IOLTA

Supreme Court Issues Order to Establish Mandatory IOLTA

What do you need to do to respond to this requirement?
What is IOLTA?
Information for Lawyers
Information for Banks
Information about IOLTA Grants
Contact the IOLTA Office

Click here for a list of participating banks

On October 11, 2007, the North Carolina Supreme Court ordered the North Carolina State Bar to implement a comprehensive (mandatory) IOLTA program for lawyers in North Carolina effective January 1, 2008.

What this order means is that all active members of the North Carolina State Bar who maintain general client trust accounts in North Carolina must ensure that all of their general client trust accounts are established as interest-bearing IOLTA accounts. Of course, lawyers still retain complete discretion to determine whether a trust deposit is of sufficient size or duration to justify placement in a separate (dedicated) interest bearing account.

Under revised rules governing the NC IOLTA program (approved by the NC State Bar Council on October 19, 2007, to be published for comment), lawyers must certify annually when paying their NC State Bar Dues—either by returning the Dues Notice form or electronically—that all general client trust accounts maintained by the lawyer/law firm are IOLTA accounts. Lawyers must be in compliance with this requirement no later than June 30, 2008.

Opening and closing accounts must also be reported to NC IOLTA, which provides a Status Update Form for that purpose. This form is also to be used to report changes in employment or address.

What do you need to do to respond to this requirement no later than June 30, 2008?

Your response will depend upon your current IOLTA status. Lawyers are currently classified in one of three categories: 1) ineligible to participate in IOLTA; 2) participating in IOLTA; or 3) not participating in IOLTA.

1. If you are currently ineligible or exempt: If you are not eligible to participate in IOLTA you will only need to certify when paying your 2008 dues that you are exempt from the IOLTA program. Lawyers are exempt from the program if they do not handle client funds because they are not in private practice; their law firm does not maintain general client trust accounts in North Carolina; or they do not practice in North Carolina.

2. If you are currently participating in NC IOLTA: If you are currently participating in the NC IOLTA program, you will need to ensure that all general client trust accounts maintained at your law firm are established as IOLTA accounts. (Some law firms currently maintain both IOLTA accounts and non-interest bearing general client trust accounts.) Then, you will certify to that fact when paying your 2008 State Bar dues.

• Documenting additional accounts for NC IOLTA: If you change any accounts to IOLTA accounts, you will need to provide documentation of the change to the NC IOLTA office. You may use the NC IOLTA Status Update Form, which you can get from the NC IOLTA office (by calling 919-828-0477) or by clicking here.

3. If you are currently not participating in NC IOLTA: If you do not currently participate in NC IOLTA, you must ensure that all general client trust accounts at your law firm are changed to interest-bearing IOLTA accounts, from which the interest, net of service charges, will be remitted to NC IOLTA for funding law-related charitable causes. Then, you will certify to that fact when paying your 2008 State Bar dues.

• Changing your accounts: Banks (including banks that do not presently have IOLTA accounts) have been notified of this requirement for lawyers and have been provided materials about the program to use in assisting lawyers to make these changes. All materials for banks—including a check list for opening IOLTA accounts—are available here on our website.

Please contact IOLTA staff (919-828-0477) if you and/or your banker have any questions about opening an IOLTA account.

• Documenting the change with NC IOLTA: You will need to provide documentation of the change to the NC IOLTA office. You may use the NC IOLTA Status Update Form, which you can get from the NC IOLTA office (by calling 919-828-0477) or by clicking here.

What is IOLTA?

The North Carolina State Bar Plan for Interest on Lawyers' Trust Accounts (“IOLTA”) was established by the North Carolina State Bar and the North Carolina Supreme Court to generate income from lawyers' trust accounts in order to fund programs for the public's benefit.

Lawyer's IOLTA
Trust Account

Bank Pays
Interest-less
Routing Service
Charges

Funds to
NC IOLTA Program

Grants for Legal Services to the Indigent and Improvement of Administration of Justice

NC IOLTA provides vital funding in support of the public interest

NC IOLTA has been a vital source of funding for the provision of civil legal service to the poor through grants made to staffed legal services programs and volunteer lawyer programs that serve every county in the state and for other programs that work to improve the administration of justice. Since its first grants were made in 1984, NC IOLTA has provided over $50 million to provide legal assistance for at-risk children, the elderly, the disabled, and the poor in need of basic necessities, and to help lawyers connect with those who need their pro bono assistance. Other innovative programs have assisted the Administrative Office of the Courts with its need for interpreter services; put law students into public interest summer internships to help them understand the need for public interest and pro bono service; trained local officials on how to provide safe and humane jails; provided first rate judicial education to NC judges; and leveraged state funds provided to assist young lawyers in public interest practice pay off law school loans.

Moving to a mandatory IOLTA program increases vital support

Equal access to justice is fundamental to our system of democratic government and necessary to the maintenance of public trust and confidence in the courts. Its denial has an adverse impact not only upon individuals and families, but also on society as a whole.

Lawyers have a professional responsibility to do what they reasonably can to increase the availability of legal services for all, regardless of the ability to pay (See Preamble to NC Rules of Professional Responsibility). In recognition of this professional obligation, the North Carolina State Bar adopted in 1983, with the approval of the NC Supreme Court, the Plan for Interest on Lawyers' Trust Accounts (NC IOLTA) by means of which funds generated from interest earned on pooled client trust accounts could be used to provide funding for civil legal aid and other projects that improve the administration of justice.

Despite these and other efforts, statistical information tends to demonstrate that less than 20% of the legal needs of poor people in North Carolina are presently being met. The council of the North Carolina State Bar believes that the conversion of North Carolina's voluntary IOLTA program to a comprehensive IOLTA program would greatly enhance the ability of the legal profession to financially support access to justice in North Carolina, a view shared and endorsed by the North Carolina Bar Association and the North Carolina Equal Access to Justice Commission.

Moving North Carolina to a mandatory IOLTA program will provide much-needed additional support for our access to justice community and other innovative programs in the public interest without requiring attorneys to provide their time or monetary support.

For more information about IOLTA, please contact our office.

Evelyn Pursley, Executive Director
Claire Mills, Accounts Manager
Sonja Puryear, Administrative Assistant

IOLTA
208 Fayetteville Street
Post Office Box 2687
Raleigh , North Carolina 27602

(919) 828-0477
(888) 828-1718 fax