Financial Institutions Banking Compliance

Client trust account services

California Rules of Professional Conduct, 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.

Interest on Lawyers’ Trust Accounts (IOLTA)

If client funds are nominal in amount or will be on deposit for a short period of time and are not capable of earning income for the client in excess of the costs of securing such income, then the funds are pooled into a single account with similar funds of other clients. These pooled accounts are IOLTAs. The interest generated by the IOLTAs is collected by the Legal Services Trust Fund Program and distributed to about 100 nonprofit legal aid organizations that provide civil legal aid to those unable to afford it. The financial institution will open the account with the State Bar’s tax ID number and send the interest or dividends to the State Bar.

Non-IOLTA trust accounts

Client funds that can earn revenue for the client in excess of the costs to hold those accounts must be deposited into a non-IOLTA trust account such that all interest accrues for the benefit of the client. The client’s taxpayer identification would be documented when opening the trust account and any interest will accrue to the client.

New reporting obligations for financial institutions

Effective January 1, 2026, new requirements under Business and Professions Code section 6091.3 apply to financial institutions offering client trust accounts (IOLTAs and non-IOLTAs) in California to California-licensed attorneys.

Collecting and reporting designated licensees’ State Bar numbers

Starting January 1, 2026, financial institutions, including banks and credit unions, holding California client trust accounts associated with California attorneys must begin collecting and maintaining attorneys’ State Bar license numbers of licensees associated with the trust accounts.

California attorneys are required, starting January 1, 2026, to provide to the financial institution the State Bar’s Notice to Financial Institutions to Establish a Trust Account and Provide Designated Licensee Name and State Bar Number for all new trust accounts. For existing trust accounts, California attorneys are required to provide the Notice to Financial Institutions form between January 1, 2026, and July 1, 2026, identifying the designated licensee name and State Bar number for each client trust account.

These collected State Bar numbers are required to become part of the financial institutions’ trust account record and will be reported to the State Bar in the annual client trust account report.

Attorneys and firms will also have an ongoing responsibility to update the designated licensee information within 30 days of a designated licensee becoming inactive with the State Bar, becoming ineligible to practice law, or ceasing to be employed by or in practice with a firm.

Attorneys must submit the completed form to the financial institution in compliance with the Code of Civil Procedure section 684.115.

Annual client trust accounts report

Between January 1, 2026, and March 1, 2026, and annually thereafter, financial institutions must electronically report to the State Bar the following information for each attorney trust account (IOLTAs and non-IOLTAs):

  • The name of the financial institution
  • The name of the attorney or law firm associated with the account
  • The account number
  • The attorney’s State Bar license number
  • The trust account balance as of December 31 of the prior year

Other reporting obligations for financial institutions

The Legislature finds that overdrafts and misappropriations from attorney trust accounts are serious problems and determines that it is in the public interest to ensure prompt detection and investigation of instances involving overdrafts and misappropriations from attorney trust accounts.

Business and Professions Code section 6091.1 requires a financial institution, including any branch, which is a depository for attorney trust accounts under subdivision (a) or (b) of Section 6211 (IOLTAs and non-IOLTAs), shall report to the State Bar in the event any properly payable instrument is presented against an attorney trust account containing insufficient funds, irrespective of whether or not the instrument is honored.

Report overdrafts, including a copy of the dishonored instrument, to OCTC.reportable.actions@calbar.ca.gov, or by mail to:

The State Bar of California
Attention: Office of Chief Trial Counsel – Intake Unit
845 South Figueroa Street
Los Angeles, CA 90017-2515

Financial Institutions Portal

Starting December 10, 2025, financial institutions may register earlier for access to the State Bar’s Financial Institutions Portal (formerly the IOLTA portal). IOLTA-eligible financial institutions will log in to the Financial Institutions Portal to upload their monthly and quarterly remittance reports.

Both IOLTA financial institutions and non-IOLTA financial institutions may register and download a blank annual reporting form to prepare for 2026 reporting.

A quick start guide will assist with the registration process.

What is an IOLTA-eligible institution?

An IOLTA-eligible institution pays interest rates or dividends to IOLTA customers comparable to 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.

Become an IOLTA-eligible institution

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:

  • Become a Leadership Financial Institution to help increase funding for legal services for low-income Californians;
  • Comply with the IOLTA statute and pay the established compliance rate (ECR); or
  • Offer a comparable rate.

