penalties and Balloon Loans on Foreclosure Starts, in Selected States: Supplemental Tables

Federal Rates and Limits

The Costs and Benefits of Half a Loaf: The Economic Effects of Recent Regulation of Debit Card Interchange Fees. Robert J. Shapiro

Ability-to-Repay Statutes

The Effect of the Federal Cigarette Tax Increase on State Revenue

State Income Tax Tables

State Corporate Income Tax Collections Decline Sharply

Undocumented Immigrants are:

The table below reflects state minimum wages in effect for 2014, as well as future increases. State Wage Tied to Federal Minimum Wage *

SECTION 109 HOST STATE LOAN-TO-DEPOSIT RATIOS. The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance

PAY STATEMENT REQUIREMENTS

ATHENE Performance Elite Series of Fixed Index Annuities

Fingerprint, Biographical Affidavit and Third-Party Verification Reports Requirements

A d j u s t e r C r e d i t C E I n f o r m a t i o n S T A T E. DRI Will Submit Credit For You To Your State Agency. (hours ethics included)

NOTICE TO MEMBERS CANADIAN DERIVATIVES CORPORATION CANADIENNE DE. Trading by U.S. Residents

Fingerprint and Biographical Affidavit Requirements

MEDICAID BUY-IN PROGRAMS

TA X FACTS NORTHERN FUNDS 2O17

Residual Income Requirements

State Tax Treatment of Social Security, Pension Income

Q Homeowner Confidence Survey Results. May 20, 2010

Understanding Oregon s Throwback Rule for Apportioning Corporate Income

S T A T E INSURANCE COVERAGE AND PRACTICE SYMPOSIUM DECEMBER 7 8, 2017 NEW YORK, NY. DRI Will Submit Credit For You To Your State Agency

S T A T E TURNING THE TABLES ON PLAINTIFFS IN TRUCKING LITIGATION APRIL 26 27, 2018 CHICAGO, IL. DRI Will Submit Credit For You To Your State Agency

Do you charge an expedite fee for online filings?

A d j u s t e r C r e d i t C E I n f o r m a t i o n S T A T E. DRI Will Submit Credit For You To Your State Agency. (hours ethics included)

A d j u s t e r C r e d i t C E I n f o r m a t i o n S T A T E. Pending. DRI Will Submit Credit For You To Your State Agency.

A d j u s t e r C r e d i t C E I n f o r m a t i o n S T A T E. DRI Will Submit Credit For You To Your State Agency. (hours ethics included)

Overview of Sales Tax Exemptions for Agricultural Producers in the United States

2014 STATE AND FEDERAL MINIMUM WAGES HR COMPLIANCE CENTER

If the foreign survivor of the merger is on the record what do you require?

Registering Foreign Nonprofit Corporations. Question by: Sarah Steinbeck. Date: 17 June 2010

Required Training Completion Date. Asset Protection Reciprocity

Minimum Wage Laws in the States - April 3, 2006

DFA INVESTMENT DIMENSIONS GROUP INC. DIMENSIONAL INVESTMENT GROUP INC. Institutional Class Shares January 2018

State Social Security Income Pension Income State computation not based on federal. Social Security benefits excluded from taxable income.

# of Credit Unions As of March 31, 2011

S T A T E MEDICAL LIABILITY AND HEALTH CARE LAW MARCH 2 3, 2017 LAS VEGAS, NV. DRI Will Submit Credit For You To Your State Agency

Mapping the geography of retirement savings

Child Care Assistance Spending and Participation in 2016

STATE AND FEDERAL MINIMUM WAGES

2012 RUN Powered by ADP Tax Changes

Exhibit 57A. Approved Attorney Fees and Title Expenses

DATA AS OF SEPTEMBER 30, 2010

Recourse for Employees Misclassified as Independent Contractors Department for Professional Employees, AFL-CIO

What is your New Financing Statement Fee? What is your Amendment Fee (include termination fee if a different amount)?

