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IOLTA stands for “Interest on Lawyers Trust Accounts”. Attorneys routinely receive client funds to be held in trust for future use. If the amount is large or the funds are to be held for a long period of time, the attorney places the money at interest for the benefit of the client. If the client funds are not capable of earning income for the client in excess of the costs of securing such income, then they are pooled in a single account with similar funds of other clients. In the past, these funds were deposited into non-interest-bearing checking accounts. Currently, under rules and/or statutes in every state, an attorney may or must pool eligible client funds in an interest-bearing account (i.e. IOLTA), with the interest used for charitable and educational purposes. It is a unique and innovative way to increase access to justice for individuals and families living in poverty and to improve our justice system. Without taxing the public, and at no cost to lawyers or their clients, interest from lawyer trust accounts is pooled to provide civil legal aid to the poor and support improvements to the justice system
A lawyer who receives funds that belong to a client must place those funds in a trust account separate from the lawyerâ€²s own money. Client funds are deposited in an IOLTA account when the funds cannot otherwise earn enough income for the client to be more than the cost of securing that income. The client and not the IOLTA program receives the interest if the funds are large enough or will be held for a long enough period of time to generate net interest that is sufficient to allocate directly to the client.
Every state in the U.S. operates an IOLTA program. Between 1991 and 2003, IOLTA generated more than $1.5 billion nationwide to ensure justice for our countrys most vulnerable residents
Each state has its own IOLTA program. Some state IOLTA programs are voluntary (which gives an attorney a choice to participate or to opt out of participating), and other state IOLTA programs are mandatory, requiring attorneys to participate. U.S. IOLTA Programs