In 1984, the Washington Supreme Court created the Legal Foundation of Washington to manage the Interest on Lawyers’ Trust Accounts (IOLTA) program. Today, IOLTA programs exist in all 50 states, Washington, D. C., and the US Virgin Islands to help fund nonprofit organizations that provide civil legal aid for low-income people.
The IOLTA program in Washington serves two purposes. First, it helps ensure that legal professionals — lawyers, limited practice officers (LPOs), and Limited License Legal Technicians (LLLTs) — appropriately manage funds that belong to their clients. Secondly, it allows interest to be earned on nominal or short term deposits held in client trust accounts, with the interest remitted directly to LFW for distribution to civil legal aid programs.
From 1996 – 2007, revenue generated from the IOLTA program provided a minimum of $4.5 million per year for the delivery of civil legal aid (see graph below). However, the Great Recession brought a dramatic decrease in both interest rates and economic activity, which severely impacted funding generated by IOLTA. From 2007 – 2009, IOLTA revenue plummeted from over $9 million to under $2 million. In 2016, IOLTA revenue topped $2 million for the first time since 2009. To keep up to date on IOLTA, subscribe to our blog where we post quarterly financial updates.
Pursuant to an Order of the Washington Supreme Court, legal professionals may only hold IOLTA deposits in financial institutions that have been certified as eligible. Please check the list of authorized financial institutions frequently for additions.
Lawyers, LPOs, and LLLTs each have their own set of rules and regulations they must follow when opening and using IOLTA accounts for their clients. Additionally, legal professionals and financial institutions must use standardized forms when opening and managing accounts and meeting compliance regulations.