IOLTA Basics for Financial Institutions

What is IOLTA?

“IOLTA” stands for Interest on Lawyer Trust Accounts. An IOLTA account is a pooled, interest-bearing demand deposit account used by lawyers to hold client funds. The interest earned on IOLTA accounts is remitted to the Lawyers Trust Fund, a charitable foundation designated as the recipient by the Illinois Supreme Court. Under Rule of Professional Conduct 1.15B, Illinois lawyers are required to deposit short-term or nominal funds of clients and third persons into IOLTA accounts.

Interest generated by IOLTA accounts forms an important source of funding for civil legal aid in Illinois. Learn more about Illinois’ legal aid system and about LTF.

Information for Financial Institutions

A financial institution may maintain IOLTA accounts for Illinois lawyers and law firms as long as it qualifies as an eligible institution under Rule 1.15B. The requirements for eligibility include agreeing to report client trust account overdrafts to the Attorney Registration & Disciplinary Commission (ARDC) and offering IOLTA accounts that comply with the interest rate comparability provisions of Rule 1.15B. These requirements are explained in detail on the Eligible Financial Institutions page. Information for banks about handling IOLTA accounts is in the IOLTA Operations Manual: Guidance for Illinois Financial Institutions.

Requirements for Lawyers

Rules 1.15 and 1.15B require lawyers to deposit funds belonging to their clients and to third persons in a client trust account. There are only two types of client trust accounts permitted under the rule:

  • IOLTA accounts, with interest remitted to the Lawyers Trust Fund
  • Interest-bearing client trust accounts established to hold the funds of an individual client, with the client receiving the interest

Lawyers may not deposit client funds in accounts that do not bear interest, or in their business or operating accounts.

Rule 1.15B(a) requires lawyers to deposit all nominal or short-term client funds in an IOLTA account. Funds that are capable of generating net interest for an individual client must be deposited into a separate interest-bearing trust account with interest paid to the client.

More about Rule 1.15

The Rules of Professional Conduct related to lawyers’ handling of client funds, client trust accounts, and IOLTA are located here. Find more information about IOLTA and trust accounting requirements on the Rules and Resources page.

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