IOLTA: A Brief Description

The comprehensive Interest on Lawyers' Trust Accounts (IOLTA) program, authorized by the Supreme Judicial Court, requires lawyers to place short-term or nominal  client funds into interest-bearing accounts.  Interest generated from IOLTA accounts is used to fund legal services to the poor, and the administration of justice in the Commonwealth.

As of January 1, 1990, all lawyers were required to convert non-interest bearing client fund accounts into IOLTA accounts.  To comply with the comprehensive IOLTA program, a lawyer or law firm must deposit client funds either in a pooled IOLTA account, which pays interest to the Massachusetts IOLTA Committee, or into an interest bearing account for the client's benefit.  The type of clients funds for deposit in IOLTA accounts are funds that are expected to be held for a short period of time or funds that are nominal in amount.  Accounts in the name of an attorney in a lending bank used exclusively for depositing and disbursing funds in connection with that bank's loan transactions are not required but are permitted to be established as IOLTA accounts. 

IOLTA funds are distributed to three charitable entities, the Boston Bar Foundation, the Massachusetts Bar Foundation and the Massachusetts Legal Assistance Corporation based on percentages established by the Supreme Judicial Court.  The three charitable entities use the interest received from the IOLTA program to fund over 100 non-profit organizations each year.

The Charitable Entities

The Boston Bar Foundation is the charitable affiliate of the Boston Bar Association .  It is governed by a board of trustees composed of twelve members.  The Massachusetts Bar Foundation is governed by a fifteen member board of trustees. Both bar foundations have a long tradition of supporting a variety of public service activities.  They have directed the IOLTA funds toward such activities as alternative dispute resolution projects, legal clinics, the development of educational and informational brochures for special needs populations, as well as direct support of legal services programs. 

The Massachusetts Legal Assistance Corporation was established in 1983 by the Legislature to provide funds for civil legal assistance to poor people throughout Massachusetts.  It is governed by an eleven member board of directors appointed by the Supreme Judicial Court and distributes, in addtion to IOLTA funds, state appropriated funds and the receipts of filing fee surcharges to legal services providers. 

For a complete listing of IOLTA grants and grantee profiles, contact the IOLTA Committee and request an Annual Report.