By: Joseph R. Marconi 
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Illinois Rule of Professional Conduct 1.15 requires attorneys to hold client property in an interest-bearing trust account separate from the attorney's own property. These accounts include Interest on Lawyers Trust Accounts (IOLTAs) and non-IOLTA trust accounts. In an article from last year, In "Eligible" IOLTAs We Trust, we noted some of the September 2011 changes to this rule. One of the more significant changes to Rule 1.15 is the automatic overdraft notification provision, Rule 1.15(h). The rule requires the financial institution at which the trust account is established to promptly notify the ARDC if a trust account is overdrawn, regardless of whether or not the instrument is honored.
To implement the reporting requirement, the rule mandates that all attorneys admitted to practice in Illinois "shall, as a condition thereof, be conclusively deemed to have consented to the reporting and production requirements mandated by this Rule." Likewise, to be eligible to offer client trust accounts, financial institutions must agree to comply with the reporting requirement.
The Supreme Court's official comment to Rule 1.15(h) states that the overdraft notification program "is intended to provide early detection of problems in lawyers' trust accounts, so that errors by lawyers and/or banks may be corrected and serious lawyer transgressions pursued." The ARDC's trust account handbook notes that 42 other jurisdictions have a similar rule in place, and, like the Supreme Court's own commentary, specifies that the system is designed to provide early warning of an attorney's financial improprieties with respect to client property.
At the same time, however, the ARDC notes that most overdrafts do not result in disciplinary charges, but instead simply identify lawyers who need education about account management. In fact, upon implementing the amended rule, the need for attorney education became immediately apparent.
During the first six months of the rule's implementation, from September 1, 2011 through February 28, 2012, the ARDC received 283 overdraft notices. During the same time period, it closed 170 of those files because they merely revealed attorney account management errors rather than intentional misconduct. Of the remaining 113 open files, the ARDC is still trying to determine what caused the overdraft, but it expects that the vast majority, again, were not the result of attorney misconduct. None of the overdraft notices to date have resulted in a formal ethics complaint.
The primary cause for inadvertent overdrafts is a draw on uncollected funds. Many lawyers are unaware, for example, that a client check may post to an account before the funds have actually been received by the bank. If the attorney immediately withdraws those funds to pay a filing fee, but the client's check later bounces, the attorney's check may result in an overdraft and a corresponding notification to the ARDC. The ARDC cautions that if an attorney has any concerns about incoming funds, the safest way to determine whether an item has cleared is to contact the bank upon which the item is drawn.
The ARDC also notes that inadvertent overdrafts are often caused by untimely check deposits by the attorney's staff, bank fees that deplete funds, math and transcription errors, attorneys confusing their various accounts or checkbooks, and occasional bank errors.
In sum, although last year's amendments imposed a stringent monitoring system on trust accounts that automatically notifies the ARDC of even minor oversights, attorneys should not be worried that a single inadvertent overdraft will lead to disciplinary action. It may nevertheless result in an inquiry from the ARDC. To avoid an inadvertent overdraft, attorneys are advised to educate themselves about basic account management, and to pay close attention to their account balances.
 Mr. Marconi is a shareholder at Johnson & Bell, Ltd., chairman of the business litigation/transaction group, and co-chair of the employment group. He gratefully acknowledges the assistance of Justin H. Volmert in drafting this article.
 Rule 1.15(j) provides a safe harbor to attorneys in real estate transactions which, if certain requirements are met, permits them to deposit and disburse funds more quickly without fear of violating their duties under this rule.