How does IOLTA work?
Very often, the amount of money a lawyer handles for a single client is quite small, or will be held for such a short period of time that it cannot earn net income for the client.
When these small or short-term funds belonging to clients are placed in a single, interest- or dividend-bearing trust account, the funds collectively earn interest that the financial institution forwards to the State Bar of California to support nonprofit legal aid organizations that provide civil legal aid to indigent and low-income people, seniors and persons with disabilities.
Business and Professions Code Sections 6091.2, 6211, 6212, 6213 require that financial institutions that choose to participate in the IOLTA program offer comparable bank investment products to their IOLTA customers as they do to their similarly situated customers. If a financial institution does not meet this requirement, then attorneys are not allowed to hold their IOLTA at that financial institution.