In the Matter of Olchowski

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SJC-12730
IN THE MATTER OF GREGORY M. OLCHOWSKI.
Suffolk. February 11, 2020. - October 1, 2020.
Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher,
& Kafker, JJ.1
Board of Bar Overseers. Treasurer and Receiver General.
Attorney at Law, Disciplinary proceeding, Client funds.
Abandoned Property.
Information filed in the Supreme Judicial Court for the
county of Suffolk on September 21, 2012.
A motion to remit funds, filed on October 18, 2018, was
reported by Kafker, J.
Maureen Mulligan (Kristyn M. Kelley also present) for
Massachusetts IOLTA committee.
Timothy J. Casey, Assistant Attorney General, for Treasurer
and Receiver General.
Robert M. Daniszewski, Assistant Bar Counsel, was present
but did not argue.
Michael J. Serduck, for the respondent, was present but did
not argue.
The following submitted briefs for amici curiae:
Karen D. O'Toole for Massachusetts Clients' Security Board
& another.
1 Chief Justice Gants participated in the deliberation on
this case and authored this opinion prior to his death.
2
Jeffrey D. Woolf for Board of Bar Overseers.
Mary K. Ryan, Micah W. Miller, Martin W. Healy, Thomas J.
Carey, Jr., & Francis C. Morrissey for Boston Bar Association &
others.
Georgia D. Katsoulomitis, Jacquelynne Bowman, Jonathan
Mannina, Elizabeth A. Soule, George Weber, Susan Nagl, Richard
Dubois, Elizabeth Matos, John A. Froio, Jay McManus, Kathleen B.
Boundy, Cathy Costanzo, & Janine Solomon for Massachusetts Law
Reform Institute & others.
GANTS, C.J. The question presented in this case concerns
the proper disposition of unidentified client funds on deposit
in an Interest on Lawyers' Trust Account (IOLTA or IOLTA
account): should they be remitted to the Commonwealth's general
fund under the abandoned property statute, G. L. c. 200A, or to
the IOLTA committee pursuant to this court's inherent authority
to govern the conduct of Massachusetts attorneys? We conclude
that trust funds on deposit in an IOLTA account do not fall
within the statutory definition of "abandoned property" and
therefore the disposition of these funds is not governed by
G. L. c. 200A. We also conclude that unidentified IOLTA funds
should be transferred to the IOLTA committee for disposition, as
set forth in this opinion.2
2 We acknowledge the amicus briefs submitted by the Board of
Bar Overseers; the Massachusetts Clients' Security Board and the
Massachusetts Clients' Security Fund; the Boston Bar
Association, the Massachusetts Bar Association, and the Real
Estate Bar Association for Massachusetts, Inc.; and the
Massachusetts Law Reform Institute.
3
Background. We recite the facts of this case as stated in
the parties' joint statement of undisputed facts. On November
23, 2012, this court issued an order temporarily suspending
Gregory M. Olchowski from the practice of law. As part of this
order, in accordance with our rules governing bar discipline and
clients' security protection, Olchowski was directed to notify
each of his clients that he had been suspended from the practice
of law and could no longer represent them, to make all files
available to clients, to refund fees not earned, to close every
IOLTA, client, trust or other fiduciary account, and to disburse
all client and fiduciary funds in his possession. See S.J.C.
Rule 4:01, § 17 (1), as amended, 426 Mass. 1301 (1997).
At the time of Olchowski's temporary suspension, he
maintained two IOLTA accounts, one with Bank of America and one
with Citizens Bank, which held a combined total of $29,927.
Olchowski was unable to identify the owners of the funds in the
IOLTA accounts, so Olchowski's accountant, a Massachusetts-
certified public accountant, undertook to try to identify the
owners of the unidentified funds. However, the accountant was
unable to discover the identity of any of the owners of the
funds in Olchowski's IOLTA accounts.3
3 In May 2013, we issued a judgment disbarring Gregory M.
Olchowski, retroactive to November 23, 2012.
4
On December 11, 2017, Olchowski's attorney notified the
Office of Bar Counsel (bar counsel) that there were unidentified
funds in Olchowski's IOLTA accounts. Subsequently, a financial
investigator from the office examined Olchowski's IOLTA accounts
to try to determine the owners of the funds. Bar counsel
obtained the records for the two IOLTA accounts from the office
of Olchowski's former accountant and subpoenaed records from the
two banks where the accounts were opened. After reviewing these
records, the investigator was unable to determine the owner or
owners of the unidentified funds in either of Olchowski's IOLTA
accounts.
While efforts were being made to identify the owners of the
funds, Olchowski's attorney transferred the unidentified funds
from the IOLTA accounts into an escrow account. At the time
briefs were filed in this case, the escrow account balance was
$29,952, including the unidentified funds and twenty-five
dollars deposited to open the account. Automatic withdrawals
transferring monthly interest payments to the IOLTA committee
continued to be made from this account.
In October 2018, Olchowski's attorney moved that the single
justice order the transfer of the unidentified funds from
Olchowski's two IOLTA accounts to the IOLTA committee. The
motion was served on the director of the unclaimed property
division of the office of the Treasurer and Receiver General
5
(Treasurer), and the director of the IOLTA committee. The
Treasurer moved to intervene and requested that the funds be
remitted to the treasury as "abandoned property" under G. L.
c. 200A. The IOLTA committee then moved to intervene and
requested that the funds be remitted to it. Bar counsel took
"no position on the issue of whether IOLTA funds whose owners
cannot be identified . . . should escheat to the [Treasurer] or
be remitted to the IOLTA [c]ommittee," but requested that it be
notified of the existence of unidentified funds and have the
opportunity to complete "any investigation and review it deems
necessary" to determine whether the attorney responsible for the
IOLTA accounts should be disciplined and "to ensure that the
owners in fact are unknown."
The single justice reserved and reported the matter to the
full court, stating that "[t]he ultimate question for the court
to decide is where these particular unidentified client funds
should go" -- either to the Commonwealth as unclaimed property
or to the IOLTA committee. Additionally, the single justice
noted that in answering this ultimate question, we would likely
have to address three subsidiary questions: (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, [as appearing
in 471 Mass. 1380 (2015),] or any other rule of this court,
6
govern the disposition of such funds?"; and (3) "Are any
constitutional issues raised by the parties' proposed
disposition(s) of the funds?"
Discussion. 1. Supreme Judicial Court's superintendence
authority over the practice of law. To address these issues, we
first explain our governance of the bar and the practice of law.
