Although income generated from IOLTA accounts has declined precipitously in the recent recession, it is important to maintain support for the IOLTA concept.
Interest on Lawyers Trust Accounts (IOLTA), which has nationally been the second largest funding source for legal services to low income individuals and families, generates income from the interest paid on certain lawyers’ trust accounts. IOLTAs, which are pooled accounts, contain only those client funds that cannot earn net interest for the client. Generally, they are funds that are nominal in amount or held for a short period of time. This interest generated from IOLTA accounts helps provide free representation to those who cannot afford counsel in civil cases, such as those involving custody or guardianship issues, landlord-tenant concerns or consumer fraud matters. This effort is directed by the Indiana Pro Bono Commission.
Falling interest rates, decline in property values and a reduction in the number of real estate transactions have contributed to a decline in the funds generated through IOLTA even as the demand for the provision for free legal services which they support has risen.
Indiana is one of 42 states requiring Universal participation (all lawyers holding client funds participate in IOLTA) and one of 32 that has IOLTA rate comparability. Comparability requires that lawyers hold IOLTA accounts only in financial institutions that pay those accounts the highest interest rate or dividend generally available to other customers of the institution when IOLTA accounts meet the same minimum balance or other requirements. IOLTA funds in Indiana are paid to the Indiana Bar Foundation who then manages distribution to support pro bono civil legal services for persons of limited means.
Maintaining support for IOLTA during difficult times is essential while we wait for the economy to improve – families and individuals who need help from civil legal assistance programs are counting on the support.•