IOLTA stands for Interest on Lawyers Trust Accounts.
Attorneys routinely receive funds from clients to be held in trust for future use.
If a client’s funds are large enough or to be held long enough to generate interest for the client, net of bank charges and administrative fees, they should be placed in an interest-bearing account for the individual client’s benefit.
Client funds that are too small in amount or held for too short a period of time to earn interest for the client, net of bank charges and administrative fees, are commingled in a pooled checking account known as an IOLTA account. As of January 1, 2008 it was required that all commingled client funds be held in IOLTA accounts.
The Alabama Law Foundation IOLTA program, authorized by the Supreme Court of Alabama in 1987 is one way lawyers have to provide access to justice for the poor. Financial institutions remit the interest earned on lawyer trust accounts to the foundation, which makes grants of it for law-related charitable purposes.
The preamble to the Alabama Rules of Professional Conduct states that “a lawyer is a representative of clients, an officer of the legal system and a public citizen having special responsibility for the quality of justice;” and further that “A lawyer should be mindful of deficiencies in the administration of justice and of the fact that the poor, and sometimes persons who are not poor, cannot afford adequate legal assistance, and should therefore devote professional time and civic influence in their behalf.”