Among the inherent superintendence powers of the Supreme
Judicial Court is the authority to govern the conduct of
attorneys in the practice of law. See Collins v. Godfrey, 324
Mass. 574, 576 (1949) ("It must now be regarded as settled that
in the distribution of powers under art. 30 [of the
Massachusetts Declaration of Rights] the ultimate power of
general control over the practice of law by its own officers
fell to the judicial department"). See also Opinion of the
Justices, 375 Mass. 795, 813 (1978) ("As to attorneys admitted
to practice before the courts of the Commonwealth, we retain the
ultimate authority to control their conduct in the practice of
law"). This superintendence authority includes determining who
is qualified to be admitted to the bar to practice law,
controlling the practice of law through rules of professional
conduct, disciplining attorneys who violate those rules, and
suspending and disbarring those attorneys who are no longer fit
to practice law. See Opinion of the Justices, 279 Mass. 607,
609–610 (1932) ("It is an inherent power of [the judicial]
7
department of government ultimately to determine the
qualifications of those to be admitted to practice in its
courts, for assisting in its work, and to protect itself in this
respect from the unfit, those lacking in sufficient learning,
and those not possessing good moral character").
In the exercise of this superintendence authority, we have
promulgated several rules, including S.J.C. Rule 3:07, as
amended, 480 Mass. 1315 (2018) (Massachusetts Rules of
Professional Conduct), which governs the conduct of attorneys;
S.J.C. Rule 4:01, which governs bar discipline, and establishes
the Board of Bar Overseers (board) to adjudicate disciplinary
matters and bar counsel to investigate and prosecute such
matters; and S.J.C. Rules 4:04 through 4:06,4 which establish the
Clients' Security Board to reimburse clients for losses arising
from the misappropriation of funds by members of the bar acting
either as attorneys or fiduciaries. In short, this court has
established a series of rules that together govern the conduct
of attorneys, provide for the discipline of attorneys who
violate the rules of professional conduct, and protect clients
from losses arising from defalcations by members of the bar.
4 S.J.C. Rule 4:04, as appearing in 482 Mass. 1301 (2019);
S.J.C. Rule 4:05, as appearing in 482 Mass. 1303 (2019); and
S.J.C. Rule 4:06, as appearing in 482 Mass. 1304 (2019).
8
2. IOLTA accounts. Rule 1.15 of the Massachusetts Rules
of Professional Conduct governs the safekeeping of property
entrusted to an attorney. An attorney in possession of "trust
property," defined as the "property of clients or third persons
that is in a lawyer's possession in connection with a
representation," is required to hold it "separate from [his or
her] own property," and deposit trust funds in a "trust
account." Mass. R. Prof. C. 1.15 (a) (1), (b) (1).
An attorney must deposit trust funds in one of two types of
interest-bearing trust accounts: (1) where, in the judgment of
the attorney, the trust funds "are nominal in amount, or are to
be held for a short period of time," the attorney must deposit
trust funds into an IOLTA account; or (2) where the amount of
money is more than nominal and is to be held for longer than a
short period of time, an attorney must deposit the money into an
individual trust account. Mass. R. Prof. C. 1.15 (e) (6). With
an individual trust account, the identity of the beneficial
owner should always be known because the account is held in a
client's name, with all accruing interest paid to the client.
Mass. R. Prof. C. 1.15 (e) (3), (6). But an IOLTA account is a
"pooled account" that may hold deposits from multiple clients
and third persons at the same time. Mass. R. Prof. C. 1.15
(e) (6). A bank holding an IOLTA account does not receive any
9
identifying information about the client or third person whose
funds may be pooled in the attorney's account.
Funds deposited into an IOLTA account may be retainers or
advances paid by clients for legal fees that have yet to be
actually earned by the attorney, client funds that are awaiting
disbursement following judgment or a settlement, or third-party
funds that are awaiting distribution, such as the funds
distributed after a closing on the sale of real property. See
Tyrrell and Casey, Managing Clients' Funds and Avoiding Ethical
Problems, at 4-5 (Jan. 2018). Because an IOLTA account is
"pooled," because the bank holding the account does not know to
whom the funds in an IOLTA account belong, and because an
attorney is responsible to "promptly deliver to the client or
third person any funds or other property that the client or
third person is entitled to receive," Mass. R. Prof. C. 1.15
(c), an attorney is required to adhere to strict record-keeping
and reconciliation requirements for an IOLTA account. See Mass.
R. Prof. C. 1.15 (f). An attorney with an IOLTA account is
required to keep a ledger for each client matter that identifies
every receipt or disbursement of trust funds for that matter, so
that the attorney knows at all times how much money in the IOLTA
account is beneficially owned by each client and third person.
See id. And the attorney is required to prepare a
reconciliation report no less than every sixty days to verify
10
the balance for each client and third person. See Mass. R.
Prof. C. 1.15 (f) (1) (C), (E), (F).
Where an attorney fails to keep careful records and prepare
periodic reconciliation reports, the risk arises that he or she
may not know who is entitled to the trust funds in an IOLTA
account, and that the clients and third persons who beneficially
own these funds will be deprived of them. Because attorneys are
not routinely required to submit reconciliation reports to
anyone, neither a bank nor bar counsel will immediately learn if
an attorney has failed to keep proper records. In order to
assist with oversight of attorney record-keeping, financial
institutions accepting IOLTA deposits must agree to report any
dishonored checks on IOLTA accounts to the board. Mass. R.
Prof. C. 1.15 (h) (1). Because a dishonored check in an IOLTA
account may reflect an attorney's failure properly to manage an
IOLTA account, receipt of such notice may trigger an
investigation by bar counsel into the attorney's management of
his or her IOLTA account, and a request for account
documentation and reconciliation reports as part of that
investigation. See Mass. R. Prof. C. 1.15 (h).
When an attorney is suspended from the practice of law,
disbarred, or placed in disability inactive status, or resigns
from the bar during a disciplinary investigation, the attorney,
among other obligations, must within fourteen days close every
11
individual trust and IOLTA account, properly disburse or
transfer all funds in those accounts, and refund any legal fees
that were paid in advance but had not been earned. See S.J.C.
Rule 4:01, § 17 (1) (f), (g). And the attorney within twenty-
one days must furnish bar counsel with an affidavit attesting to
compliance with these obligations and provide "a schedule
describing the lawyer's disposition of all client and fiduciary
funds in the lawyer's possession." S.J.C. Rule 4:01,
§ 17 (5) (c). If an attorney's poor record-keeping was not the
impetus for bar discipline, an attorney's inability to identify
the beneficial owners of IOLTA funds will become apparent when
the attorney's IOLTA accounts are closed. Similarly, IOLTA
funds may be unidentified where an attorney who is a sole
practitioner is placed on disability inactive status,
disappears, or dies, and has made no provisions for the transfer
of IOLTA account documents and reconciliation reports, or for
the disbursement of funds in an IOLTA account.
