An Interest on Lawyers’ Trust Accounts (IOLTA)-eligible institution pays interest rates or dividends to IOLTA customers comparable rates paid to similar situated non-IOLTA customers, as required under amended Business and Professions Code sections 6091.2, 6212, and 6213 effective January 1, 2008.
IOLTA is a method of raising money, primarily for providing legal services to those unable to afford it.
Rule 1.15 requires that attorneys who handle money belonging to their clients, including settlement checks, fees advanced for services not yet performed, or money to pay court fees, deposit the funds in one or more clearly identifiable trust accounts.
If the amount is large or the funds are to be held for a long period of time, the attorney must place the money at interest for the benefit of the client. However, if the client funds are not capable of earning income for the client in excess of the costs of securing such income, then they are pooled in a single account with similar funds of other clients. These pooled accounts are IOLTA accounts. The interest generated by the IOLTA accounts is collected by the Trust Fund Program and distributed to about 100 nonprofit legal aid organizations that provide civil legal aid to indigent people.
Financial institutions play a significant role in the success of the IOLTA program. Banks and credit unions who wish to participate in the IOLTA program have three options: (1) become a Leadership Bank to help increase funding for legal services for low-income Californians; (2) comply with the IOLTA statute and pay the Established Compliance Rate (ECR); (3) offer a comparable rate. To be considered for either, financial institutions must submit a financial institution eligibility and compliance statement.
For more information about becoming an IOLTA-eligible financial institution, please email email@example.com or call 415-538-2252.