Q309 NATIONAL DELINQUENCY SURVEY FROM THE MORTGAGE BANKERS ASSOCIATION. Data as of September 30, 2009

Federal Reserve Bank of Dallas. July 15, 2005 SUBJECT. Banking Agencies Issue Host State Loan-to-Deposit Ratios DETAILS

Tax Recommendations and Actions in Other States. Joel Michael House Research Department June 9, 2011

White Paper 2018 STATE AND FEDERAL MINIMUM WAGES

CLE/CE Credit Pro cedure

Q209 NATIONAL DELINQUENCY SURVEY FROM THE MORTGAGE BANKERS ASSOCIATION. Data as of June 30, 2009

CLE/CE Credit Procedure

Year-End Tax Tables Applicable to Form 1099-DIV Page 2 Qualified Dividend Income

FHA Manual Underwriting Exceeding 31% / 43% DTI Eligibility Quick Reference

8, ADP,

FAPRI Analysis of Dairy Policy Options for the 2002 Farm Bill Conference

STATE MINIMUM WAGES 2017 MINIMUM WAGE BY STATE

IMPORTANT TAX INFORMATION

State Estate Taxes BECAUSE YOU ASKED ADVANCED MARKETS

Interest Table 01/04/2010

Mutual Fund Tax Information

Mutual Fund Tax Information

Forecasting State and Local Government Spending: Model Re-estimation. January Equation

# of Credit Unions As of September 30, 2011

Providing Subprime Consumers with Access to Credit: Helpful or Harmful? James R. Barth Auburn University

CLE/CE Credit Pro cedure

J.P. Morgan Funds 2018 Distribution Notice

EBRI Databook on Employee Benefits Chapter 6: Employment-Based Retirement Plan Participation

ADDITIONAL REQUIRED TRAINING before proceeding. Annuity Carrier Specific Product Training

Questions Regarding Name Standards. Date: March 6, [Questions Regarding Name Standards] [March 6, 2013]

MainStay Funds Income Tax Information Notice

MINIMUM WAGE WORKERS IN HAWAII 2013

Important 2008 Tax Information Regarding Your Mutual Funds

THE STATE OF THE STATES IN DEVELOPMENTAL DISABILITIES

Nation s Uninsured Rate for Children Drops to Another Historic Low in 2016

CLE/CE Credit Procedure

Notice on Reallotment of Workforce Investment Act (WIA) Title I Formula Allotted Funds

ADDITIONAL REQUIRED TRAINING before proceeding. Annuity Carrier Specific Product Training

504 Loan Program Rural Initiative - Waiver of Limitation on Lending Authority

CLE/CE Credit Procedure

Chapter D State and Local Governments

ANTI-ARSON APPLICATION MODEL BILL

BRINKER CAPITAL DESTINATIONS TRUST

Certifiates of Good Standing Date of Incorporation. Question by: Allison A. DeSantis. Jurisdiction. Date: January 15, 2013

Media Alert. First American CoreLogic Releases Q3 Negative Equity Data

State Minimum Wage Chart (See below for Local/City Minimum Wage Chart)

Summary of Benefits. Express Scripts Medicare. Value Choice S5660 & S5983. January 1, 2016 December 31, 2016

Transcription:

STATE OF RHODE ISLAND SUPREME COURT In Re Rhode Island Bar Foundation and M.P. No.: 08-227 Rhode Island Bar Association Proposed Changes to Rule of Professional Conduct 1.15 AMENDED PETITION The Rhode Island Bar Foundation (Bar Foundation) and the Rhode Island Bar Association (Bar Association) petition this Honorable Court to change Rule 1.15 of the Rules of Professional Conduct (1) to require that all attorneys who hold eligible client funds participate in the Bar Foundation s Interest On Lawyers Trust Accounts (IOLTA) program, i.e., to make IOLTA mandatory, and (2) to require that the financial institutions in which attorneys deposit IOLTA-eligible client funds pay a rate of interest or dividend that is not less than the rate of interest or dividend those institutions pay to their equivalent non-iolta customers, i.e., rate parity. The grounds for this petition are the following: 1. The Bar Foundation is an entity that is separate from the Bar Association and is a non-profit charitable foundation whose directors and fellows are members of the Rhode Island bar. The mission of the Bar Foundation is to foster and maintain the honor and integrity of the profession of law and to study, improve and facilitate the administration of justice in Rhode Island, as well as promote the study of law and to promote high standards of legal education. 2. The Bar Association is an integrated, unified Bar Association that represents the interests of all attorneys admitted to practice law in the State of Rhode Island. Attorneys who are admitted to practice law in Rhode Island are also members of the Bar Association. 3. The Bar Foundation s IOLTA program makes significant grants in four main areas:

(i) (ii) (iii) (iv) providing legal services to the poor in Rhode Island; improving delivery of legal services; promoting knowledge and awareness of the law; and improving the administration of justice. In 2007, the Bar Foundation IOLTA program awarded $1,679,326 to grant recipients in these four areas. 4. Attorney and law firm participation in the IOLTA program accounts for the Bar Foundation s most significant source of revenue. The IOLTA program provides funding that is critical to maintaining and improving access to the justice system in the State of Rhode Island. 5. Current Rule of Professional Conduct 1.15(h) does not require Rhode Island attorneys or law firms to establish IOLTA accounts. Consequently, Rhode Island is what is known as an opt-out state. That is, attorneys and law firms may choose not to participate in IOLTA. 6. Current Rule of Professional Conduct 1.15(f) addresses what are commonly known as IOLTA accounts and Rule 1.15(f)(1)-(4) describes the nature of these IOLTA accounts. Current Rule 1.15(f)(5) states: The rate of interest payable on any interest-bearing trust account [IOLTA] shall not be less than the rate paid by the depository institution on similar accounts. (emphasis added) The italicized language similar accounts is not defined in the rules; however, the Bar Association and Bar Foundation believe that the rule is meant to prohibit discriminatory treatment of IOLTA accounts. 7. Based on information that the Bar Association and Bar Foundation have received, and the research and investigation they have conducted, it appears that despite the language of current Rule 1.15(f)(5), various banks and financial institutions in Rhode Island (including 2

Rhode Island based banks as well as national banks with Rhode Island branches) presently discriminate against IOLTA accounts; that is, they pay less interest on IOLTA accounts than the highest interest or dividend generally paid by the bank or financial institution to its non-iolta customers, even when the IOLTA account meets the same minimum balance or other eligibility qualifications. For this reason, IOLTA accounts do not receive as high a rate of interest as the Bar Association and Bar Foundation believe they should receive, nor do receive the nondiscriminatory treatment that the Bar Association and Bar Foundation believe is contemplated by Rule 1.15(f)(5). 8. Based on information and belief, including information and data obtained from the American Bar Association, the majority of states are now mandatory IOLTA states and, therefore, they do not allow either opt out of IOLTA or voluntary participation in IOLTA. In February 2008, the Nevada Supreme Court approved an amendment to the state s IOLTA rule converting the IOLTA program from opt out to mandatory status. The new rule became effective May 1, 2008. On September 10, 2008, New Mexico also changed its rules to require mandatory IOLTA effective January 1, 2009. As a result of these changes, thirty-eight states have adopted mandatory IOLTA. Two states are voluntary IOLTA states; that is, attorneys must affirmatively choose to participate in IOLTA. A chart listing the states that are mandatory, optout and voluntary with respect to IOLTA, is attached as Exhibit 1. 9. Many states also require parity or comparable treatment by financial institutions with respect to IOLTA accounts such that the institutions may pay no less on an IOLTA account than the highest interest rate or dividend generally available from the institution to non-iolta customers. In such states, rate parity results in substantially higher rates of interest being paid by financial institutions on their customers IOLTA accounts than what is presently being paid by 3

Rhode Island banks and financial institutions on their customers IOLTA accounts. For example, on information and belief, banks and financial institutions in Massachusetts, as well as those in some other New England states, pay substantially higher interest rates on IOLTA accounts than their Rhode Island counterparts even if the bank or financial institution in each state is part of the same regional or national bank or financial institution. On July 1, 2008, IOLTA interest rate comparability provisions became effective in Hawaii. These comparability provisions require Hawaii attorneys to place their IOLTA accounts at a financial institution that pays IOLTA accounts the highest interest rate of interest or dividend generally available at the financial institution to other, non-iolta customers when the IOLTA account meets the same minimum balance or other requirements, i.e., what the Bar Association and Bar Foundation believe is intended by current Rule 1.15(f)(5), but which in practice does not occur in Rhode Island. On September 4, 2008, the Pennsylvania Supreme Court issued an order amending its Rule of Professional Conduct 1.5 and Rule of Disciplinary Enforcement 221 to fully implement IOLTA rate parity. And on September 10, 2008, the Supreme Court of New Mexico changed its rules to require mandatory IOLTA and interest rate parity, effective January 1, 2009. As a result of these various rule changes, there are now 23 states that have amended their IOLTA rules, regulations, or statutes to include comparability or parity provisions. A listing of the states requiring rate parity is attached as Exhibit 2. 10. The Bar Foundation and Bar Association reasonably believe that if the rule changes requested by this Petition are made to require non-exempt attorneys to establish IOLTA accounts and to prohibit attorneys and law firms from establishing IOLTA accounts in financial institutions that discriminate against IOLTA accounts, then the amount of IOLTA funds ultimately paid by financial institutions in Rhode Island on IOLTA accounts would increase 4

