BBA Files Brief in Support of the Massachusetts IOLTA Committee

On January 21, the Boston Bar Association, Massachusetts Bar Association (MBA), and Real Estate Bar Association (REBA) filed a joint brief to the Supreme Judicial Court (SJC) in the case of In the Matter of Gregory M. Olchowski, which has to do with a dispute between the Massachusetts Interest On Lawyers’ Trust Accounts (IOLTA) Committee and the State Treasurer over access to unidentified funds in IOLTA accounts. The brief, co-drafted by Mary Ryan and Micah Miller of Nutter McClennen & Fish, Tom Carey of Hogan Lovells, and Francis Morrissey of Morrissey, Wilson & Zafiropoulos, sided with the IOLTA Committee, arguing that unidentified funds should be remitted  to the IOLTA Committee instead of the Treasurer.

Attorney Gregory Olchowski was temporarily suspended in early 2013 and funds from his two IOLTA accounts were deposited in a separate account in the name of his attorney. The intended recipients of the funds could not be identified. Since 1994, Bar Counsel’s practice has been to remit funds to the Committee, with the SJC’s approval, after conducting a thorough investigation (including reviewing attorney records) and determining that the owner of the funds cannot be identified. In October 2018, Bar Counsel filed a motion to remit the Olchowski funds to the IOLTA Committee. The Treasurer filed a motion to intervene and ultimately opposed Bar Counsel’s motion, asserting that the funds should escheat to the Treasurer.  The Committee filed a motion to intervene and to oppose the Treasurer’s motion. 

As the BBA/MBA/REBA brief notes, 13 other states have either statutes or court rules which send unidentified funds to that state’s IOLTA group or similar entity. The SJC posed the following questions for amici:

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?

In April 2019, the IOLTA Committee formally requested that the BBA file an amicus brief in support of their argument in this case. The Amicus Committee reviewed the facts of this case and monitored the development of the brief.

As filed, the brief argues that the Abandoned Property Act was never intended to address unidentified IOLTA funds, inasmuch as it was enacted decades before the creation of the Commonwealth’s IOLTA program in 1985.  G.L. c. 200A has been amended at least five times since then to define when specific types of property are deemed abandoned, yet the Legislature has not chosen to bring IOLTA funds within that ambit: “Had the legislature intended to bring unidentified IOLTA funds under the APA, it could have done so by express amendment, as it did for other kinds of property. This history shows that the Legislature never intended the APA to apply to unidentified funds in an IOLTA account.”

Further, amici point out, on behalf of their respective members and the bar as a whole, that treating these funds as abandoned property would interfere with the practice of law by intruding on attorney-client confidences—“a critical aspect of the practice of law”—and jeopardizing the security of client information. This is because “[a]ttorney records concerning IOLTA accounts are necessarily intertwined with attorney-client confidences,” and the Treasurer’s Office would have broad discretion to review attorney records related to IOLTA accounts holding such funds. Yet, unlike the IOLTA Committee and the Board of Bar Overseers, that Office lacks clear protections against the disclosure of confidential information.

The brief also places the power to regulate unidentified IOLTA funds squarely within the SJC’s inherent authority to regulate the practice of law, and highlights “the beneficial effects that turning even modest sums of money over to the IOLTA Committee will have on access to justice for all.” This position is consistent with the BBA’s mission, and with its history: The BBA and MBA jointly petitioned the SJC to create the Massachusetts IOLTA program in 1985, and it has been funding programs on behalf of indigent residents of the Commonwealth since then.

The IOLTA Committee recruited two pro bono attorneys to represent it in oral argument, which will be held on February 11. Follow @MikeAvitzurBBA on Twitter for live updates of the hearing (which you can also watch through the Suffolk Law School feed)! A ruling is anticipated by June, and we’ll be sure to update you on it here.

-Michael Avitzur
Director of Government Relations & Public Affairs
Boston Bar Association