What Is IOLTA? IOLTA" stands for Interest on Lawyer Trust Accounts In 1983, the Supreme Court of Illinois adopted the "IOLTA rule" (Article VIII, Illinois Rules of Professional Conduct, Rule 1.15(d)-(f)), which requires attorneys holding "nominal" and/or "short-term" client funds to place those funds in a pooled interest-bearing trust account. These accounts are referred to as "IOLTA accounts." The interest on these pooled client trust accounts is paid to the Lawyers Trust Fund of Illinois. The Lawyers Trust Fund is a tax-exempt, not-for-profit organization that administers the IOLTA program. The Lawyers Trust Fund uses the interest generated by IOLTA accounts to make charitable contributions to not-for-profit agencies that provide legal aid to the poor. Why Is IOLTA Necessary? Lawyers often hold funds in trust or escrow for their clients. When the funds the lawyer holds for a particular client are substantial in amount or will be held for a long period of time, clients are entitled to the interest on these funds. Lawyers often hold client funds that are so small in amount and/or will be held for such a short period of time that the administrative costs of establishing and maintaining the account for an individual client would exceed the interest earned. Historically, lawyers have combined these nominal and/or short-term funds in a pooled client trust account. Prior to the implementation of the IOLTA program, these funds were deposited in non-interest bearing accounts, because lawyers are ethically barred from benefiting from the use of their client's money, including earning interest on it. Under the IOLTA rule, these pooled client trust accounts ("IOLTA accounts") must earn interest and the interest must be paid to the Lawyers Trust Fund of Illinois. What is an IOLTA Account? An IOLTA account is a corporate/business checking account (such as a NOW account) for pooled client funds that pays all interest earned to the Lawyers Trust Fund of Illinois, a tax-exempt, not-for-profit organization. An IOLTA account is operationally different because: The taxpayer identification number (TIN) on the account is the Lawyers Trust Fund's, not that of the attorney or law firm; and The bank collects the interest earned on the IOLTA account and sends it, along with a remittance report, to the Lawyers Trust Fund. Two Prudential Plaza   180 North Stetson Ave.   Suite 820   Chicago, IL 60601   (312) 938-2906 [Main]   (312) 938-3091 [Fax]    1-800-624-8962 [Toll Free]