A recent Supreme Judicial Court order has created a unique opportunity for Massachusetts attorneys to help expand access to justice for low-income people. The order has the potential to produce significant new dollars for civil legal services for low-income people, depending, to some extent, on which banks attorneys choose for their Interest on Lawyers’ Trust Accounts (IOLTA) funds.
The IOLTA program raises money for the provision of civil legal services to low-income Massachusetts residents and to improve the administration of justice. Attorneys who handle nominal or short term client funds that cannot earn net income for the client place these funds in pooled, interest bearing IOLTA accounts. IOLTA programs throughout the country are the result of a unique partnership between the banking and legal communities and are a major funding source for legal services programs. In recent years, however, increases in the interest paid by banks on other types of accounts greatly exceeded increases in IOLTA interest rates. In response, Massachusetts joined eight other states in updating their IOLTA rules to require more parity between IOLTA and non-IOLTA account rates.
In July, the SJC mandated fairer IOLTA rates. IOLTA accounts must now earn the same interest rates as are generally available to similarly-situated non-IOLTA accounts at the same financial institution. Implementation of the revised guidelines went very smoothly, with the IOLTA Committee, participating Massachusetts banks and the Massachusetts Bankers Association working closely together. Rates paid by banks, however, vary considerably under the new court order. As a result, decisions by attorneys as to which banks they place their IOLTA funds in will have a significant impact on IOLTA revenues.
To help attorneys make the maximum impact on legal services funding, the IOLTA Committee has now published a list of Leadership Banks and Platinum Leadership Banks. Leadership Banks have committed to an IOLTA interest rate of at least 2.89 percent. These banks have recognized that they could afford to pay a more competitive rate on IOLTA accounts and help meet a critical need at the same time. Platinum Leadership Banks have, in addition, shown a long-term commitment to their communities by maintaining Leadership Bank status for two years or longer.
“We are delighted to have supported this program by increasing interest rates on these accounts knowing the additional funding will provide critical legal assistance to those seeking counsel,” said Robert E. Smyth, chairman, president and CEO of Citizens Bank of Massachusetts.
“The IOLTA program is a valuable legal resource to our community and to the many vulnerable people who take advantage of the services this organization provides.” Since IOLTA’s inception in 1986, low-income Massachusetts residents have benefited from increased access to legal services in civil cases. Legal services programs are funded by the state and federal governments, foundations, law firm and other private contributions in addition to IOLTA.
However, funding has long been inadequate to meet the need, with legal services programs turning away about half of eligible applicants. With nowhere else to turn, those turned away often come to court unrepresented and consequently at a severe disadvantage. These unrepresented litigants also add significantly to delays in the court system. Legal services clients include domestic violence victims seeking divorce, child support and custody; families on the verge of losing their homes; individuals wrongly denied government or disability benefits or health care; and elder victims of consumer scams.
Choosing the IOLTA Leadership Banks is both symbolic and a very practical way for Massachusetts lawyers to assure Massachusetts residents access to justice. The IOLTA Committee encourages attorneys and law firms to consider these financial institutions for their banking needs.
The current list of Leadership and Platinum Leadership Banks follows. The list is provided to attorneys requesting information on IOLTA, is published in our annual report and in bar publications. For a full list of participating banks, visit the Massachusetts IOLTA Committee’s Web site at www.maiolta.org.
In addition to serving as executive director of the Massachusetts IOLTA Program, Jayne Tyrrell is a former president of the National Association of IOLTA Programs. She currently is a member of the MBA’s Access to Justice Section Council, the SJC Expanding Justice Working Group, the BBA’s Delivery of Legal Services and serves on the WBA Board of Directors. On the national level, Tyrrell is also working with the NAIP Joint Technical Committee, the National Coalition for a Civil Right to Counsel and the Self Represented Litigation Network.