§ 497. Attorneys fiduciary funds; interest-bearing accounts. 1. An\n"interest on lawyer account" or "IOLA" is an unsegregated\ninterest-bearing deposit account with a banking institution for the\ndeposit by an attorney of qualified funds.\n 2. "Qualified funds" are moneys received by an attorney in a fiduciary\ncapacity from a client or beneficial owner and which, in the judgment of\nthe attorney, are too small in amount or are reasonably expected to be\nheld for too short a time to generate sufficient interest income to\njustify the expense of administering a segregated account for the\nbenefit of the client or beneficial owner. In determining whether funds\nare qualified for deposit in an IOLA account, an attorney may use as a\nguide the regulation adopted by the board of trustees of the IOLA fund\npursuant to subdivision four of section ninety-seven-v of the state\nfinance law.\n 2-a. "Funds received in a fiduciary capacity" are funds received by an\nattorney from a client or beneficial owner in the course of the practice\nof law, including but not limited to funds received in an escrow\ncapacity, but not including funds received as trustee, guardian or\nreceiver in bankruptcy.\n 3. A "banking institution" means a bank, trust company, savings bank,\nsavings and loan association, credit union or foreign banking\ncorporation whether incorporated, chartered, organized or licensed under\nthe laws of this state or the United States, provided that such banking\ninstitution conducts its principal banking business in this state.\n 4. (a) An attorney shall have discretion, in accordance with the code\nof professional responsibility, to determine whether moneys received by\nan attorney in a fiduciary capacity from a client or beneficial owner\nshall be deposited in non-interest, or in interest bearing accounts. If\nin the judgment of an attorney any moneys received are qualified funds,\nsuch funds shall be deposited in an IOLA account in a banking\ninstitution of his or her choice offering such accounts.\n (b) The decision as to whether funds are nominal in amount or expected\nto be held for a short period of time rests exclusively in the sound\njudgment of the lawyer or law firm. Ordinarily, in determining the type\nof account into which to deposit particular funds held for a client, a\nlawyer or law firm shall take into consideration the following factors:\n (i) the amount of interest the funds would earn during the period they\nare expected to be deposited;\n (ii) the cost of establishing and administering the account, including\nthe cost of the lawyer or law firm's services;\n (iii) the capability of the banking institution, through\nsubaccounting, to calculate and pay interest earned by each client's\nfunds, net of any transaction costs, to the individual client.\n (c) All qualified funds shall be deposited in an IOLA account unless\nthey are deposited in:\n (i) a separate interest bearing account for the particular client or\nclient's matter on which the interest will be paid to the client; or\n (ii) an interest bearing trust account at a banking institution with\nprovision by the bank or by the depositing lawyer or law firm for\ncomputation of interest earned by each client's funds and the payment\nthereof to the client.\n (d) Notwithstanding the deposit requirements of this subdivision, no\nattorney or law firm shall be liable in damages nor held to answer for a\ncharge of professional misconduct for failure to deposit qualified funds\nin an IOLA account.\n 5. No attorney or law firm shall be liable in damages nor held to\nanswer for a charge of professional misconduct because of a deposit of\nmoneys to an IOLA account pursuant to a judgment in good faith that such\nmoneys were qualified funds.\n 6. a. An attorney or law firm which receives qualified funds in the\ncourse of its practice of law and establishes and maintains an IOLA\naccount shall do so by (1) designating the account as "(name of\nattorney/law fir
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