Where there are unidentified IOLTA funds arising from a bar
disciplinary matter, bar counsel may conduct a forensic
investigation to attempt to identify the owners of the funds, as
happened in this case. Because the records in the custody of
the bank holding the IOLTA account may not disclose the
ownership of these funds, or the amount owned, bar counsel's
investigation might require a confidential examination of the
12
attorney's records, including privileged attorney-client
communications and attorney work product. Where unidentified
IOLTA funds arise from the death, disability, or disappearance
of an attorney, and where no partner, executor, or other
responsible person is capable of conducting the attorney's
affairs, a single justice of the county court may appoint a
commissioner to make an inventory of the attorney's files and
protect the interests of the attorney's clients, which includes
identifying the owners of the unidentified funds. See S.J.C.
Rule 4:01, § 14 (1), as appearing in 425 Mass. 1318 (1997). The
commissioner's examination of the attorney's files is
confidential; the commissioner "shall not disclose any
information contained in any files listed in such inventory
without the consent of the client to whom such file relates
except as necessary to carry out the order of this court to make
such inventory." S.J.C. Rule 4:01, § 14 (2).
Where bar counsel or a court-appointed commissioner
identifies the owners of previously unidentified funds in an
attorney's IOLTA account, the funds are provided to their
rightful owner, assuming the owner can be located. When the
owner of funds cannot be identified, it can be inferred that one
or more unknown clients or third parties who had entrusted funds
to the attorney who was responsible for the IOLTA account have
been deprived of funds that are rightfully theirs. Clients who
13
can establish that they suffered losses arising from
defalcations by members of the bar can seek reimbursement from
the Clients' Security Board. See S.J.C. Rule 4:05, as appearing
in 482 Mass. 1303 (2019). But where the true owner of IOLTA
funds cannot be identified, he or she cannot be informed that
the mismanagement of the attorney's IOLTA account might have
caused him or her to suffer losses arising from an attorney's
defalcation.
Under Mass. R. Prof. C. 1.15 (g), the interest on IOLTA
accounts is distributed to the IOLTA committee, whose members
are appointed by this court to oversee the operation of the
IOLTA program. The IOLTA committee, in turn, disburses sixty-
seven percent of all IOLTA-generated funds, net of expenses, to
the Massachusetts Legal Assistance Corporation and the remaining
thirty-three percent to "other designated charitable entities,"
in proportions ordered by this court, to improve the
administration of justice and deliver legal services to those
who cannot afford them. Mass. R. Prof. C. 1.15 (g) (4) (i).
But neither rule 1.15 nor any other rule promulgated by this
court declares what happens to the principal in IOLTA accounts
when a true owner cannot be identified.
3. Abandoned property law. The Treasurer contends that
the disposition of unidentified funds in an IOLTA account is
governed by the abandoned property law, G. L. c. 200A. The
14
abandoned property law, first enacted in St. 1950, c. 801, "sets
forth a comprehensive scheme governing the disposition of
abandoned property." Biogen IDEC MA, Inc. v. Treasurer &
Receiver Gen., 454 Mass. 174, 176 (2009). The legislative
purposes of the law are threefold: "protecting true owners'
rights, bringing additional revenues to the treasury, and
providing a procedure for the transfer of abandoned property."
Id.
The law requires every "person"5 holding presumptively
abandoned funds annually to furnish the Treasurer with a report
identifying the name and last known address appearing in its
records of the owner of any presumptively abandoned funds of one
hundred dollars or more, and transfer those funds to the
treasury. G. L. c. 200A, §§ 7, 8A. Sixty days before filing
the report, the holder of the presumptively abandoned funds must
send a notice to the apparent owner of the funds, at the last
known address in the holder's records, informing the owner "of
the process necessary to rebut the presumption of abandonment."
G. L. c. 200A, § 7A. If the owner does not timely come forward
5The statute defines "person" broadly to include "any
individual, corporation, . . . trust, partnership,
association, . . . savings bank, . . . national
banks, . . . bank holding companies and bank subsidiaries."
G. L. c. 200A, § 1.
15
to rebut the presumption, the funds are included in the holder's
abandoned property report and transferred to the treasury.
Once abandoned property is reported and delivered, the
Treasurer's unclaimed property division (division) takes various
steps to reunite property with its true owner. The division
manages an online database (findmassmoney.com) where individuals
can search for abandoned property. The search tool displays,
among other information, the apparent owner's name and last
known address and the holder who reported the property
abandoned. The division also publishes the apparent owners'
names in Statewide newspapers twice per year. Consistent with
the statute's purpose to reunite property with its true owner
whenever possible, there is no statute of limitations for a
putative owner of abandoned property to make a claim to the
treasury; a person making such a claim may do so "at any time"
after the property has been surrendered to the Treasurer. G. L.
c. 200A, § 10 (a).
4. Application of the abandoned property law. Chapter
200A would govern unidentified funds in IOLTA accounts only if
such funds constitute "abandoned property" under the law.
"Abandoned property" is defined in G. L. c. 200A, § 1, as
"property presumed unclaimed and abandoned pursuant to this
chapter." For funds to be deemed "abandoned property" under
c. 200A, they must satisfy two sets of statutory conditions.
16
First, "the conditions for presumption of abandonment" stated in
one of eight enumerated sections in c. 200A must "exist."6 G. L.
c. 200A, § 1A. Second, one of the four conditions in § 1A must
be met.7 See id. As to the first set of required statutory
6 The eight enumerated sections are G. L. c. 200A, § 3
(abandonment of deposits of property); G. L. c. 200A, § 4
(abandonment of security deposits); G. L. c. 200A, § 5
(abandonment of instruments, documents, and money); G. L.
c. 200A, § 5A (abandonment of life insurance proceeds and the
like); G. L. c. 200A, § 5B (abandonment of dividends,
distributions, and interest in business); G. L. c. 200A, § 6A
(abandonment of distribution due in liquidation); G. L. c. 200A,
§ 6B (abandonment of traveler's checks and other guaranteed
instruments); and G. L. c. 200A, § 6D (abandonment of property
payable from insurance company demutualization).
7 The four conditions in G. L. c. 200A, § 1A, are the
following:
"(a) the last known address of the apparent owner is in the
commonwealth as shown on the records of the person in
possession of property;
"(b) no address of the apparent owner appears on the
records of the person in possession of the property and
"(1) the last known address of the apparent owner is in the
commonwealth, or
"(2) the person in possession of property subject to this
chapter is domiciled in the commonwealth and has not
previously paid the property to the state of the last known
address of the apparent owner, or
"(3) the holder is a government or governmental subdivision
or agency of the commonwealth and has not previously paid
the property to the state of the last known address of the
apparent owner;
"(c) the last known address, as shown on the records of the
person in possession of property, is in a state that does
not provide by law for the escheat or custodial taking of
17
conditions, none of the designated sections specifically
addresses IOLTA accounts, but the Treasurer contends that § 3,
which concerns "deposits" of funds, applies to the unidentified
funds in IOLTA accounts. We disagree. A careful review of this
section reveals that attempting to apply § 3 to IOLTA accounts
would be the legal equivalent of trying to fit a square peg into
a round hole.
