Arkansas IOLTA Compliance: Trust Account Rules & Requirements
Complete guide to Arkansas's IOLTA compliance requirements. Covers reconciliation rules, record retention periods, overdraft notification requirements, and how Disbo automates compliance for Arkansas law firms under Arkansas Rules of Professional Conduct Rule 1.15.
If you practice in Arkansas, your IOLTA trust accounts are governed by Arkansas Rules of Professional Conduct Rule 1.15. You've got to run monthly three-way reconciliation on every trust account, keep an individual ledger for each client matter, retain records for 5 years, and bank with a financial institution that complies with Arkansas's overdraft notification rule.
- Governing rule
- Arkansas Rules of Professional Conduct Rule 1.15
- Reconciliation frequency
- Monthly three-way reconciliation
- Record retention
- 5 years
- Overdraft notification
- Required — bank must report to the Executive Director of the Office of Professional Conduct within 5 banking days
- Interest remittance
- Quarterly to Arkansas Access to Justice Foundation
- Client ledger
- Required — individual ledger per matter
Arkansas IOLTA Requirements at a Glance
Key trust account rules under Arkansas Rules of Professional Conduct Rule 1.15
| Requirement | Arkansas Rule |
|---|---|
| Reconciliation Frequency | Monthly three-way reconciliation |
| Record Retention Period | 5 years |
| Overdraft Notification | Required — bank must report to the Executive Director of the Office of Professional Conduct within 5 banking days |
| Interest Remittance | Quarterly to Arkansas Access to Justice Foundation |
| Governing Rule | Arkansas Rules of Professional Conduct Rule 1.15 |
| Client Ledger | Required — individual ledger per matter |
Arkansas IOLTA Key Requirements
- Complete record of receipts and disbursements per client matter
- Monthly three-way reconciliation required
- Client ledger required per matter
- Interest remitted quarterly to the Arkansas Access to Justice Foundation
- 5-year retention of all trust account records
Arkansas IOLTA Note
Arkansas made IOLTA mandatory in 1994 under Rule 1.15. The original Arkansas IOLTA Foundation merged into the Arkansas Access to Justice Foundation (arkansasjustice.org) in 2014, which now administers the program and distributes interest to civil legal aid. Bank overdrafts on a trust account must be reported to the Executive Director of the Office of Professional Conduct within five banking days, and records are kept for five years after a matter closes.
Common IOLTA Violations in Arkansas
These are the most frequently cited IOLTA violations for Arkansas law firms. Each one can trigger bar discipline — and each is preventable with the right software.
- Failure to maintain complete records of receipts and disbursements
- Missing individual client matter ledgers
- Insufficient monthly reconciliation documentation
- Commingling operating and client trust funds
- Late quarterly interest remittance
How Disbo Keeps Your Arkansas Firm IOLTA Compliant
Disbo's rules engine applies Arkansas's specific IOLTA requirements — including Arkansas Rules of Professional Conduct Rule 1.15 — automatically to every trust account transaction. Stop managing compliance manually. Let Disbo enforce the rules so your team can focus on clients.
Negative Balance Prevention
Disbo blocks any disbursement that would overdraw a client's trust balance — eliminating the #1 IOLTA violation in Arkansas.
Automated Three-Way Reconciliation
Continuous reconciliation runs behind the scenes. Monthly reconciliation records are generated automatically and stored for 5 years.
One-Click Audit Package
If the Arkansas Bar initiates an audit, generate a complete audit package — ledgers, reconciliation reports, disbursement records — in under 60 seconds.
5 years Immutable Audit Trail
Every trust account event is timestamped, logged, and retained for 5 years — meeting Arkansas's retention requirement automatically.
Monthly Reconciliation Status
Bank Balance
$124,500
Trust Ledger
$124,500
Client Totals
$124,500
Recent Trust Activity
Smith v. Acme
Settlement Receipt
Smith v. Acme
Attorney Fees
Smith v. Acme
Medical Lien Payment
Jones Matter
Settlement Receipt
Arkansas IOLTA Compliance FAQ
What rule governs IOLTA trust accounts in Arkansas?
Arkansas IOLTA trust accounts are governed by Arkansas Rules of Professional Conduct Rule 1.15. The rule sets the requirements for reconciliation frequency, record retention, client ledger maintenance, overdraft notification, and interest remittance to the Arkansas IOLTA program.
How often must Arkansas attorneys reconcile their IOLTA accounts?
Arkansas attorneys have to complete a three-way reconciliation of their IOLTA trust accounts monthly. Three-way reconciliation lines up the bank statement balance, the trust account ledger balance, and the sum of every individual client ledger balance — and all three have to match.
How long must Arkansas attorneys retain IOLTA records?
Arkansas attorneys have to retain every IOLTA trust account record — bank statements, client ledgers, reconciliation reports, and disbursement documentation — for 5 years under Arkansas Rules of Professional Conduct Rule 1.15. Disbo keeps all of it automatically for the required period.
