(a) A licensed paralegal practitioner or a licensed paralegal practitioner firm shall create and maintain an interest or dividend-bearing trust account for client funds ("IOLPPTA account"). All client funds shall be placed into this account except those funds which can earn net income for the client in excess of the costs to secure such income, except as provided in paragraph (g).
(b) In determining whether a client's funds can earn net income in excess of the costs of securing that income for the benefit of the client, the licensed paralegal practitioner or licensed paralegal practitioner firm shall consider the following factors:
(b)(1) the amount of the funds to be deposited;
(b)(2) the expected duration of the deposit, including the likelihood of delay in the matter for which funds are held;
(b)(3) the rates of interest or yield at financial institutions where the funds are to be deposited;
(b)(4) the costs of establishing and administering non-IOLPPTA accounts for the client's benefit, including service charges, and the costs of preparing any tax reports required for income accruing to the client's benefit; and
(b)(5) the capability of financial institutions, licensed paralegal practitioners, or their firms to calculate and pay income to individual clients and any other circumstances that may affect the ability of the client's funds to earn net income.
(c) The licensed paralegal practitioner, or the licensed paralegal practitioner firm, shall review the IOLPPTA account at reasonable intervals, but not less than annually, to determine whether changed circumstances require further action with respect to the funds of a particular client.
(d) The licensed paralegal practitioner, or the licensed paralegal practitioner firm shall:
(d)(1) not allow earnings from an IOLPPTA account to be made available to a licensed paralegal practitioner, or licensed paralegal practitioner firm;
(d)(2) place in the IOLPPTA account all client funds which cannot earn net income for the client in excess of the costs of securing that income;
(d)(3) establish an IOLPPTA account with an eligible financial institution that has voluntarily chosen to offer and maintain IOLPPTA accounts, and:
(d)(3)(A) is authorized by federal or state law to do business in Utah;
(d)(3)(B) is insured by the Federal Deposit Insurance Corporation or its equivalent;
(d)(3)(C) complies with Rule 1.15 (a) of the Utah Rules of Licensed Paralegal Practitioner Professional Conduct; and
(d)(4) direct the depository institution where the IOLPPTA account is established:
(d)(4)(A) to remit all interest or dividends, net of allowable reasonable service charges or fees, if any, on the average monthly balance in the account, or as otherwise computed in accordance with the institution's standard practice, at least quarterly, solely to the Utah Bar Foundation ("Foundation"). When feasible, the depository institution shall remit the interest or dividends on all of its IOLPPTA accounts in a lump sum, however, the depository institution must provide, for each individual IOLPPTA account, the information to the Foundation required by subparagraphs (d)(4)(B) and (d)(4)(C) of this rule;
(d)(4)(B) to report in a form and through any manner of transmission approved by the Foundation showing the name of the licensed paralegal practitioner, or licensed paralegal practitioner firm, and the amount of the remittance attributable to each, account number for each account, the rate and type of interest or dividend applied, the amount and type of allowable reasonable service charges or fees deducted, the average account balance for the reporting period and such other information as is reasonably required by the Foundation;
(d)(4)(C) to report in accordance with normal procedures for reporting to depositors;
(d)(4)(D) that allowable reasonable service charges or fees in excess of the interest earned on the account for any period shall not be taken from interest earned on other IOLPPTA accounts or any principal balance of the accounts; and
(d)(4)(E) to comply with all other administrative rules for IOLPPTA accounts as promulgated by the Foundation or the Supreme Court.
(e) The determination of whether an institution is an eligible institution and whether it is meeting the requirements of this rule shall be made by the Utah Bar Foundation. The Foundation shall maintain a list of participating eligible financial institutions, and shall provide a copy of the list to any Utah licensed paralegal practitioner upon request.
(f) Licensed paralegal practitioners may only maintain IOLPPTA accounts in eligible financial institutions. Eligible financial institutions are those that voluntarily offer IOLPPTA accounts and comply with the requirements of this rule, including maintaining IOLPPTA accounts which pay the highest interest rate or dividend generally available from the institution to its non-IOLPPTA account customers when IOLPPTA accounts meet or exceed the same minimum balance or other account eligibility qualifications, if any. In determining the highest interest rate or dividend generally available from the institution to its non-IOLPPTA accounts, eligible institutions may consider factors, in addition to the IOLPPTA account balance, customarily considered by the institution when setting interest rates or dividends for its customers, provided that such factors do not discriminate between IOLPPTA accounts and accounts of non-IOLPPTA customers, and that these factors do not include that the account is an IOLPPTA account.
