June 15 Free CLE, Access to Justice: Serving the Civil Legal Needs of the Poor,
Plus Reception and Access to the OHS Kennedy Exhibit
 
History
Info for Lawyers
Info for Banks
Leadership Banks
Grantees
Board of Directors
Contact Info
B of A Letter of Intent
Press Releases

Info for Banks

1) What is the Interest of Lawyers Trust Accounts (IOLTA) Program?
2) How does the Oregon Law Foundation use the interest?
3) Have IOLTA Programs operated successfully elsewhere?
4) What are the requirements for financial institutions?
5) May Attorneys still invest money on
     behalf of clients if they participate in IOLTA?

6) What are the tax consequences of participation in the program?
7) How do financial institutions benefit from participation?
8) How can we become a Leadership Bank?
9) How can we find out more about IOLTA?

1) What is the Interest of Lawyers Trust Accounts (IOLTA) Program?
The Interest on Lawyers' Trust Accounts (IOLTA) program is an innovative way to supply a public good. Client funds that are too small in amount or held for too short of a time to earn interest for the client, net of bank charges or administrative fees, are placed in a pooled interest-bearing trust account. The interest from these accounts is remitted at least quarterly by the financial institutions to the Oregon Law Foundation, a charitable, tax-exempt entity. If a client's deposit is large enough or held for a long enough time to earn interest for the client net of banking charges and administrative fees, the funds may not be placed in an IOLTA account.
The Oregon IOLTA program is mandatory for all lawyers and became so in 1988 when the Oregon State Bar members voted to make the IOLTA program mandatory. The Oregon Supreme Court approved the necessary rule changes, effective May 1, 1989.
For the Oregon Rule of Professional Conduct (Oregon RPC) on client trust accounts including IOLTA accounts please see Oregon RPC 1.15-1 and 1.15-2.

2) How does the Oregon Law Foundation use the interest?
The interest generated by the IOLTA program is used by the Oregon Law Foundation to make grants in the following categories:
A. to support access to justice in Oregon by obtaining and distributing funds to provide legal services to persons of lesser means

B. promote diversity in the legal profession;

C. educate the public about the law.
Since the IOLTA program became mandatory in 1989, the Oregon Law Foundation has awarded over $29,000,000 for charitable, law related purposes. The existence of IOLTA has allowed us to fund programs that provide civil legal services to people of lesser means helping to create greater access to justice in Oregon. The Oregon Law Foundation has also funded projects to promote diversity in the legal profession and to provide law-related education for the public.

3) Have IOLTA Programs operated successfully elsewhere?
Yes. The first IOLTA program in the U.S. was introduced in Florida in 1981. All fifty states now have IOLTA programs. These programs have proven very successful. A number of Canadian jurisdictions also operate such programs.

4) What are the requirements for financial institutions?
Agreements
Attorneys can only open IOLTA accounts with financial institutions that have entered into an agreement with the Oregon Law Foundation. The agreement outlines interest remittance and reporting requirements. To enter into an agreement with the Oregon Law Foundation please contact a staff person listed below.

Tax ID Number
The IOLTA accounts must have the Oregon Law Foundations tax ID number. The Tax ID Number is 93-0817536.

Remitting Interest
Interest must be remitted at least quarterly to the Oregon Law Foundation but preferably on a monthly basis. The interest should be calculated on an average daily collected balance in the account, or as otherwise computed in accordance with the institution's standard accounting practice.

Reporting Requirements
Financial institutions must send a report at least quarterly but preferably monthly to the Oregon Law Foundation. These reports must include the name of the lawyer or law firm for whom the remittance is sent, the number of the IOLTA account as assigned by the financial institution, the average daily collected account balance or the balance on which the interest remitted was otherwise computed for each month for which the remittance is made, the rate of interest applied, the period for which the remittance is made, and the amount and description of any service charges deducted during the remittance period.

Service Charges
Fees for wire transfer, insufficient funds, bad checks, stop payment, account reconciliation, negative collected balances and check printing are not considered customary account maintenance charges and may not be assessed against an IOLTA account. Such non-routine fees are the responsibility of the lawyer or law firm who may absorb these specific costs or pass along those fees to the client(s) being served by the transaction (in accordance with attorney/client agreements).

The service fees that are considered customary account maintenance charges are charged against the interest earned on the IOLTA account. The Oregon Law Foundation works with banks to encourage them to waive services charges associated with IOLTA accounts. This ensures that a maximum amount of funding is remitted to the foundation. Many banks waive the service charges associated with IOLTA accounts.

5) May Attorneys still invest money on behalf
of clients if they participate in IOLTA?
Yes. Funds of a substantial amount or that are to be held for long periods of time and can earn interest for the client net of banking charges and administrative fees, may continue to be invested in an interest-bearing account for the individual client's benefit. Funds affected by IOLTA are funds commingled in an account by the attorney because they are small in amount or to be held for a short period of time, and would not generate enough interest to benefit the individual client.

6) What are the tax consequences of participation in the program?
There are none to the attorney or the client. The Oregon Law Foundation, which receives the interest income, is tax-exempt. The Internal Revenue Service stated in Revenue Ruling 81-209 that the interest earned on nominal and short term client advances, which is paid over to a bar foundation pursuant to a court-established program, is not includable in the gross income of any client.

7) How do financial institutions benefit from participation?
Financial institutions play a significant role in the success of the IOLTA program. The amount of funding generated through IOLTA each year is dependent upon several factors, including interest rates and bank-imposed service fees. Participation in IOLTA can be seen as a community service by banks and can result in favorable coverage by the media. Since Oregon lawyers are committed to access to justice issues and funding, some financial institutions in Oregon use their IOLTA accounts as a way to attract new customers.

In addition, the Oregon Law Foundation wll promote among attorneys the patronage of finacial institutions in which IOLTA accounts will generate funds for legal services to the poor, including assisting attorneys in locating Leadership Banks in their area.

8) How do we become a Leadership Bank?
Leadership Banks are those banks that are committed to maximizing the rate of return on IOLTA accounts. This kind of help reflects support for the overall goals of the Oregon Law Foundation. The Oregon Law Foundation will make attorneys aware of the Leadership Banks by posting the list in publications, the Oregon Law Foundation website, marketing brochures and other forums that target attorneys. Click below to view the Leadership Bank list which includes the criteria for being on the list.
Banks on the Leadership Bank list also will be allowed to have their bank website linked to their name on the list. Click here to view the Oregon Law Foundation’s Leadership Bank list.

9) How can we find out more about IOLTA?
You may contact the following Oregon Law Foundation Staff:
Judith Baker
Executive Director

16037 SW Upper Boones Ferry Road
Tigard, Oregon 97224
(503) 431-6323
E-mail: jbaker@osbar.org

Annalisa Baskett
Administrative Assistant

Tel: (503) 431-6373
Fax: (503) 598-6973
E-mail: abaskett@osbar.org