Funds held in trust by an attorney that are “too small in amount or are reasonably expected to be held for too short a time to generate sufficient income to justify the expense of administering a segregated account for the benefit of the client or beneficial owner” are “qualified funds” and are appropriate for deposit in an IOLA account.  See Judiciary Law 497 §2 and Section 7000.2(d) of the Trustees Regulations.

The determination is made solely in the judgment of the attorney who holds the funds in trust. New York has a statuary hold-harmless provision.  New York attorneys shall neither be liable in damages nor held to answer for a charge of professional misconduct because of a deposit of moneys into an IOLA account, pursuant to the attorney's good-faith judgment that such moneys were qualified funds. Judiciary Law §497(5); 21 N.Y.C.R.R. 7000.8(b).

Please click here for A Lawyer’s Guide to IOLA Accounts -- it has detailed instructions on opening an IOLA account and a link to the Enrollment Form.

All IOLA Account must contain the attorney's name followed by the acronym IOLA and must end in one of the following phrases; Attorney Trust Account, Attorney Escrow Account or Attorney Special Account. For details, see A Lawyer's Guide to IOLA accounts.

The attorney is responsible for paying any fees not mentioned above, including those associated with wire transfers, stop payments, or NSFs (overdrafts).

If the attorney maintains an operating account at the same bank, the bank may agree to arrange for fees to be taken from the operating account. Alternately, the attorney can deposit funds into your IOLA account in an amount sufficient to cover such fees before they are charged. See Rules of Professional Conduct: 22 N.Y.C.R.R., Part 1200, Rule 1.15 (b)(3).

IOLA accounts are subject to Rule 1.15 of the Rules of Professional Conduct, which requires that:

“All special account withdrawals shall be made only to a named payee and not to cash. Such withdrawals shall be made by check or, with the prior written approval of the party entitled to the proceeds, by bank transfer.” 22 NYCRR Part 1200, Rule 1.15 (e).

Courts have found that checks payable to “cash” and ATM withdrawals are prohibited from IOLA accounts. See, e.g., Matter of Butler, 285 A.D.2d 344 (2d Dep’t 2001).

The procedure for designation of successor signatories is explained in the Disciplinary Rules of the Code of Professional Responsibility. See Rules of Professional Conduct: 22 N.Y.C.R.R. Part 1200, Rule 1.15 (g).