As of December 22, the Senate has unanimously passed a bill (HR
6398) protecting the funding stream for legal aid services for the
disadvantaged. The bill, which extends FDIC unlimited coverage for IOLTA
accounts has previously been passed by the House and now goes to the President.
President Obama is expected to sign.
The bill modifies the financial overhaul law to include interest on accounts
established by an attorney or law firm on behalf of a client, commonly called
Interest on Lawyer Trust Accounts. These accounts have enjoyed unlimited
coverage by FDIC insurance since 2008, but coverage was set to expire after
December 31, 2010.
Lisa C. Wood, Chair of the IOLTA Committee, said, "By extending coverage for
these accounts, which create interest only for public use, the FDIC has allayed
attorneys’ concerns regarding the security of client funds."
The IOLTA program represents a significant source of financial support for
civil legal services to low-income Massachusetts residents. Attorneys who
handle nominal or short term client funds that cannot earn net income for the
client place these funds in pooled, interest bearing IOLTA accounts. The
interest on these accounts is used to fund basic human needs involving shelter,
sustenance, safety, health or child custody. IOLTA programs are the result
of a unique partnership between the banking and legal communities and are a
major funding source for legal services programs throughout the country.
For further information, please contact the IOLTA Committee at