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Massachusetts IOLTA Program Overview

The Supreme Judicial Court created the Interest on Lawyers' Trust Accounts (IOLTA) program in 1985 by adding DR 9-102 (C) under Rule 3:07. On January 1, 1998 DR 9-102 (C) was replaced by Rule 1.15 (e) of the Massachusetts Rules of Professional Conduct. Originally voluntary, the SJC converted IOLTA to a "comprehensive" program in 1990. As a result, lawyers holding funds on a client’s behalf must place the funds either in an account which pays interest to the client or in an IOLTA account. An IOLTA account is selected if the funds are relatively modest, or large amounts held by the lawyer for only a short period: in either of these situations, the interest that might be earned for the client would be less than the cost of establishing and maintaining an account for the benefit of the client.

The Charitable Entities

The Boston Bar Foundation is governed by a board of trustees composed of twenty members. The Massachusetts Bar Foundation is also governed by a twenty member board of trustees. Both bar foundations have a long tradition of supporting a variety of public service activities. They have directed IOLTA funds toward activities such as alternative dispute resolution projects, legal clinics and the development of educational and informational brochures for special needs populations, as well as towards 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 addition to IOLTA funds, state appropriated funds to legal services providers.

Importance of the Program

For the past few years, the legal needs of low income people have grown in both scope and complexity. The nature of poverty has also changed. The number of people receiving welfare has dropped, and most poor families have at least one person who is working. But for many, employment has not necessarily been an escape from poverty. An increasing number of low income people work at low-paying jobs with no health insurance, and they lack childcare and adequate transportation resources. A disproportionate slice of their income goes to housing that, because of short supply, is often both costly and substandard. These difficult circumstances are now compounded by new problems associated with an uncertain economy. The recent recession has boosted unemployment and exacerbated problems in housing, transportation, health care and education. In addition, federal and state budget cuts are significantly affecting programs that protect the poor. The lingering effects of the recession will plague the poor and lower income families for years to come. As the characteristics of poverty have changed and the state faces challenging economic times, legal services are increasingly needed to protect those who are most vulnerable. IOLTA funds are essential because they provide more than 60% of revenues for legal aid programs in the Commonwealth.

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