substantially. Accordingly, this change would likely result in substantially more money being awarded by the Bar Foundation in its IOLTA grants than is currently the case. In this way, more funding would be available to assist in providing legal services to those in need. 11. As a result of the economic downturn, substantially decreased numbers of real estate transactions, the fact that attorneys and law firms may opt-out of IOLTA and the increased need for legal services in Rhode Island, there is now a substantial difference between IOLTA funds available to distribute to grantees, and amounts needed to support the needs of IOLTA grantees and their programs. 12. The Board of Directors of the Bar Foundation and the House of Delegates of the Bar Association have approved a proposed rule change that would make IOLTA mandatory (as is now required by 38 states) and that would establish IOLTA account rate parity (as is required by 23 states). 13. Consistent with the actions of the Board of Directors of the Bar Foundation and the House of Delegates of the Bar Association, the Bar Foundation and the Bar Association petition this Court for rule changes that would make IOLTA participation for non-exempt attorneys mandatory, thus deleting current Rule 1.15(h), which now allows lawyers or law firms to opt-out of IOLTA, and deleting current Rule 1.15(f)(5) and replacing the language of Rule 1.15(f)(5) as follows: The rate of interest payable on any IOLTA account shall not be less than the highest interest rate or dividend available from the financial institution to its non-iolta customers when the IOLTA account meets the same minimum balance or other eligibility qualifications. Lawyers or law firms making such deposits shall direct the depository institution: [continue with Rule 1.15(f)(5) (i), (ii) and 1.15(g)] 14. The Bar Foundation and Bar Association also request that Rule 1.15(f)(3) be changed to correct what appears to be a scrivener s error and to clarify, consistent with the 5

original orders from this Court with respect to former DR9-102(3), which established rules relating to IOLTA accounts, that notification to clients whose funds are deposited in IOLTA accounts shall not be necessary. The current version of Rule 1.15(f), (g) and (h) is attached as Exhibit 3 and the proposed change to these Rules is attached as Exhibit 4. The original orders from this Court with respect to former Supreme Court Rule 47, Canon 9, DR9-102(3) IOLTA accounts are attached as Exhibit 5. 15. In accordance with the original Petition filed, the Bar Foundation and the Bar Association gave notice of the Petition and hearing to all financial institutions presently participating in the IOLTA program, and gave notice of the Petition and hearing to Bar Association members. Public comment closed on November 10, 2008 and a hearing on the original Petition was held on November 13, 2008. 16. On November 21, 2008, the Federal Insurance Deposit Corporation (FDIC) changed its rules with respect to the Temporary Liquidity Guaranty Program (TLGP) to include IOLTA accounts as non-interest bearing transaction accounts for purposes of unlimited FDIC protection for deposit accounts. See C.F.R. Part 370 Final Rule and relevant page from FDIC TLGP final rule amending the definition of a noninterest-bearing transaction account to include IOLTA accounts, attached as Exhibit 6. WHEREFORE, the Bar Foundation and the Bar Association respectfully request that this Court grant this Amended Petition instanter, and in doing so, allow attorneys ninety (90) days from the Order granting the Amended Petition to comply with the Rule changes. 6

Dated: December 2, 2008 RHODE ISLAND BAR FOUNDATION By: John A. Tarantino (Bar #2586) Adler Pollock & Sheehan P.C. One Citizens Plaza, 8 th Floor Providence, RI 02903 Tel: (401) 274-7200 Fax: (401) 351-4607 E-mail: jtarantino@apslaw.com John A. Tarantino President, Rhode Island Bar Foundation 115 Cedar Street Providence, RI 02903 - and RHODE ISLAND BAR ASSOCIATION By: Richard A. Pacia (Bar #2348) Richard A. Pacia Law Associates, LLC 50 Power Road, Suite 200 Pawtucket, RI 02860 Tel: (401) 728-1600 Fax: (401) 365-1145 E-mail: richard@pacialawassociates.com Richard A. Pacia President, Rhode Island Bar Association 115 Cedar Street Providence, RI 02903 476618_1.doc 7

Exhibit 1 Mandatory Opt-Out Voluntary Alabama Arizona Arkansas California Colorado Connecticut Florida Georgia Hawaii Illinois Indiana Iowa Louisiana Maine Maryland Massachusetts Michigan Minnesota Missouri Mississippi Montana Nevada New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania South Carolina Texas Utah Vermont Washington West Virginia Wisconsin Alaska Delaware District of Columbia Idaho Kansas Kentucky Nebraska New Hampshire Rhode Island Tennessee Virginia Wyoming South Dakota Virgin Islands

Exhibit 2 States That Require IOLTA Rate Parity Alabama Arkansas California Connecticut Florida Hawaii Illinois Indiana Louisiana Maryland Massachusetts Maine Michigan Minnesota Mississippi Missouri New Jersey New Mexico New York Ohio Pennsylvania Texas Utah

