If you're used to opting out of the District's Interest on Lawyers Trust Accounts program, odds are you're not going to be able to after Aug. 1.
The D.C. Court of Appeals has approved a change to the D.C. Rules of Professional Conduct that requires all members of the D.C. Bar who receive IOLTA-eligible funds to participate in the IOLTA program. Before the court’s March 22 order, lawyers could opt out of the program.
That said, the changes to the IOLTA rule allow for two exceptions. If a court issues a ruling outlying how client funds should be held that is contrary to the D.C. Bar rule, the lawyer must comply with the court order. And lawyers don’t have to participate in the D.C. IOLTA program if they are participating in a different IOLTA program where he or she is licensed and principally practices.
The court also adopted a rule change that requires banks that want to qualify as approved IOLTA depositories to provide interest rates for IOLTA accounts that are comparable to what they would offer for non-IOLTA accounts.
Washington’s IOLTA program, like others across the country, takes the interest collected on client funds that are either small in amount or held for a short period of time and allows the D.C. Bar Foundation to distribute it to legal service providers in Washington. Katia Garrett, the executive director of the D.C. Bar Foundation, said that to date, 41 other states require participation in their IOLTA programs, and 31 require banks that participate in the IOLTA program to provide comparable rates to non-IOLTA accounts.
Saul Singer, a legal ethics counsel for the D.C. Bar, said that making participation in the program mandatory will give the D.C. Bar Foundation, the charitable arm of the D.C. Bar, a much larger pool of money to draw from. “This will allow the D.C. Bar Foundation to distribute more money to legal service providers so that they may provide better service for the poor in Washington,” Singer said.
Garrett said that the IOLTA program has been hard hit by the tightening of interest rates in the wake of the economic downturn. “When interest rates were higher we were receiving about $2 million annually. Now, we’re averaging around $500,000,” Garrett said.