Section 3 provides that a deposit of funds in a bank shall
be presumed abandoned unless the "owner" within three years has
"[c]ommunicated in writing with the person concerning the
deposit," "[b]een credited with interest on a passbook or
certificate of deposit at his request," or otherwise done some
act with respect to the account, such as depositing or
withdrawing funds, transferring funds, or engaging in some
transaction regarding the account.8 Under § 3, the "owner" of
such property and the person in possession of property is
domiciled in the commonwealth or is a government or
governmental subdivision or agency of the commonwealth; or
"(d) the last known address, as shown on the records of the
person in possession of property, of the apparent owner is
in a foreign nation and the person in possession of
property is domiciled in the commonwealth or is a
subdivision or agency of the commonwealth."
8 The full text of G. L. c. 200A, § 3, provides:
"Any deposit of property with a person having a residence
or place of business in the commonwealth, or authorized to
do business therein, together with the increments thereon,
shall be presumed abandoned unless the owner has, within
18
the funds in the account is the person named on the account who
is also presumed to be the person who actually owns the funds in
the account. In fact, the Treasurer's regulations define an
"owner" as "[a] person or entity having a legal or equitable
claim to abandoned property." 960 Code Mass. Regs. § 4.02
(2004). But with an IOLTA account, the attorney named on the
three years next preceding the date as of which reports are
required by [G. L. c. 200A, § 7]:
"(1) Communicated in writing with the person concerning the
deposit; or
"(2) Been credited with interest on a passbook or
certificate of deposit at his request; or
"(3) Had a transfer, disposition of interest or other
transaction noted of record in the books or records of the
person; or
"(4) Increased or decreased the amount of deposit; or
"(5) Owned other property for which clause (1), (2), (3) or
(4) is applicable; provided, however, that the holder
communicates in writing with the owner with regard to such
property that would otherwise be presumed abandoned under
this section at the address at which communications
regarding such other property regularly are received; or
"(6) Had another relationship with the holder concerning
which the owner has:
"(i) communicated in writing with the holder, or
"(ii) otherwise indicated an interest as evidenced by a
memorandum on file prepared by an employee of the holder;
provided, however, that if the holder communicates in
writing with the owner with regard to the property that
would otherwise be presumed abandoned under this section at
the address at which communications regarding the other
relationship regularly are received."
19
account is not the true owner of the funds; those funds are the
property of the clients or third persons who entrusted those
funds to the attorney. See Matter of Sharif, 459 Mass. 558, 565
n.7 (2011). See also ZVI Constr. Co. v. Levy, 90 Mass. App. Ct.
412, 419 (2016), quoting Phillips v. Washington Legal Found.,
524 U.S. 156, 164 (1998) ("the principal held in IOLTA trust
accounts is the 'private property' of the client").
The bank has no way to learn the identity of the true
owners of the funds, and therefore no way to provide them with
the advance notice required under § 7A to prevent these funds
from being deemed presumptively abandoned and included in the
bank's report of abandoned property it must provide to the
Treasurer under § 7. Additionally, § 7 (b) (1) requires the
bank in its report to provide the name and last known address of
"each person appearing from the records of the holder to be the
owner of any property of the value of one hundred dollars or
more presumed abandoned under this chapter," but the bank's
records will reveal only the attorney's name and address, not
the name and address of the true owner of the funds in the IOLTA
account. Therefore, if IOLTA accounts could be deemed
"abandoned property" under § 3, the true owners of these funds
would not receive notice by the bank that the account was to be
reported abandoned (that notice would go only to the attorney
whose name is on the IOLTA account), nor be able to take one of
20
the six listed actions in § 3 to prevent their IOLTA funds from
being presumed abandoned by the bank.
The claims process established by the Treasurer to allow
true owners of presumptively abandoned property to claim those
funds also does not fit the unique nature of IOLTA accounts.
Under the Treasurer's regulations, "the original owner" of the
funds is required to submit documentation in support of his or
her claims. See 960 Code Mass. Regs. § 4.04(1), (2) (2004).
But the usual required documentation, such as the monthly
statement of the bank or the holder's certification, is not
applicable to an IOLTA account because these documents would not
establish a purported owner's beneficial ownership of the funds.
The attorney named on the IOLTA account may make a claim on
behalf of the true owner, but only if he or she is the "legal
representative" of the owner, which is defined as an executor or
administrator of an estate, a conservator or guardian, "or an
authorized agent appointed in accordance with a properly-
executed power of attorney." 960 Code Mass. Regs. §§ 4.02,
4.04(2)(b).
In short, the careful procedures established by c. 200A to
identify presumptively abandoned funds, report and remit those
funds to the treasury, and allow the true owner of those funds
to reclaim them by proof of ownership simply do not fit when
applied to IOLTA accounts. This is not a criticism of the
21
Legislature; there were no pooled IOLTA accounts in 1950 when
the law was enacted, and although the law has since been
amended,9 none of the amendments addresses the unique nature of
an IOLTA account.10
9 See, e.g., St. 1958, c. 283; St. 1969, c. 377; St. 1975,
c. 277; St. 1975, c. 608; St. 1980, c. 130, §§ 3, 4, 7;
St. 1984, c. 458; and St. 2000, c. 198.
10The IOLTA committee contends that G. L. c. 200A, § 3,
does not apply to IOLTA accounts because, under Mass. R. Prof.
C. 1.15 (g) (2) (i), banks must remit interest to the committee
no less than quarterly, so the account may never be presumed
abandoned where G. L. c. 200A, § 3 (2), provides that a bank
account is not to be presumed abandoned if the account each
quarter has "[b]een credited with interest on a passbook or
certificate of deposit at his request." This argument ignores
the phrase, "at his request," which requires some act by the
owner of the account (here, the attorney) to request the credit
of interest. If the passive receipt of automatic interest
payments was sufficient to show that a bank account was not
presumptively abandoned, any bank account with an established
automatic transfer schedule would never be considered abandoned
under the statute nor ever be remitted to the treasury --
undermining the statute's aim to "provide a smooth and simple
procedure for transferring such property into the state treasury
and out of the hands of those in unjust possession." Treasurer
& Receiver Gen. v. John Hancock Mut. Life Ins. Co., 388 Mass.
410, 423 (1983), quoting 1950 Senate Doc. No. 1, at 22.
Moreover, the Treasurer's regulations reflect that an owner's
property should not be deemed presumptively abandoned where "the
owner maintains an active relationship with a holder with
respect to any property of the same owner." 960 Code Mass.
