The Interest on Lawyers’ Trust Accounts (IOLTA) program has been adopted by all state bar associations and the District of Columbia as an innovative way to do a public good; simplify accounting on clients’ accounts; and prevent the temptation of misuse/abuse of earned interest on those accounts. By authority of state supreme courts or legislative acts, attorneys can deposit client funds that are too small in amount, or are deposited for too short a time to earn interest, in a state-wide IOLTA account. These accounts represent pooled, interest-bearing trust accounts. (Larger amounts from clients are placed in client bank accounts where interest inures back to the benefit of the clients.)
Since the pooled funds generate interest where none had been previously paid, IOLTA provides a public benefit without cost to taxpayers. The funds are earmarked through a local grant process to not-for-profit organizations throughout each state. They are generally used to fund civil legal services for the poor, or for law-related public education or administration of justice.