The Leadership Bank program recognizes financial institutions that elect to waive fees and pay the established compliance interest rate, thereby increasing funding for free civil legal aid to low-income Californians through the Interest on Lawyers’ Trust Accounts (IOLTA) program. Civil legal aid ensures that low-income individuals and families have access to attorneys and the legal system to address critical legal issues.
What is IOLTA?
IOLTA stands for Interest on Lawyers’ Trust Accounts. Attorneys deposit client funds that they plan to hold briefly, or that are too small to earn interest for the client, into larger shared accounts. Over 73,000 attorneys make deposits in approximately 49,000 IOLTA accounts in California. As of September 2019, IOLTA accounts hold nearly $5 billion. Any interest earned on these accounts is paid by financial institutions to the State Bar, which in turn distributes those funds as grants to qualified nonprofit civil legal organizations throughout the state.
IOLTA is a primary source of funding for civil legal aid in California. Civil legal aid provides free legal services to those who would not otherwise be able to afford them. On average low-income Californians report experiencing twice as many civil legal problems in a year as nonindigent Californians. Approximately 20 percent of Californians live in poverty and rely on these services for their civil legal needs.
Currently, almost 100 organizations receive IOLTA grants from the State Bar. In 2018 the State Bar distributed over $51 million to support civil legal aid. (This includes other funds besides IOLTA, such as the Equal Access Fund and the Greg E. Knoll Justice Gap Fund.) Top areas where these organizations provided legal assistance included housing, immigration, and family law/domestic violence cases. In 2017, almost 5,000 families were able to stay in their homes, over $16 million in unpaid wages were recovered, and over 2,000 individuals were able to obtain or maintain their health insurance as a result of civil legal aid.
Increased visibility as a partner in access to justice: The State Bar will prominently highlight Leadership Banks on its website, including their names first on the list of financial institutions eligible to hold IOLTA accounts, and including hyperlinks to their institution’s website. The State Bar will draw attention the Leadership Bank program in its communications and publications seen by attorneys around the state, emphasizing how selecting a Leadership Bank for IOLTA funds will increase funding for civil legal aid to vulnerable low-income Californians.
Marketing edge: Financial institutions will have permission to advertise their Leadership Bank designation and branding as evidence of their support for their communities and for civil legal aid.
Ability to obtain Community Reinvestment Act credit: Being a Leadership Bank will help financial institutions fulfill their obligations under the Community Reinvestment Act (CRA) by generating funds that will go directly towards assisting those most in need. Civil legal aid helps prevent homelessness, protect families, and stop wage theft, among many other areas that align with CRA development goals. Becoming a Leadership Bank is an investment in the community that contributes to its overall economic strength and stability
Demonstrated social responsibility: Financial institutions care about their customers and their communities. This is another way to support veterans, seniors, and low-income Californians struggling with disability benefits, medical care, and their financial health. The California Justice Gap Study estimates that 33 percent of the problems that low-income Californians seek help for will not be resolved due to insufficient resources. In fact, in the past year only 27 percent of low-income Californians received some legal help for issues that matter the most to them; less significant issues received even less support. The Leadership Bank program is an immediate and critical means to start filling the gap by providing additional interest on IOLTA accounts that in turn will fund more services to these clients.
Source: State Bar of California, The California Justice Gap Study: Measuring the Unmet Civil Legal Needs of Californians (2019).
What are the requirements for a financial institution to become a Leadership Bank?
There are only two criteria. A financial institution must agree that it will pay at least 68 percent of the Federal Funds Rate (FFR) on IOLTA accounts or a floor rate of 0.68 percent, whichever is higher, and waive fees and charges on ALL IOLTA accounts, regardless of the account’s size.
Are there limits on how a Leadership Bank may market their Leadership Bank designation?
Any marketing of or other communication or publication regarding your institution’s participation in the State Bar’s Leadership Bank program must be limited to the fact that your institution has been recognized by the State Bar for paying higher rates on IOLTA accounts, resulting in increased funding of free legal services for those in need. Leadership Banks may not state or imply that the State Bar has endorsed them generally or made any other endorsements or representations about their products or services. Failure to comply with these requirements may result in, withdrawal of the Leadership Bank designation, and withdrawal of all State Bar approval, endorsement, and connection, including the ability to offer IOLTA products.
How will attorneys know that we are a Leadership Bank?
Starting in January 2020, the State Bar will highlight the Leadership Bank Program through press releases and social media accounts. In addition, the State Bar will ensure that Leadership Banks are prominently displayed on its website and have active hyperlinks to the Leadership Banks’ IOLTA websites. Lastly, designated Leadership Banks may advertise their IOLTA offerings with the State Bar Leadership Bank logo.
How frequently is the Leadership Bank list updated?
The list will be updated periodically as requests for Leadership Bank designation are received or changed, but at a minimum, quarterly.