Regs. § 4.03(11) (2004). "Activity" is defined in the
regulations as an "[a]ction taken by an owner with respect to
his or her property which indicates that the owner intends for
the property not to be presumed abandoned." 960 Code Mass.
Regs. § 4.02. The passive receipt of interest is not an
"activity" and is insufficient to rebut a presumption of
abandonment.
22
The Treasurer seeks to fit IOLTA accounts into § 3 by
arguing, in the alternative, that the definition of "person"
holding unclaimed property who is required to report and
transmit the property to the treasury is broad enough to include
the attorney responsible for the IOLTA account. It is certainly
true that the definition of "person" under the abandoned
property law is broad enough to include an attorney or law firm
holding funds on behalf of a client or third person. See G. L.
c. 200A, § 1 ("person" includes "any individual" or
"partnership"). However, in the context of § 3, this would
require the attorney responsible for the account, and not the
bank, to report to the Treasurer that the funds in an IOLTA
account are presumptively abandoned where the client or the
third person who is the beneficial owner of the funds has not
communicated with the attorney for three years regarding the
funds. There are two problems with this alternative argument.
First, G. L. c. 200A, § 7, requires the "holder" of funds
deposited in a bank that are presumptively abandoned to file a
report based on "the records of the holder." There is nothing
in the Treasurer's regulations or in the record to suggest that
the Treasurer has informed banks that, with regards to IOLTA
accounts, the attorney is the holder of the funds, not the bank.
Under the Treasurer's regulations, "holder" is defined as "[t]he
entity that has custody of abandoned property," which suggests
23
that, at least with respect to bank deposits, the holder is
expected to be an entity rather than an individual attorney.
960 Code Mass. Regs. § 4.02. Nor is there any language in
c. 200A or the regulations to suggest that there may be multiple
"holders" of the same funds, and any such suggestion would be a
recipe for confusion, because it would mean that multiple
reports would be filed regarding the same abandoned funds. To
be sure, law firms and legal service agencies at times have
filed abandoned property reports regarding an IOLTA account with
the Treasurer, but the vast majority of such reports are filed
by banks. According to the director of audit and compliance for
the division, as of December 1, 2019, 572 "IOLTA-type
properties" were unclaimed in the abandoned property database,
but only thirteen of the submitted reports were from law firms;
one was from a legal aid organization.
Second, if the attorney responsible for an IOLTA account is
deemed the "holder" of the account, the Treasurer or her agents
"may at any reasonable time and upon reasonable notice examine
or audit a holder's books, papers or other records to verify
proper compliance with the reporting requirements of [c. 200A]."
960 Code Mass. Regs. § 4.07 (2004). Section 3 cannot be
reasonably understood to mean that, by opening an IOLTA account,
which an attorney may be required to do under our rules of
professional conduct, the attorney opens the door to treasury
24
agents examining all of his or her books, papers, and other
records, which may contain confidential client information,
attorney-client communications, or attorney work product.
Allowing that to happen in the ordinary course might result in a
breach of an attorney's obligations to his or her client. See
Commonwealth v. Perkins, 450 Mass. 834, 851 (2008) ("It is
axiomatic that among the highest duties an attorney owes a
client is the duty to maintain the confidentiality of client
information" [citation omitted]); Mass. R. Prof. C. 1.6 comment
2, as amended, 474 Mass. 1301 (2016) ("A fundamental principle
in the client-lawyer relationship is that, in the absence of the
client's informed consent or as otherwise permitted by these
Rules, the lawyer must not reveal confidential information
relating to the representation. . . . This contributes to the
trust that is the hallmark of the client-lawyer relationship");
Mass. R. Prof. C. 1.6 (providing for protection of confidential
client information).
We therefore conclude, given the incongruent fit between
§ 3 and IOLTA accounts, that G. L. c. 200A, § 3, does not apply
to unidentified funds deposited in IOLTA accounts. Where the
Treasurer does not contend that any of the other seven
enumerated sections in c. 200A apply to these funds, we conclude
25
that IOLTA accounts fall outside the scope of the abandoned
property law.11
5. Identification, investigation, and disposition of
abandoned IOLTA funds. Our conclusion that c. 200A does not
govern IOLTA accounts does not mean that there will be no
process to identify abandoned funds in IOLTA accounts, to
investigate bank and attorney records to determine the true
owners of those funds, to restore the funds to those true
owners, and to transfer any funds whose true owner cannot be
identified despite diligent investigation. It simply means that
we must put that process in place through our superintendence
authority over the bar and the practice of law. We do so here,
and direct this court's standing advisory committee on the rules
of professional conduct (standing committee) to propose
amendments to Mass. R. Prof. C. 1.15 to incorporate the
following guidance into our rule.
Just as a dishonored check in an IOLTA account is an
indicator of a possible disciplinary violation by an attorney
regarding his or her management of an IOLTA account, so, too, is
the absence of any activity in an IOLTA account over an extended
11Because we conclude that the first set of required
statutory conditions is not met, we need not address whether
unidentified funds in IOLTA accounts meet the second set of
required conditions in § 1A for the funds to be "presumed
abandoned" under the statute.
26
period of time. We currently require lawyers to maintain IOLTA
accounts only in financial institutions that agree to notify the
board when a check is dishonored for insufficient funds. See
Mass. R. Prof. C. 1.15 (h). See also Go-Best Assets Ltd. v.
Citizens Bank of Mass., 463 Mass. 50, 60 (2012). Such
notification permits bar counsel to investigate the attorney to
determine whether the dishonored check arises from a
disciplinary violation regarding the attorney's management of
client funds, from financial mismanagement that could be
remedied with appropriate guidance or supervision, or from a
simple careless mistake. We shall now require similar
agreements to impose an obligation on financial institutions to
notify the board when there is no activity in an IOLTA account
for more than two years, apart from automatic interest payments
to the IOLTA committee.12 This notification will allow bar
counsel, where appropriate, to conduct a forensic examination of
the attorney's IOLTA account records, and other books and
records, to ascertain whether the funds are abandoned and
determine the true owner of any such funds so that they may be
disbursed. In addition, such notice will allow bar counsel to
12This court's standing advisory committee on the rules of
professional conduct, in proposing amendments to Mass. R. Prof.
C. 1.15, may consider whether a different time period is more
appropriate to accomplish our purpose for requiring such
notification.
27
determine whether the prolonged inactivity of the account is a
sign of possible disciplinary violations or financial
mismanagement by the attorney.
Of course, bar counsel need not wait for two years of IOLTA
account inactivity to examine whether there are presumptively
abandoned funds in certain IOLTA accounts. As discussed supra,
Supreme Judicial Court rules are already in place requiring an
attorney who is suspended from the practice of law, disbarred,
or placed on disability inactive status, or has resigned from
the bar during a disciplinary investigation, to close every
IOLTA account, disburse or transfer all IOLTA funds, and report
to bar counsel the disposition of all such funds, which should
reveal the existence of any unclaimed or unidentified funds.
