#iolta

[remotebooksonline]

Bookkeeping Challenges for Attorneys | Solutions That Work

Discover the top bookkeeping challenges law firms face — and how CPA-reviewed remote bookkeeping solves them quickly.

[melabea]

diota/iolta!

a bidynamic term for when one is a delta & iota!

for anon!

etymology; delta, iota/iota, delta

tagging; @radiomogai, @omegarchive, & @miscearchival!

[casefoxinc]

Understanding Lawyer Trust Accounts and FDIC Insurance

This blog provides insights on the importance of lawyer trust accounts and the role of FDIC insurance in protecting client funds. Learn what you need to know to ensure compliance and safeguard your clients' money.

[productthoughtleader-blog]

Are You IOLTA Compliant?

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.

[peashooter85]

It's not about the money, it's a matter of principle! --- Brown vs. Legal Foundation of Washington (2003)

When it comes to hiring an attorney it is not uncommon for the client to pay a retainer.  When this is done the client pays the money up front, but the attorney doesn't get the money until his legal services are concluded.  In the meantime the money is deposited in a temporary account.  Since the money can sit in the account for as little as a few days, banks will not pay interest on retainer fees. 

In the 1980's and 90's state bar associations began to institute IOLTA accounts (interest on lawyer trust accounts).  Instead of various attorneys depositing their retainers fees in individual accounts, they could collectively deposit their retainers in an IOLTA account owned by the state bar association.  Since money was constantly withdrawn and deposited, this allowed for the account to have a regular balance with which the bank could pay interest on.  Money raised from the interest was used to provide free legal services to the poor.

A Washington attorney named Allen D. Brown believed that it was unconstitutional for the state to take that money, but that the interest raised was his, and that taking the money was an infringement of his 5th Amendment Rights.  In 2003 he brought a lawsuit against the Legal Foundation of Washington to the Supreme Court of the United States over interest accrued on his retainer fees.  Keep in mind that to get to the Supreme Court, he had to take his suit through the Washington State courts, appeals court, Washington State Supreme Court, Federal District Court, and Federal Appeals Court.  So how much money was at stake that Brown was willing to navigate the entire US court system?  Drum roll please --- $4.96.  Not even enough to buy a five dollar foot long.

SCOTUS ruled against Brown in a 5 to 4 decision.  The majority opinion was that the state didn't take anything from him since he could not have earned the interest on the private market.  Without intervention of IOLTA, the interest would have never been raised in the first place. It wouldn't even have existed.  Bummer for Brown.

On a related note Judge Judy once threw out a case with damages amounting to $25, citing that it was a waste of her time.

[sproeiwaa-blog]

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