What happens if a Arkansas IOLTA account is overdrawn?
Required — bank must report to the Executive Director of the Office of Professional Conduct within 5 banking days. An overdraft notification can trigger a disciplinary review, and the only way to avoid that is to make sure cleared funds are actually in the trust account before any disbursement goes out. Disbo blocks transactions that would create a negative balance before they process.
Where does Arkansas IOLTA interest go?
Quarterly to Arkansas Access to Justice Foundation. The funds support civil legal aid programs for low-income residents throughout Arkansas. Every IOLTA account has to be at an approved financial institution that forwards the interest to the Arkansas IOLTA program.
Referral Fee Rules in Arkansas — and How to Actually Pay Them
Trust account compliance and referral fee compliance go hand-in-hand for any Arkansas firm that splits fees with co-counsel, accepts case referrals, or pays referring attorneys out of a settlement. The same Arkansas Rules of Professional Conduct Rule 1.15 that governs your IOLTA account also dictates how referral fees flow through it — and Arkansas Rules of Professional Conduct Rule 1.5(e) adds a separate layer of disclosure, consent, and reasonableness rules on top.
Governing rule: Arkansas Rules of Professional Conduct Rule 1.5(e)
The Arkansas Referral Fee Standard, in Plain English
Arkansas follows the ABA Model Rule 1.5(e) framework for fee divisions between lawyers who are not in the same firm. Referral fees and co-counsel splits are permitted only when the client gives informed written consent, the total fee is reasonable, and the division is either proportionate to services performed or each lawyer assumes joint responsibility for the matter.
- Client gives informed written consent to the fee division, including the share each lawyer will receive
- Division is in proportion to services performed by each lawyer, OR each lawyer assumes joint responsibility for the representation
- Total fee is reasonable
Once a Arkansas matter resolves and the referral fee is owed, the trust accounting and the actual payment have to line up exactly. Disbo lets you pay attorney referral fees in Arkansas directly from the settlement disbursement — with the client consent, fee split, and IOLTA ledger entries documented in one workflow.
The Referral Fee Workflow Most Arkansas Firms Get Wrong
Almost every PI and employment firm in Arkansas has the same broken referral fee workflow: the obligation lives in a spreadsheet, the disclosure lives in an email, the consent lives in a signed PDF in a shared drive, and the actual payment happens at the bank — completely outside the platform that holds the client funds. That gap is where bar discipline starts and where money gets lost. Here is what the end-to-end flow should look like under Arkansas Rules of Professional Conduct Rule 1.5(e), and how Disbo executes it.
- 1
Intake — capture the referring attorney up front
When the matter is opened, the referring attorney's identity, firm, percentage share, and the basis for the division (proportionate services or joint responsibility, depending on what Arkansas requires) are recorded as structured fields on the matter — not in a notes box.
- 2
Client disclosure and written consent
Disbo generates the Arkansas-specific written disclosure and consent form pre-populated with the participating lawyers, the share each will receive, and the language Arkansas Rules of Professional Conduct Rule 1.5(e) requires. The client signs it electronically and the executed form is bound to the matter file.
- 3
Settlement received into IOLTA
When settlement funds hit the IOLTA account, Disbo applies your three-way reconciliation rules under Arkansas Rules of Professional Conduct Rule 1.15 and posts the receipt to the client's individual ledger. Nothing is disbursed yet — including the referral fee.
- 4
Fee calculation and split preview
Disbo computes the attorney fee, the referring lawyer's share, the costs to be reimbursed, lien payoffs, and the client's net — all from the agreed percentages. The closing statement is generated automatically in the format your Arkansas bar expects.
- 5
Compliance check before disbursement
Before any payment goes out, Disbo verifies the consent is on file, the client's trust balance is sufficient (no negative balance), the total fee is not unconscionable, and any state-specific caps or proportionality requirements are satisfied. If anything fails, the disbursement is blocked.
- 6
One-click payment to the referring attorney
Disbo pays the referring attorney directly out of the IOLTA disbursement by ACH, wire, or printed check — without leaving the platform, logging into your bank, or rekeying the amount. The payment is reconciled against the ledger in real time.
- 7
Audit-ready archive
The signed consent, the fee agreement, the closing statement, the ACH/wire receipt, and the ledger entry are stored together on the matter and retained for 5 years to satisfy Arkansas's record retention rule.
Referral Fees by Practice Area in Arkansas
Referral fees and co-counsel splits look different depending on the practice area. The underlying ethics rule under Arkansas Rules of Professional Conduct Rule 1.5(e) is the same, but the money movement is not. Disbo handles all four of the patterns Arkansas firms run into most.
Contingency referral fee from settlement
The classic PI flow. A referring attorney sends you a case, the matter settles, and a percentage of your contingency fee is owed to the referring lawyer. Disbo pays the referring attorney from the IOLTA disbursement, with the Arkansas consent and closing statement already attached.