See S.J.C. Rule 4:01, § 17 (1), (5) (c). And where an attorney
dies, disappears, or becomes inactive because of disability, and
where no partner, executor, or other responsible person
disburses or transfers the funds in the attorney's IOLTA
account, a single justice of the county court may appoint a
commissioner to identify the owners of the funds in the IOLTA
accounts and disburse the monies. See S.J.C. Rule 4:01,
§ 14 (1). With vigilant bar counsel and commissioners, the
number and dollar amount of unidentified IOLTA funds should be
minimized.
28
But as this case demonstrates, there will still be
unidentified funds in IOLTA accounts that, despite exhaustive
forensic investigation, will elude all reasonable efforts to
determine and locate their true owner.13 There are two
reasonable alternative dispositions of these funds: the
Commonwealth's general fund, where abandoned property within the
scope of G. L. c. 200A is ultimately transferred pursuant to
G. L. c. 200A, § 9 (e); or the IOLTA committee, where the
interest on IOLTA accounts is transferred, which is in turn
distributed pursuant to Mass. R. Prof. C. 1.15 (g) to entities
that will deliver civil legal services to those who cannot
afford them or improve the administration of justice. Some
13We are of course concerned about the 572 "IOLTA-type
properties" currently unclaimed in the abandoned property
database. It is unclear whether bar counsel was alerted to
their existence before this litigation, or how bar counsel would
otherwise be alerted to abandoned IOLTA accounts in order to
begin an investigation or disciplinary proceeding. It is also
unclear whether bar counsel has conducted, or will be able to
conduct, investigations into whether the funds in these 572
accounts are truly unidentified or simply unclaimed.
29
States have chosen the first alternative.14 Others have chosen
the second alternative.15
Even though the disposition of these funds is not governed
by c. 200A because IOLTA funds fall outside the scope of the
abandoned property law, we recognize and respect the legislative
purpose that all abandoned property be transferred to the
general fund. We would, pursuant to our superintendence
authority, transfer these funds to the general fund out of
respect for that legislative purpose if funds deemed abandoned
could never be claimed by their rightful owner. But such claims
may be made, with no limitations period, and therein lies the
rub.
If we were to determine that unidentified IOLTA funds
should be transferred to the Treasurer, we would expect the
Treasurer to apply the same claims process to IOLTA funds, which
fall outside the scope of c. 200A, as she applies to abandoned
See, e.g., Alaska Bar Association Ethics Opinion No. 90-3
14
(1990); State Bar of Arizona Ethics Opinion No. 97-03 (1997);
State Bar of Georgia Formal Advisory Opinion No. 98-2 (1998);
State Bar of Michigan Ethics Opinion No. RI-38 (1989);
Mississippi Ethics Opinion No. 178 (1990); N.C. R. Prof. C.
1.15-2(r); Washington Bar Association, Ethics FAQ ("What do I do
with unclaimed trust account funds?"), citing Wash. Rev. Code
§ 63.29, https://www.wsba.org/for-legal-professionals/ethics
/ethics-faqs#unclaimed [https://perma.cc/2R3H-GUFW].
See, e.g., Ark. R. Prof. C. 1.15(c)(1)-(2); Colo. R.
15
Prof. C. 1.15B(k); Ill. R. Prof. C. 1.15(i); La. R. Prof. C.
1.15(g)(7)-(8), (h); N.J. Court Rule 1:21-6(j); N.Y. R. Prof. C.
1.15(f); Pa. R. Prof. C. 1.15(v).
30
funds that are within the scope of c. 200A. Under that process,
when someone claims an interest in property surrendered to the
State, the Treasurer has "full and complete authority to
determine all such claims" and, in doing so, may take testimony
under oath, subpoena the attendance of witnesses, and subpoena
the production of all "books, papers and documents which may be
pertinent to such hearing." G. L. c. 200A, § 10 (b)-(c). This
is precisely the type of inquiry that we are reluctant to
relinquish to the Treasurer should a claim be made on
unidentified IOLTA funds by an attorney's client. Attorney
records concerning IOLTA accounts are necessarily intertwined
with attorney-client confidences. Any such inquiry by the
Treasurer poses the risk of impermissible disclosure of
confidential client information, attorney-client communications,
and attorney work product.
We conclude that there is a better approach that is more
protective of the confidential information so fundamental to the
attorney-client relationship: where bar counsel determines
after reasonable investigation that the owner of IOLTA funds
cannot be identified or located, bar counsel should request the
single justice of the county court to find that the funds are
presumptively abandoned and to order the transfer of the
31
abandoned funds to the IOLTA committee.16 The transfer of these
funds to the IOLTA committee, in order to avoid constitutional
concerns, carries with it an obligation by the committee to
return those funds to their true owner, with interest, if the
true owner establishes ownership at any time. Therefore, we
will revise our rules of professional conduct to memorialize
that obligation after considering language recommended by our
standing committee.17 Where such a claim is made, the
investigation of its merits should be conducted by bar counsel,
whose obligation to maintain the confidentiality of information
arising from an investigation is already established by rule.
See S.J.C. Rule 4:01, § 20, as amended, 438 Mass. 1301 (2002).
16 Where the owner of the IOLTA funds has been identified
but cannot be located, the Board of Bar Overseers shall publish
the name on a webpage on its website to allow the missing client
or third person to reclaim his or her abandoned funds from the
IOLTA committee. Nothing in this opinion is intended to prevent
the board from seeking the agreement of the Treasurer to include
these names on her abandoned property website, with the proviso
that any persons claiming ownership of such property will be
referred to bar counsel for investigation.
17 The Treasurer does not allege that there is any
constitutional bar to the transfer of funds to the IOLTA
committee but instead contends that "constitutional problems
could arise" under the takings clause of the Fifth Amendment or
under the First Amendment to the United States Constitution, if
the transfer were deemed compelled speech. The Treasurer does
not have standing to raise such claims, see Tax Equity Alliance
for Mass. v. Commissioner of Revenue, 423 Mass. 708, 715–716
(1996), and in any event she recognizes that the weight of these
claims is diminished if a claimant who can establish ownership
of previously unidentified IOLTA funds will be able to recover
those funds from the IOLTA committee, with interest, at any
time.
32
Any dispute concerning the adjudication of ownership shall be
resolved by the single justice.
Conclusion. In answer to the questions posed by the single
justice in his reservation and report, we conclude that
unidentified client funds on deposit in an IOLTA account do not
fall within the statutory definition of "abandoned property"
under G. L. c. 200A; that neither Mass. R. Prof. C. 1.15 nor any
other rule of this court presently governs the disposition of
such funds; and that such funds shall be transferred to the
IOLTA committee for disposition under the conditions set forth
in this opinion, which shall later be incorporated in revisions
to Mass. R. Prof. C. 1.15.
