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Peak Your Interest: Interest on Lawyers' Trust Accounts (IOLTA)

Asian Law Alliance has received funding from the State Bar IOLTA program since 1984. What follows is based on a brochure produced by the State Bar of California – Legal Services Trust Fund Program.
 
Understanding Interest in Lawyers’ Trust Accounts
 
What is the Legal Services Trust Fund Program?
 
It is a program that was created by statute in 1982 to help fund legal services to indigent Californians. When lawyers hold client funds that are nominal in amount or held too briefly to earn interest or dividends for the client, they are required to place these funds in pooled trust accounts. 
 
These pooled trust accounts earn interest that is remitted to the State Bar’s Legal Services Trust Fund Program, which distributes the interest on lawyers’ trust accounts (IOLTA) through grants to approximately 100 non-profit legal aid programs throughout California – including Asian Law Alliance.
 
Since 1984, more than $350 million in IOLTA grants have been distributed to legal services programs. In 2008, $12.2 million in IOLTA grants enabled services to many thousands of indigent individuals, people with disabilities and seniors. 
 
Creating Access to Justice
 
Who benefits and receives funds from the IOLTA program?
 
Everyone. Everyone is entitled to equal justice, whether or not they can afford to pay for it. IOLTA grants help fund non-profits (like Asian Law Alliance) and attorney pro-bono programs that provide critical legal aid. 
 
When individuals need legal help to avoid eviction, prevent domestic violence, claim earned wages, keep children in school, obtain health benefits – California’s nonprofit legal aid programs are there. In these extraordinary difficult times, legal aid advocates play a key role in stabilizing families and helping communities address the impact of the worst recession most of us have ever seen. While legal help is needed now more than ever in these troubled economic times, the safety net is shrinking as state and local governments are forced to cut back services and IOLTA revenue decreases because of declining interest rates.
 
How can IOLTA funding be increased?
 
Attorneys and banks have the ability to make a substantial difference in the amount of funding generated by IOLTA interest. In 2007, legislators enacted a law to make sure that IOLTA accounts are treated fairly; by law, banks must treat IOLTA accounts the same way that they treat similarly situated non-IOLTA accounts. In California, approximately 300 banks hold over 40,000 IOLTA accounts. When banks choose to pay higher interests rates on IOLTA accounts, they can make an enormous difference in IOLTA funding. 
 
Attorneys who choose to bank at a financial institution that offers a higher rate of return provide much needed legal aid to people who otherwise would have nowhere to turn for help. A few special banks have opted to demonstrate their commitment to their communities by joining the ranks of Leadership Banks that “Peak their Interest” and currently pay at least 1% net yield on IOLTA accounts or that make a million dollar annual difference in IOLTA revenue by paying above their comparable rate. 
 
The State Bar Legal Services Trust Fund Program especially thanks all banks that opt to join the ranks of “Leadership Banks”. We hope that all attorneys and concerned community members will take a moment to ask their banks to join the banks that “Peak their Interest”
 
The State Bar of California gratefully acknowledges the following Leadership Banks that support access for justice for all. As of June 1, 2009 these banks have agreed to “Peak their Interest” to fund vital legal aid to help individuals, families and communities. Affinity Bank, Alta Alliance Bank, American Rivera Bank, Bank of Guam, Bank of Sacramento, Borel Private Bank & Trust Co., Center Bank, Commercial Bank of California, Community Bank of the Bay, Excel National Bank, GBC International Bank, Golden State Business Bank, Imperial Capital Bank, Montecito Bank and Trust, Omni Bank, Premiere West Bank, San Luis Trust Bank, US Bank, Union Bank, Valley Business Bank.
 
For further information, contact the Legal Services Trust Fund Program (415)538-2046 or iolta@calbar.ca.gov