Trust Account (IOLTA)
What does "Trust Account (IOLTA)" mean in law?
Under Model Rule 1.15, lawyers must hold client and third-party funds separate from their own property in a trust account, commonly known as an Interest on Lawyers' Trust Account (IOLTA). The lawyer must promptly notify clients when funds are received on their behalf, promptly deliver funds the client is entitled to receive, and maintain complete records of all trust account transactions. Commingling of client funds with the lawyer's own funds is strictly prohibited and is one of the most heavily disciplined violations in legal ethics. IOLTA programs pool the nominal or short-term interest earned on these accounts and direct it to fund legal aid and other public interest programs, a system the Supreme Court upheld in Brown v. Legal Foundation of Washington (2003).
Definition
Under Model Rule 1.15, lawyers must hold client and third-party funds separate from their own property in a trust account, commonly known as an Interest on Lawyers' Trust Account (IOLTA). The lawyer must promptly notify clients when funds are received on their behalf, promptly deliver funds the client is entitled to receive, and maintain complete records of all trust account transactions. Commingling of client funds with the lawyer's own funds is strictly prohibited and is one of the most heavily disciplined violations in legal ethics. IOLTA programs pool the nominal or short-term interest earned on these accounts and direct it to fund legal aid and other public interest programs, a system the Supreme Court upheld in Brown v. Legal Foundation of Washington (2003).
Example
A lawyer who deposits a client's $50,000 settlement check into his personal checking account rather than the firm's IOLTA trust account has committed commingling in violation of Rule 1.15 and faces severe disciplinary consequences.