So ordered.
LOWY, J. (dissenting). The court holds, without an
adequate factual record to support it, that Interest on Lawyers'
Trust Accounts (IOLTAs or IOLTA accounts) fall outside the
abandoned property act (act), in part because the alternative
would allow the Treasurer and Receiver General (Treasurer) to
inspect attorneys' records in a manner that could allow the
Treasurer to maintain and to investigate IOLTA accounts, as she
does with other abandoned property. This, according to the
court, would improperly risk "disclosure of confidential client
information, attorney-client communications, and attorney work
product," all of which fall under the attorney-client privilege
governed by the judicial branch. Ante at . Because the
court concludes as such, it avoids having to decide whether
classifying orphaned IOLTA funds as abandoned property would
impede upon the judiciary's authority under art. 30 of the
Massachusetts Declaration of Rights to regulate the practice of
law, or whether keeping unclaimed IOLTA accounts within the
province of the judiciary would unduly interfere with the
executive or legislative powers as outlined in art. 30.
I, on the other hand, believe that the plain meaning and
legislative intent of the act require categorizing unclaimed or
orphaned IOLTA funds as abandoned property, a conclusion that
prevents us from avoiding the lurking separation of powers
issues. I therefore do not believe that we should draw any
2
definitive conclusions from the bare factual record. Instead,
we should remand to a trial court to develop a more complete
record.
First, orphaned IOLTA funds, at least based on this limited
record, seem to fit within the act's definition of abandoned
property, specifically as intangible property, property on
deposit in a bank, or, perhaps, as security deposits.18 See
G. L. c. 200A, §§ 1A, 3, 4. Because IOLTA funds are deposited
into "trust accounts" in a bank by attorneys operating on behalf
of their clients in a fiduciary capacity, such funds facially
qualify as abandoned property under the act absent some
compelling factual or legal reason to the contrary. See Mass.
R. Prof. C. 1.15, as appearing in 471 Mass. 1380 (2015). Aside
from plain meaning, the Legislature intended the act to "set[]
forth a comprehensive scheme governing the disposition of
abandoned property," Biogen IDEC MA, Inc. v. Treasurer &
Receiver Gen., 454 Mass. 174, 176 (2009), including "all kinds"
18The Treasurer contended that IOLTA accounts fall within
G. L. c. 200A, § 3, and the court cabined its analysis to that
section of the act. In whole, G. L. c. 200A, § 4 states:
"Subject to the provisions of section one A, any deposit of
property made to secure payment for services rendered or to be
rendered, or to guarantee the performance of service or duties,
or to protect against damage or harm, and the increments
thereof, shall be presumed abandoned, unless claimed by the
person entitled thereto within three years after the occurrence
of the event that would obligate the holder or depository to
return it or its equivalent."
3
of unclaimed property "whose owner is unknown or had neglected
to claim it during a specific number of years," Treasurer &
Receiver Gen. v. John Hancock Mut. Life Ins. Co., 388 Mass. 410,
412-413, 423 (1983). Whether one conceives of the owner as the
attorney who opened the IOLTA account or the clients whose funds
constitute the account, the legislative intent facially captures
IOLTA accounts.
The court argues that "attempting to apply § 3 to IOLTA
accounts would be the legal equivalent of trying to fit a square
peg into a round hole." Ante at . Statutory interpretation,
however, does not pursue a perfect fit when effectuating
legislative intent, and some square pegs can fit into round
holes. See Plymouth Retirement Bd. v. Contributory Retirement
Appeal Bd., 483 Mass. 600, 604 (2019). To that end, the court
contends that orphaned IOLTA funds do not qualify as abandoned
property because the true owner is the client, not the attorney
listed on the account, and the holder of the account, the bank,
could not therefore notify the true owner in advance of deeming
the property presumptively abandoned. See G. L. c. 200A,
§ 7 (b) (1) (bank must report name and last known address of
"each person appearing from the records of the holder to be the
owner"); G. L. c. 200A, § 7A (if holder has accurate address of
"apparent owner" of property presumed abandoned, then holder
4
must send notice "of the process necessary to rebut the
presumption of abandonment").
This apparent "square peg" actually fits quite nicely into
the act, even though the statute does not define "owner," see
G. L. c. 200A, § 1, because attorneys acting as fiduciaries have
a "legal . . . claim to abandoned property" on behalf of their
clients and therefore qualify as "owners" under the Treasurer's
regulations.19 960 Code Mass. Regs. § 4.02 (2004). See Matter
of Sharif, 459 Mass. 558, 565 n.7 (2011) (explaining ways that
attorney must act as fiduciary for trust accounts). See also
Biogen IDEC MA, Inc., 454 Mass. at 186-187 (in absence of clear
statutory language to contrary, we must defer to Treasurer's
regulations). Because the attorney is the owner of the IOLTA
account, I am not convinced on this record that the bank could
not comply with its statutory obligations to notify the owner in
advance of reporting the IOLTA account as abandoned property.20
See G. L. c. 200A, §§ 7 (b) (1), 7A.
19I presume that, in the context of this case, Gregory M.
Olchowski's counsel, who requested the transfer of the IOLTA
account, would have legal claim to the property.
20The court seems to recognize that attorneys acting as
fiduciaries for IOLTA funds are owners of those accounts when
refuting an argument made by the IOLTA committee that trust-
bearing accounts cannot qualify as abandoned property under the
act. Under the act, earning interest rebuts the presumption of
abandonment only "at his request," which, according to the
court, "requires some act by the owner of the account (here, the
5
Moreover, the regulations appear to account for
circumstances where an attorney or other fiduciary may be the
"owner" of an account that becomes abandoned for which the "true
owners" of the funds, the clients, can file to reclaim property
that was abandoned due to their fiduciaries' irresponsibility.
See John Hancock Mut. Life Ins. Co., 388 Mass. at 426 ("The
focus of the statute is to reunite the owners with their
property, and therefore it is irrelevant that John Hancock does
not own [or control] the property"). The Treasurer's
regulations outlining the claims process note that only the
"original owner" can make a claim by presenting certain
documents, such as a "monthly statement, if applicable." 960
Code Mass. Regs. § 4.04(2)(a) (2004). Although clients may not
have documents, such as the specific IOLTA account information,
they could still make a claim by presenting "other documentation
as may be required by the [unclaimed property division] to
substantiate the validity of the claim," since the Treasurer
would likely recognize that those other documents were not
"applicable." Id. Alternatively, the owner's "legal
representative" may make a claim on behalf of the client. 960
Code Mass. Regs. § 4.04(2)(b). The record shows that banks and
law firms have transferred 572 IOLTA accounts to the Treasurer
attorney) to request the credit of interest." Ante at note 10,
quoting G. L. c. 200A, § 3 (2).
