Purpose of an IOLTA Checking Account for a Lawyer

by Hal Bartle ; Updated September 26, 2017
Most lawyers must have IOLTA accounts.

An IOLTA account is an Interest on Lawyers' Trust Account. Most lawyers must have IOLTA accounts in order to hold client funds because lawyers may not deposit a client's money with their own money. IOLTA accounts are interest-bearing checking accounts. The interest on all IOLTA accounts in a state is pooled together, and is then used to help low income individuals afford legal help.


IOLTA accounts have been used by attorneys in the United States since the early 1980s. Florida was the first state in the country to allow its attorneys to put client funds in an IOLTA account. After the success of Florida's program, the other 49 states and the United States territories created their own IOLTA programs to help support legal service organizations for the underprivileged.


An IOLTA account is used when an attorney receives money from a client to perform legal services, the attorney receives money from a settlement that must be paid to a client or the attorney is otherwise holding property for the client that the attorney has not yet earned or must return. Attorneys are not allowed to mix their funds with the funds of their clients, and IOLTA accounts are used to hold smaller amounts of money for a client, or some amount of client money for a short period of time. A very large sum of money, or money that is held for a client for a longer period of time should not be put in an IOLTA account, but should be put in an account to be held in trust for the particular client.

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The interest earned on the IOLTA account is collected and distributed to a variety of legal programs that aid the underprivileged. In some cases IOLTA money is distributed to law school legal clinics, legal education programs and other legal charities. IOLTA funds are generally used to provide legal services and education in the areas of family law and landlord-tenant law. The funds are used in civil law cases and not criminal law cases, because indigent criminal defendants are guaranteed the assistance of an attorney, and no such guarantee exists in civil cases.


An IOLTA account is a checking account that earns interest on the funds in the account. The interest rate is not a special interest rate, but is the interest rate offered by the bank on like accounts. The interest is given to each state's IOLTA board because attorneys may not keep the interest earned on client money. Further, the IOLTA account is a checking account so that the lawyer can easily return the client money to her client, or use it as necessary.


Not all banks must offer IOLTA accounts, however, there are more than 5,500 banks that offer them. When interest rates are favorable, IOLTA accounts can provide more than $200 million to help defray legal costs to those who need legal assistance but cannot afford it.

About the Author

Hal Bartle has been writing professionally since 2009. He has been published on various websites. He holds a Bachelor of Arts in political science from Saint Joseph's University and a Juris Doctor from Duquesne University School of Law.

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