(f)(1) An eligible financial institution may satisfy these comparability requirements by electing one of the following options:
(f)(1)(A) establish the IOLPPTA account as the comparable rate product; or
(f)(1)(B) pay the comparable rate on the IOLPPTA checking account in lieu of actually establishing the comparable highest interest rate or dividend product;
(f)(1)(C) pay an amount on funds that would otherwise qualify for the investment options noted at (f)(3) equal to 70% of the federal funds targeted rate as of the first business day of the month or other IOLPPTA remitting period, which is deemed to be already net of allowable reasonable service charges or fees. The safe harbor yield rate may be adjusted once per year by the Foundation, upon 90 days’ written notice to financial institutions participating in the IOLPPTA program; or
(f)(1)(D) pay a yield rate specified by the Foundation, if the Foundation so chooses, which is agreed to by the financial institution. The rate would be deemed to be already net of allowable reasonable fees and would be in effect for and remain unchanged during a period of no more than twelve months from the inception of the agreement between financial institution and the Foundation.
(f)(2) IOLPPTA accounts may be established as:
(f)(2)(A) a business checking account with an automated investment feature, such as an overnight and investment in repurchase agreements or money market funds invested solely in or fully collateralized by U.S. government securities, including U.S. Treasury obligations and obligations issued or guaranteed as to principal and interest by the United States or any agency or instrument thereof;
(f)(2)(B) a checking account paying preferred interest rates, such as money market or indexed rates;
(f)(2)(C) a government interest-bearing checking account such as accounts used for municipal deposits;
(f)(2)(D) an interest-bearing checking account such as a negotiable order of withdrawal (NOW) account, or business checking account with interest;
(f)(2)(E) any other suitable interest-bearing deposit account offered by the institution to its non-IOLPPTA customers.
(f)(3) A daily financial institution repurchase agreement shall be fully collateralized by United States Government Securities and may be established only with an eligible institution that is "well capitalized" or "adequately capitalized" as those terms are defined by applicable federal statutes and regulations. An open-end money-market fund shall be invested solely in the United States Government Securities or repurchase agreements fully collateralized by United States Government Securities, shall hold itself out as a "money-market fund" as that term is defined by federal statutes and regulations under the Investment Company Act of 1940 and, at the time of the investment, shall have total assets of at least two hundred fifty million dollars ($250,000,000).
(f)(4) Nothing in this rule shall preclude a participating financial institution from paying a higher interest rate or dividend than described above or electing to waive any service charges or fees on IOLPPTA accounts.
(f)(5) Interest and dividends shall be calculated in accordance with the participating financial institution's standard practice for non-IOLPPTA customers.
(f)(6) "Allowable reasonable service charges or fees" for IOLPPTA accounts are defined as per check charges, per deposit charges, a fee in lieu of minimum balances, sweep fees, FDIC insurance fees, and a reasonable IOLPPTA account administrative fee.
(f)(7) Allowable reasonable service charges or fees may be deducted from interest or dividends on an IOLPPTA account only at the rates and in accordance with the customary practices of the eligible institution for non-IOLPPTA customers. No fees or service charges other than allowable reasonable fees may be assessed against the accrued interest or dividends on an IOLPPTA account. Any fees and service charges other than allowable reasonable fees shall be the sole responsibility of, and may be charged to, the licensed paralegal practitioner or licensed paralegal practitioner firm maintaining the IOLPPTA account.
(g) Any IOLPPTA account which has or may have the net effect of costing the IOLPPTA program more in fees than earned in interest over a period of any time, may at the discretion of the Foundation, be exempted from and removed from the IOLPPTA program. Exemption of an IOLPPTA account from the IOLPPTA program revokes the permission to use the Foundation's tax identification number for that account. Exemption of such account from the IOLPPTA program shall not relieve the licensed paralegal practitioner and/or licensed paralegal practitioner firm from the obligation to maintain the property of client funds separately, as required above, in a non-interest bearing account and also will not relieve the licensed paralegal practitioner of the annual IOLPPTA certification.
(h) In the event a licensed paralegal practitioner determines that funds placed in an IOLPPTA account should have been placed in an interest bearing account for the benefit of the client, the licensed paralegal practitioner, licensed paralegal practitioner firm shall:
(h)(1) make a request for a refund in writing, in a timely manner, to the Foundation on firm letterhead within a reasonable period of time after the interest was remitted to the Foundation; and
(h)(2) provide verification from the financial institution of the interest amount. In no event will the Foundation refund more than the amount of net interest it received; remittance shall be made to the financial institution for transmittal to the licensed paralegal practitioner, or licensed paralegal practitioner firm, after appropriate accounting and reporting.