6
as abandoned property, but the record does not reflect the
claims process to which clients with funds in those accounts
have adhered. The existing framework seems capable of handling
claims by the true owners of funds within IOLTA accounts.
The court next alleges that it would be improper for an
attorney to be a "holder" under the act -- the individual who
would have to file reports about presumptively abandoned
property -- even though the statute's definition of a person who
can hold property is broad enough to encompass an attorney
acting as the fiduciary for IOLTA funds. See G. L. c. 200A,
§ 1. The court worries that this would create an unmanageable
scenario with multiple persons with statutory responsibilities
as holders of one pool of property under the act. To the
contrary, it is perfectly plausible that the bank would be a
holder for the IOLTA account and the attorney would be a holder
for the apportioned IOLTA funds within the account. In fact, it
makes logical sense that responsible attorneys would report
abandoned IOLTA funds to the Treasurer as abandoned property if
they could not contact clients for three years, and that the
bank would report the entire IOLTA account if it qualified as
presumptively abandoned under the act. See 960 Code Mass. Regs.
§ 4.02. Although the court claims that this scenario "would be
a recipe for confusion," ante at , the factual record
provides no indication of such confusion, especially considering
7
that some attorneys and law firms have reported IOLTA funds as
abandoned property. We simply need more information.
Even if I were to agree with the court's statutory
analysis, my foundational concern about the inadequate record
remains for the court's apparent primary concern: that the
Treasurer might need to investigate attorneys' books to
determine to whom the unclaimed IOLTA funds belong, see G. L.
c. 200A, § 10 (b)-(c), or to ensure that attorneys complied with
their requirements as holders. See 960 Code Mass. Regs. § 4.07
(2004). The court raises the understandable concern that
"[a]llowing [such an investigation] to happen in the ordinary
course might result in a breach of an attorney's obligations to
his or her client," ante at , but only hints at the second-
level implication of that statement; allowing the Treasurer such
access as the statute would require might invade upon the
judiciary's art. 30 power to protect attorney-client privilege
and attorney confidentiality as part of its power to regulate
the practice of law.
Of course, the court does not need to reach whether those
fears would come true, because its version of statutory
interpretation keeps IOLTA accounts outside the realm of
abandoned property and therefore out of the possible reach of
the Treasurer. The court accordingly has no obligation to
provide evidence that such breaches occur or that investigations
8
by the Treasurer would impede upon our art. 30 authority. I
view the matter differently.
Because I conclude that orphaned IOLTA funds qualify as
abandoned property under the act, we can only keep the Treasurer
from exercising her statutory obligations regarding those funds
based on some interpretation of our constitutional authority to
regulate the practice of law. We could hold that the act is
unconstitutional as applied to orphaned IOLTA funds, or we could
craft an alternative solution that gives the Treasurer control
over the orphaned IOLTA funds without unduly impeding the
attorney-client privilege. Either solution necessarily
implicates separation of powers concerns, as both could
interfere with the Legislature's and the executive branch's
powers under art. 30. In sum, concluding that unclaimed IOLTA
funds constitute abandoned property requires me to consider how
the court's proposed solution, one that still might be
constitutionally or statutorily permissible even though I
determined that IOLTA accounts are abandoned property under the
act, affects art. 30, and to consider whether it does so
appropriately on the facts before the court.
Before we reach such a significant decision, I believe that
we need a factual record to help answer critical questions
beyond the bare joint statement of facts presented to the single
justice. The record does not reflect whether investigating
9
unclaimed funds in IOLTA accounts would necessarily violate the
attorney-client privilege. The amicus briefs presented by the
Boston Bar Association and others and by the Board of Bar
Overseers (BBO) suggest that it does, but the factual record
only explains that a financial investigator subpoenaed records
from banks and examined records held by Gregory M. Olchowski's
former accountant. There is no indication that the
investigation necessarily pierced the veil of attorney-client
privilege, which, if accurate, would lessen the art. 30 concerns
for orphaned IOLTA funds constituting abandoned property because
the Treasurer would not therefore be impeding upon the
judiciary's art. 30 authority to regulate the practice of law.21
Moreover, there might be an alternative path that neither
ignores the act's plain meaning nor imposes on or interferes
with our art. 30 obligations, and that simultaneously respects
the Legislature's and executive branch's powers. However, the
parties only briefed opposing absolutes: the Treasurer claimed
complete authority to investigate and to manage orphaned IOLTA
21As stated supra, the record notes that entities have
transferred 572 IOLTA accounts to the Treasurer as abandoned
property. The record makes no reference to whether the
Treasurer has investigated these properties to determine the
true owner and, if so, whether those investigations pierced the
veil of attorney-client privilege. Moreover, the record does
not reflect whether investigations into other types of abandoned
property, such as trust funds or remainders of estates, which I
presume are under the authority of the Treasurer, would also
pierce the veil of attorney-client privilege.
10
accounts, no matter attorney-client privilege, while the IOLTA
committee and Olchowski, who the court largely followed, put the
power squarely with the judiciary. I agree with the court that
it is possible that classifying IOLTA accounts as abandoned
property could interfere with the judiciary's art. 30 authority
to regulate the practice of law. On the other hand, mitigating
that concern by following the court's chosen path, which would
transfer abandoned IOLTA funds to the judiciary's control rather
than to the general fund, or by ordering the Treasurer to
respect attorney-client privilege could also offend art. 30 by
unduly interfering with legislative or executive authority.22
We simply need to know more before we meddle with the
separation of powers, a principle that is the foundation of our
22The court contemplates that someone will have to review
attorney-client privileged materials to determine the true
owners of the IOLTA funds, but it does not discuss any precise
procedures for doing so beyond keeping the funds within the
judiciary and having the BBO conduct an inquiry in a manner
similar to how it assesses attorney accounts during disciplinary
procedures. There may be alternatives. For example, it may be
constitutionally permissible to require that the Treasurer
transfer investigatory responsibilities to an agent of the
judiciary, namely the BBO, if an examination of orphaned IOLTA
accounts threatened to pierce the veil of attorney-client
privilege. It also might be possible to maintain the privilege
if the BBO hired outside counsel to conduct the review. It may
even be possible to rely on an interpleader action, with the
Treasurer and the IOLTA committee as nominal parties, so that
the unclaimed IOLTA funds are deposited with the court until
appropriate disposition of the matter. See Mass. R. Civ. P. 67,
365 Mass. 835 (1974). Perhaps these ideas would not be possible
or constitutionally permissible, but the parties understandably
did not brief this matter.
11
constitutional system. I therefore dissent and recommend that
we remand to the Chief Justice of the Trial Court for assignment
of the case to create a more thorough factual record.