IOLTA at Age 40 – Where Does All the Money Go?

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IOLTA Executive Director Mary Irvine sat behind an exhibition table at the North Carolina Bar Association convention in June to talk about IOLTA as it marks its 40th anniversary and explain to anyone who asked how its funds were spent. I asked.

If your firm maintains trust accounts, you are aware of IOLTA or Interest on Lawyers’ Trust Accounts. It is a program administered by the North Carolina State Bar. The interest on the money in trust accounts is remitted from the bank to IOLTA on a monthly or quarterly basis as batch transfer. Funds collected are used to support programs for the public’s benefit.


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“I think that most lawyers do not realize how much interest is being paid on their trust account; it often isn’t reflected on your bank statement,” explained Shelby Duffy Benton, who chairs the NC IOLTA board of trustees. “You’ve got to go check and find out if you want to know what rate the bank is paying and what’s being remitted.”

In 2022, IOLTA received $7.7 million, from which $6,061,864 in grants were distributed. The remaining balance of the funds supported a significant contribution to build IOLTA’s reserves and administrative costs. The forecast for 2023 is $10 million.

In the 40 years since the IOLTA program was established, it has received $109 million in interest on IOLTA accounts.


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So where does all that money go?

“The primary purpose is funding for civil legal aid for individuals who are low income and otherwise would not have access to an attorney,” said Irvine. “So we have programs, regardless of where their offices are geographically located, that take cases across the entire state in every county in North Carolina.”

The programs provide legal services in the areas of domestic violence, child custody, employment rights, foreclosure and eviction, immigration, disability rights, elder abuse, access to health care, economic stability, unemployment assistance, and safe and humane jails.

“Through initiatives like the General Operating, Pro Bono, Capacity Building, Home Defense Project, and the upcoming statewide referral system collaboration, IOLTA grants enable organizations like Legal Aid of North Carolina to stand as beacons of hope, steadily closing the gap to ensure access to justice for all,” said Ashley Campbell, CEO of Legal Aid of North Carolina.

Interest Rates

TowneBank currently banks 90 law firms. “We take pride in knowing that TowneBank’s participation in the IOLTA program helps to provide legal access for those who cannot afford attorney representation on their own,” said Sara Boshart, senior VP at TowneBank.


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Any bank that handles trust accounts for lawyers is required to participate in the IOLTA program.

IOLTA does not set interest rates. In 2010, a new rule directed banks to pay a comparable rate on IOLTA accounts. “It requires the bank to pay IOLTA a rate that’s comparable to other similar accounts within that bank that are being offered to their other customers, and so that looks different for different banks,” said Irvine.

Rates of interest earned on NC IOLTA accounts currently range from 0.01% to 4.17%. The average rate is 0.71%. Practically speaking, an account holding $100,000 held at a bank with an interest rate of 0.01% earns less than a dollar per month.

Six banks are Prime Partners, and the interest rate they pay on IOLTA funds is 75% of the Fed Funds rate. “The same account [$100,000] held at one of our Prime Partner Banks would earn more than $300 each month,” said Irvine. Banks that are Benchmark Partners pay 65% of the Fed funds rate on IOLTA money.

“If lawyers would consider having their banking relationships with those banks, that would be wonderful,” offered Benton.

She added that a lot of lawyers have long-term relationships with their banks and would be reluctant to move to a new bank just because it pays a higher interest rate on IOLTA funds.

“We do invite any lawyer who would like to talk to their banker or have some inroads to get the bank to realize that the bank ought to know they are providing civil legal aid in the state of North Carolina. We’re all working together in partnership. Between the lawyers and the banks and the grantees, we are all working to render services to people who otherwise would not have them.”

Irvine further highlighted the value of this partnership. “While it may still seem small, the power of IOLTA is in the aggregate impact. When all North Carolina lawyers come together, the combined impact on the justice system and the ability of North Carolinians in need to access legal services is substantial.”

Grant Awards

Community organizations submit grant requests to IOLTA staff on an annual basis. The staff reviews the grants and makes recommendations to its board of trustees, primarily made up of lawyers.

“We all have had some interaction in legal services, either having been employed as a legal services lawyer, having done pro bono work, or having been involved in either bar association or state bar leadership. There, they would have been involved with seeing a host of programs and the vast need that exists across the state so that they have some perspective when they are considering the grants,” said Benton.

IOLTA By the Numbers

In 2022, grants were made to 18 organizations, such as Legal Aid of North Carolina, Disability Rights North Carolina, and the NC Center on Actual Innocence. Some legal aid organizations submit multiple grant applications because the money is used for a variety of programs. For instance, the NC Equal Access to Justice Foundation received $75,000 to support driver’s license restoration and expunction and $81,500 for technology projects to improve access to justice.

In 2022, the NC Center on Actual Innocence received a $40,000 grant. “Support from IOLTA has been critical to the center’s success through their investment in truth and justice, core values of our justice system that cross both sides of the courtroom and both sides of the aisle,” said Center Executive Director Chris Mumma. “Financial support not only goes directly to ligation costs associated with credible claims of innocence and infrastructure improvement that has made us more effective, but it provides a partnership that strengthens our resolve in our difficult work.”

Bob Friedman

Robert "Bob" Friedman is the publisher of Attorney at Law Magazine North Carolina Triangle. He contributes articles and interviews to each issue.

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