Hybrid contingency + invoiced business clients
Plaintiff-side employment cases are often contingency, but defense-side and advisory work for the same firm is hourly and billed to a business. Disbo lets you invoice businesses directly through the platform — generate the invoice, accept ACH or card payment, deposit operating funds (not IOLTA), and still record any referral or co-counsel split on the same matter.
Multi-firm fee splits with joint responsibility
When two or more {name} firms work a matter together — common in mass tort, complex litigation, and class actions — Disbo records each firm's percentage, the joint responsibility agreement required by Arkansas Rules of Professional Conduct Rule 1.5(e), and disburses each firm's share separately at settlement.
Invoice a business for hourly fees
For defense work, in-house counsel arrangements, and business clients on retainer, Disbo lets you invoice the company directly, accept ACH/credit-card payment from the business, deposit it into the operating account (never IOLTA, per Arkansas Rules of Professional Conduct Rule 1.15), and route any agreed referral split to the referring attorney from operating — with the same documentation trail as a contingency split.
Invoice Business Clients Through the Same Platform — Even on Employment Disbursements
Most Arkansas employment firms run a hybrid book of business: contingency wage-and-hour and discrimination cases on one side, and hourly defense, advisory, severance, and compliance work for businesses on the other. Disbo is built for both. You don't need a second tool to bill the corporate clients — and you don't need a third tool to pay a referring attorney when the case settles.
Issue invoices to businesses from the matter
Generate a branded invoice from any employment matter — defense work for an employer, advisory hours for HR counsel, severance negotiation, an ADA accommodation review. Line-item hourly entries, flat fees, or hybrid arrangements all flow into the same template.
Accept ACH and card payment directly
Businesses pay you online — ACH, credit card, or wire. Funds land in your operating account (not the IOLTA), the invoice is marked paid automatically, and the matter ledger shows the receipt next to the time entries it covered.
Recurring retainers and replenishment
Set up monthly retainers for business clients, automated replenishment when balances dip below a threshold, and credit-card-on-file for predictable corporate billing. The same platform that runs your IOLTA runs your A/R.
Pay the referring attorney from operating
When the business invoice is paid and a referral fee is owed, Disbo pays the referring attorney out of the operating account — not the IOLTA — and applies the same Arkansas Rules of Professional Conduct Rule 1.5(e) consent and disclosure documentation you'd use on a contingency split.
One audit trail across IOLTA and operating
Whether the fee was contingent and disbursed from IOLTA, or hourly and invoiced to a business and paid from operating, the matter shows a unified audit trail: engagement letter, fee agreement, referral consent, time entries or settlement, invoice or closing statement, payment receipt, and the referral payment.
Invoice — Business Client
INV-2026-0418
Bill To
Northstar Logistics, Inc.
Employment Defense — Matter 2026-118
Linked Referral
Patel Employment Group
15% of fee — paid from operating
Consent on file · Arkansas Rules of Professional Conduct Rule 1.5(e)
Common Arkansas Referral Fee Mistakes
- Verbal-only fee splits with no signed client consent — unenforceable and a discipline risk under Arkansas Rules of Professional Conduct Rule 1.5(e).
- Cutting the referring attorney's check from a personal account or operating account when the funds came from IOLTA, breaking the money trail.
- Disbursing the referral fee before the settlement check has actually cleared, creating a negative trust balance under Arkansas Rules of Professional Conduct Rule 1.15.
- Increasing the total fee charged to the client to absorb the referral split — a per se violation in most jurisdictions.
- Failing to document the basis for the division (proportionate services vs. joint responsibility) when the bar requires one.
- Mixing business-client invoices and IOLTA settlement receipts in the same account because the platform won't separate them.
What Disbo Enforces Automatically
- Blocks any referral fee disbursement when written client consent for that matter is not on file.
- Routes contingency-derived referral payments through IOLTA and business-invoice referral payments through operating — never the wrong direction.
- Refuses any disbursement that would create a negative client balance, no matter who the payee is.
- Locks the total client-charged fee so it can't be inflated to absorb a referral split.
- Prompts you to record proportionate-services or joint-responsibility basis when Arkansas requires it.
- Generates the closing statement, payment receipt, and ledger entry as a single signed package retained for 5 years.
One platform, both sides of the ledger
Whether you're disbursing a contingent Arkansas settlement out of IOLTA or invoicing a business client for hourly employment defense work, Disbo runs the trust accounting, the invoice, the payment rail, and the referral fee on a single matter — under the same Arkansas Rules of Professional Conduct Rule 1.5(e) and Arkansas Rules of Professional Conduct Rule 1.15 rule set.
Explore the referral fee featureFirms in Arkansas Using Disbo
See how Arkansas law firms and medical providers use Disbo to stay IOLTA compliant and accelerate disbursements.
See How Disbo Keeps Your Arkansas Firm Compliant
Stop managing Arkansas IOLTA compliance with spreadsheets. Disbo enforces Arkansas Rules of Professional Conduct Rule 1.15 automatically — negative balance prevention, three-way reconciliation, and audit-ready records built in from day one.
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