If you are a lawyer who maintains a client trust account, then this program applies to you.
IOLTA stands for Interest On Lawyer’s Trust Accounts. It requires law firms to take monies related to a trust and keep it in an interest bearing depository account. Participating financial institutions take the interest earned on deposits held in IOLTA accounts and remit the interest directly to the IOLTA Fund. The Fund generates millions of dollars and these funds help to finance legal aid for those in need.
Why was this program created?
Unlike the criminal justice system, people with civil legal problems are not guaranteed an attorney. From the abused woman trying to find safety for herself and her children, to the elderly woman unlawfully evicted from her home, legal aid exists to ensure that all Americans have access to our civil justice system.
Just as lawyers must find a financial institution that supports IOLTA, they must also research which merchant services providers can support a process whereby trust payments and unearned income (such as retainers) get deposited into a trust account, while income for earned legal services get deposited into the operating account. The IOLTA program also prohibits fees from being debited from a trust account. All business expenses, including merchant services fees, must come out of the operating account.
Once you’ve taken the time to ensure you’re compliant with IOLTA, why don’t you let your clients know! Display some information about the IOLTA Program, advertise its purpose and let people know your firm proudly supports it. You can also post this information on your website and any marketing collateral your firm produces. Small businesses who support local charities proudly let their customers know by advertising it at their place of business – why shouldn’t you?
For some examples of how the IOLTA program has helped those in need you can visit http://www.iolta.org/what-is-iolta/iolta-makes-a-difference.
All 50 states participate in IOLTA and to find your state’s site, visit this directory. Your state’s site should also provide a listing of local financial institutions that support the IOLTA program.