Exhibit 3 Current Version of Rule 1.15(f), (g), (h) and (i) (f) A lawyer or law firm shall, subject to paragraph (h) of this Rule, deposit clients funds, which are nominal in amount or to be held for a short period of time, in one or more interest bearing trust accounts in accordance with the following provisions: (1) Earnings from such accounts shall not be available to a lawyer or law firm. (2) Whether clients funds are nominal in amount or to be held for a short period of time shall be determined solely by each attorney or law firm. (3) Notification to clients whose funds are deposited in interest bearing trust accounts shall be necessary. (4) Such interest bearing trust accounts may be established with any financial institution authorized by federal or state law to do business in Rhode Island, the deposits in which are insured by insurance entities regulated by the United States and/or the State of Rhode Island or any agency or instrumentality thereof. Funds deposited in such accounts shall be available for withdrawal immediately upon demand. (5) The rate of interest payable on any interest bearing trust account shall not be less than the rate paid by the depository institution on similar deposits. Lawyers or law firms making such deposits shall direct the depository institution: (i) To remit interest or dividends on such deposits, net of any service or fees, at least quarterly, to the Rhode Island Bar Foundation (the Foundation ). (ii) To transmit to the Foundation and the depositor with each remittance statements showing the name of the depositor, the amount remitted, and the rate(s) at which the interest was computed. (g) Interest paid to the Foundation shall be used for any of the following purposes: providing legal services to the poor of Rhode Island; improving the delivery of legal services; promoting knowledge and awareness of the law; improving the administration of justice; and for the reasonable costs of administration of interest earned on clients trust accounts under this Rule. (h) A lawyer or law firm may elect not to deposit clients funds in an interest bearing account as authorized in paragraph (f) of this Rule by notifying the Clerk of the Supreme Court in writing of such election during the month of January in each year. (i) Nothing in this Rule shall preclude a lawyer or law firm from depositing any funds of a client other than those funds described in paragraph (f) of this Rule in an interest bearing account and accounting for the interest to such client.

Exhibit 4 Proposed Changes to Rule 1.15(f), (g), (h) and (i) (f) A lawyer or law firm shall, subject to paragraph (h) of this Rule, deposit clients funds, which are nominal in amount or to be held for a short period of time, in one or more interest bearing trust accounts in accordance with the following provisions. For purposes of this rule, such accounts are referred to as Interest on Lawyers Trust Accounts (IOLTA]: (1) Earnings from such IOLTA accounts shall not be available to a lawyer or law firm. (2) Whether clients funds are nominal in amount or to be held for a short period of time shall be determined solely by each attorney or law firm. (3) Notification to clients whose funds are deposited in interest bearing trust IOLTA accounts shall not be necessary. (4) Such interest bearing trustiolta accounts may be established with any financial institution authorized by federal or state law to do business in Rhode Island, the deposits in which are insured by insurance entities regulated by the United States and/or the State of Rhode Island or any agency or instrumentality thereof. Funds deposited in such accounts shall be available for withdrawal immediately upon demand. Deleted: (5) The rate of interest payable on any interest bearing trust account shall not be less than the rate paid by the depository institution on similar deposits. Lawyers or law firms making such deposits shall direct the depository institution: (5) The rate of interest payable on any IOLTA account shall not be less than the highest interest rate or dividend available from the financial institution to its non-iolta customers when the IOLTA account meets the same minimum balance or other eligibility qualifications. Lawyers or law firms making such deposits shall direct the depository institution: (i) To remit interest or dividends on such deposits, net of any service or fees, at least quarterly, to the Rhode Island Bar Foundation (the Foundation ). (ii) To transmit to the Foundation and the depositor with each remittance statements showing the name of the depositor, the amount remitted, and the rate(s) at which the interest was computed. (g) Interest paid to the Foundation shall be used for any of the following purposes: providing legal services to the poor of Rhode Island; improving the delivery of legal services; promoting knowledge and awareness of the law; improving the administration of justice; and for the reasonable costs of administration of interest earned on clients trust IOLTA accounts under this Rule.

(h) A lawyer or law firm may elect not to deposit clients funds in an interest bearing account as authorized in paragraph (f) of this Rule by notifying the Clerk of the Supreme Court in writing of such election during the month of January in each year. (h) Nothing in this Rule shall preclude a lawyer or law firm from depositing any funds of a client other than those funds described in paragraph (f) of this Rule in an interest bearing account and accounting for the interest to such client. Deleted: (i)

Exhibit 5

Exhibit 5 Formatted: Centered Formatted: Font: Bold, Underline 476618_1.doc