MBA Joins Amicus Brief Arguing Unidentified IOLTA Funds Not 'Abandoned Property'

Thursday, Jan. 23, 2020

mbasealThe Massachusetts Bar Association has filed an amicus brief at the Supreme Judicial Court in a case that will determine whether unidentified client funds in a disbarred attorney's IOLTA accounts are considered "abandoned property" and remit to the state treasurer or whether they should go to the state's IOLTA Committee. The MBA's brief, filed in conjunction with the Boston Bar Association and the Real Estate Bar Association for Massachusetts, argues that such funds should remit to the IOLTA Committee, because the SJC has the "ultimate authority to regulate the practice of law," including lawyers' IOLTA accounts and the disposition of unidentified funds. The case is Olchowski, et al. v. Office of the State Treasurer and Receiver General (SJC-12730).

The underlying dispute involves unidentified client funds in the IOLTA account of Gregory Olchowski, a lawyer who resigned and was disbarred by the SJC in May 2013. Pursuant to the SJC's requirement that Olchowski close his IOLTA accounts and despite the Board of Bar Overseers' best efforts at identifying the owners of the client funds, Olchowski's attorney filed a petition before a single justice of the SJC to have the unidentified IOLTA funds remit to the Massachusetts IOLTA Committee. The state treasurer's office intervened, claiming that the unidentified funds should be treated as abandoned property under the state's Abandoned Property Act, M.G.L. c. 200A, and remit to the treasurer. After the Massachusetts IOLTA Committee intervened, Justice Scott L. Kafker, sitting as a single justice, reported the matter to the full bench to determine where the unclaimed IOLTA funds should go. He requested that the parties and amici address three issues:

  1. Do unidentified client funds on deposit in an IOLTA account fall within the statutory definition of "abandoned property" under G. L. c. 200A?
  2. Does Mass. R. Prof. C. 1.15, or any other rule of this court, govern the disposition of such funds?
  3. Are any constitutional issues raised by the parties' proposed disposition(s) of the funds?
The MBA's brief answers the first question in the negative and urges the SJC to follow its customary practice and determine that unidentified funds in IOLTA accounts "should be remitted to the IOLTA Committee for use in funding its access to justice efforts." The brief asserts that the Abandoned Property Act, which was enacted more than 30 years before IOLTA accounts were implemented in Massachusetts and amended several times since, has never been amended to specifically include unidentified funds in IOLTA accounts as abandoned property. The MBA's brief also argues that treating the unidentified funds as abandoned property would allow the treasurer's office to "conduct audits and take other actions that would intrude upon client confidences."

The MBA's brief answers the second question in the affirmative, although it notes the court "may wish to clarify the rule." It argues that "the existing bar system," which includes the expertise and investigational services of the BBO and the Office of Bar Counsel, is best equipped to understand the administrative requirements of Rule 1.15 and determine whether the owner of the unclaimed funds can be located. "This will also have the benefit of maintaining public trust and confidence that the Court and entities it has created and oversees are ultimately responsible for the regulation of lawyers and the security of client trust funds," the brief says.

The MBA's brief did not address the SJC's third constitutional question, writing: "Remitting unidentified IOLTA funds to the IOLTA Committee does not increase constitutional concerns, provided that the IOLTA Committee can repay funds when a true owner comes forward. There is no reason to believe the IOLTA Committee cannot establish procedures and adequate reserves that would allow it to repay owners."

MBA Chief Legal Counsel and Chief Operating Officer Martin W. Healy, Thomas J. Carey Jr. and Francis C. Morrissey from the MBA worked on the amicus brief with Mary K. Ryan and Micah Miller from the BBA, and support from REBA. Oral arguments are scheduled for Tuesday, Feb. 11. 

Click here to read the amicus brief.