IOLTA
Interest on Lawyers Trust Accounts
Most Indiana law firms maintain trust accounts in which funds are held on behalf of clients for distribution at a later date.
In some cases these amounts are large and are held for long periods of time, but more than likely, the amounts are small or are held for a short period of time. Traditionally, it was not permissible for a lawyer's trust account to earn interest.
Under the Rules of Professional Conduct 1.15, lawyer trust accounts may be converted to interest bearing accounts for deposits that are of short duration or of a minimal amount. The resulting interest is paid to the Indiana Bar Foundation to be distributed for charitable purposes as spelled out in the Rule 1.15. Other distributions may include:
- to establish pro bono programs
- to provide equal access to civil justice to persons of limited means
- to provide law related education programs for the public
- to assist in research about the legal system
- to improve the administration of justice
- other public service programs specifically approved by the Supreme Court
There is no cost to Indiana lawyers to participate in this program. Existing accounts can be converted to IOLTA accounts or a new account may be established. The Foundation's tax ID number is used, so there is no tax liability to the lawyer or the client.
The necessary forms for participating in IOLTA are available at this website.
Lawyers will report to the Clerk of the Indiana Supreme Court via their annual registration form whether they are participating in IOLTA, or if not, the reason for not participating, such as the lawyer:
- is not in private practice
- Does not have an office in the State of Indiana
- is employed by a local, state or federal government agency
- is a corporate counsel or teacher of law
- another reason (must seek approval from the Supreme Court, attach copy of approval)
Rule 1.15 requires establishment of an approved pro bono program in each of Indiana's 14 judicial districts. In some areas local bar associations have established programs. These may serve as a basis for that district's plan. Funding from IOLTA will help develop these pro bono. A separate pro bono commission appointed by the Supreme Court and the Indiana bar Foundation will serve to coordinate the efforts of the states pro bono programs. See http://www.state.in.us/judiciary/probono/index.html
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