Become a Leadership Financial Institution

Leadership Financial Institutions volunteer to provide increased interest, free of fees, for their IOLTA offerings. IOLTA funds support civil legal aid, providing critical free legal assistance to vulnerable low-income Californians, including older adults and individuals at risk of abuse or living with a disability. Civil legal aid helps hundreds of thousands of individuals every year to stay in their homes, obtain restraining orders, and combat wage theft. IOLTA is a major source of funding for these services, but unfortunately, as many as 63 percent of low-income Californians will not receive all the help that they need to resolve their legal issues due to insufficient resources.

Leadership Financial Institutions increase funding to close this gap in services, and the potential benefit to civil legal aid is dramatic. In 2025, approximately $252 million will be distributed to legal aid programs. In 2026, $217.5 million has been approved for distribution.

Participation in the program greatly increases a financial institution’s visibility among attorneys and law firms in California. The State Bar highlights Leadership Financial Institutions in its communications to attorneys and external stakeholders.

Currently, over 103,000 attorneys in California hold approximately 50,000 IOLTAs, with nearly $9.7 billion in assets. Additionally, attorneys hold over $5 billion in approximately 13,000 non-IOLTA trust accounts, generally at the same financial institutions. Many attorneys and law firms care about supporting and increasing the availability of free legal services to those who cannot afford them. Leadership Financial Institutions can increase their market share by attracting business from these attorneys.

In addition, these changes can help fulfill a financial institution’s obligations under the Community Reinvestment Act by helping families stay in their homes and find economic stability and physical safety in their community. For more information about how IOLTA funds benefit individual clients as well as entire communities, see the most recent impact report identifying outcomes achieved by legal aid and the life-changing impact of these services for low-income Californians.

The State Bar prominently features IOLTA-Eligible Financial Institutions online, with links to the financial institutions.

Leadership Financial Institutions are required to:

  • Agree to pay, on all IOLTAs, at least the established compliance rate (ECR), which is 68 percent of the federal funds rate, or 0.68 percent, whichever is higher; and
  • Waive fees and charges on all IOLTAs, regardless of account size.

Become an Established Compliance Rate (ECR) Financial Institution

Provide the highest interest rate, based on 68 percent of the federal funds rate, for Interest on Lawyers’ Trust Accounts (IOLTA).

ECR Financial Institutions are required to:

  • Agree to pay, on all IOLTAs, at least the established compliance rate (ECR), which is 68 percent of the federal funds rate, or 0.68 percent, whichever is higher.

Offer a Comparable Rate

To offer a comparable rate, financial institutions are required to:

  • Agree to pay interest rates or dividends on IOLTA accounts that are comparable to or higher than those paid on similarly situated non-IOLTA accounts, and
  • Submit the Rate Specification Report.

Application, review, setup, and reporting process

Application process: To apply to be an IOLTA-Eligible Financial Institution in California, you must submit an IOLTA Compliance Statement.

Review process: The State Bar will review submitted compliance statements. ECR and Leadership rates have a shorter review process than comparable rates. For comparable rates, the State Bar will need up to 30 days to review and evaluate certifying banks’ compliance once all documentation is received.

Approval: Financial institutions that are approved will receive an approval letter, access to the IOLTA Portal to upload remittance reports, and remit information.

New account setup: Attorneys will submit to the financial institution a completed Notice to Financial Institution to Establish an IOLTA Account form to establish the IOLTA. Please note:

  • The State Bar of California’s tax number (94-6001385) must be linked to the IOLTA where the financial institution will remit earned interests to the State Bar.
  • Account name for IOLTAs must include “IOLTA,” “trust account,” or similar wording.
  • Bank statements must be addressed to the attorney or firm.

Reporting requirements:

Rate changes for Comparable: Financial institutions must submit an updated compliance statement for review and cannot change their rate until the request has been reviewed and approved.

Rate changes for ECR and Leadership: ECR and Leadership financial institutions may notify the State Bar at BankingCompliance@calbar.ca.gov when there is a change in federal funds target rate that affects the established compliance rate. An updated compliance statement is not required unless changing their IOLTA-Eligible compliance category.

For more information, please email BankingCompliance@calbar.ca.gov.

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