IOLTA is a method of raising money, primarily for providing legal services to those unable to afford it.
Rule 1.15 of the Rules of Professional Conduct requires that attorneys who handle client funds or funds entrusted by others, including settlement checks, fees advanced for services not yet performed, or money to pay court fees, to hold those funds in one or more interest-bearing bank accounts labeled as a "Trust Account," or words of similar import.
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 amount of funds is small or the funds held for such a short period of time that they will not earn interest for the client in excess of the cost of maintaining a separate bank account, the funds are pooled in a single account with similar funds of other clients. These pooled accounts are Interest on Lawyers’ Trust Accounts (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.
An IOLTA-eligible institution pays interest rates or dividends to IOLTA customers comparable rates paid to similarly situated non-IOLTA customers, as required under amended Business and Professions Code sections 6091.2, 6212, and 6213 effective January 1, 2008. If a financial institution does not meet this requirement, then attorneys are not allowed to hold their IOLTA at that financial institution.
Where you bank makes a difference! Financial institutions play a significant role in the success of the IOLTA program. You can help generate more money for civil legal aid for low-income Californians by establishing and maintaining your IOLTA accounts at financial institutions that commit to offering favorable interest rates. Leadership Banks support access to justice by paying a prime rate on IOLTAs held at their institutions. Banking with a Leadership Bank is a great way for you to help support access to justice for low-income individuals in our state.
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