(i) On or before September 1 of each year, any licensed paralegal practitioner licensed in Utah shall certify to the Foundation, in such form as the Foundation shall provide ("IOLPPTA Certification Form"), that the licensed paralegal practitioner is in compliance with, or is exempt from, the provisions of this rule. If the licensed paralegal practitioner, or licensed paralegal practitioner firm, maintains an IOLPPTA account, the licensed paralegal practitioner shall certify the manner in which the licensed paralegal practitioner accounts for the interest on clients' trust accounts. The IOLPPTA Certification Form shall include the financial institution, account numbers, name of accounts and such other information as the Foundation shall require. If the licensed paralegal practitioner is exempt from the IOLPPTA program, the licensed paralegal practitioner must still submit an IOLPPTA Certification Form annually to certify to the Foundation that he or she is exempt from the provisions in this Rule. Each licensed paralegal practitioner shall keep and maintain records supporting the information submitted in the IOLPPTA Certification Form. The licensed paralegal practitioner shall maintain these records for a period of five years from the end of the period for which the IOLPPTA Certification Form is filed, and these records shall be submitted to the Foundation upon written request. Failure by the licensed paralegal practitioner to produce such records within thirty days after written request by the Foundation constitutes a rebuttable presumption that the licensed paralegal practitioner has not complied with these rules.
(i)(1) If the IOLPPTA Certification Form is timely filed, indicating compliance, there will be no acknowledgement. Should an IOLPPTA Certification Form filed by a licensed paralegal practitioner fail to evidence compliance, the Foundation shall contact the licensed paralegal practitioner and attempt to resolve the non-compliance administratively.
(i)(2) The Foundation shall furnish annually to the Utah Supreme Court a list of all licensed paralegal practitioners who have not timely filed an IOLPPTA Certification Form and any licensed paralegal practitioners with whom the Foundation has been unable to administratively resolve an impediment to the proper filing of an IOLPPTA Certification Form or the proper compliance with Rule 15-1001, IOLPPTA.
(i)(3) Any licensed paralegal practitioner who is not in compliance with IOLPPTA or who has failed to complete the IOLPPTA Certification Form by September 1 will be sent, by certified mail, return receipt requested, a non-compliance notice. Should the licensed paralegal practitioner fail or refuse to rectify the situation within thirty (30) days of such notice, the Foundation shall petition the Utah Supreme Court for the licensed paralegal practitioner’s suspension from the practice of law.
(i)(4) A licensed paralegal practitioner suspended by the Utah Supreme Court under the provisions of this rule may be reinstated by the Court upon motion of the Foundation showing that the licensed paralegal practitioner has cured the noncompliance issue for which the licensed paralegal practitioner has been suspended. If a licensed paralegal practitioner has been suspended by the Utah Supreme Court for non-compliance with these rules, the licensed paralegal practitioner must then comply with all applicable rules to be eligible to return to active or inactive status.
(j) A licensed paralegal practitioner may be exempt from having to maintain an IOLPPTA account for the following reasons:
(j)(1) the licensed paralegal practitioner, or law firm's client trust account has been exempted and removed from the IOLPPTA program by the Foundation pursuant to paragraph (g) of this rule; or
(j)(2) the licensed paralegal practitioner has certified in his or her most recent annual IOLPPTA Certification Form that the licensed paralegal practitioner:
(j)(2)(A) is not engaged in the private practice of law or does not manage or handle client trust funds and does not have a client trust account;
(j)(2)(B) does not have an office within Utah and has the client's permission to hold the funds out of state; or
(j)(2)(C) has been exempted by an order of general or special application of this Court which is cited in the certification;
(j)(3) the licensed paralegal practitioner, or licensed paralegal practitioner firm petitions for and receives a written exemption from the Foundation that compliance with this rule would create an undue hardship on the licensed paralegal practitioner and would be extremely impractical, based on geographic distance between the licensed paralegal practitioner’s principal office and the closest depository institution which is participating in the IOLPPTA program.
(k) Licensed paralegal practitioners must notify the Foundation in writing within thirty (30) days of any change in IOLPPTA status, including the opening or closing of any IOLPPTA accounts.
(l) The Foundation is the only entity authorized to receive and administer IOLPPTA funds in Utah.
(l)(1) The Foundation shall have general supervisory authority over the administration of the IOLPPTA funds, subject to the continuing jurisdiction of the Supreme Court.
(l)(2) The Foundation shall receive the net earnings from all IOLPPTA accounts and shall make appropriate investments of IOLPPTA funds. The Foundation shall maintain proper records of all IOLPPTA receipts and disbursements, which records shall be audited or reviewed annually by a certified public accountant. The Foundation shall annually present to the Supreme Court a reviewed or audited financial statement of the IOLPPTA receipts and expenditures for the prior year and a summary thereof shall be made available to anyone requesting copies.
(l)(3) The Foundation shall be responsible to present annually to the Supreme Court a status report on activities of the Foundation and compliance with these rules.
(l)(4) The Foundation shall be responsible to make disbursements from the IOLPPTA program funds, including current and accumulated net earnings, by grants, appropriations and other appropriate measures, as outlined in the articles and by-laws for the organization.
(l)(5) The Foundation shall promulgate such other rules, procedures, reports and forms that are necessary or advisable for the proper implementation of the foregoing rules.
(m) Every licensed paralegal practitioner, shall, as a condition thereof, be conclusively deemed to have consented to the reporting requirements mandated by this rule.
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