The IOLTA program allows interest to be earned on the deposit of client or third-party funds that are nominal in amount or expected to be held for a short period of time. Under Rule of Professional Conduct 1.15(f), lawyers are required to deposit such funds into an IOLTA account, which is defined as a “pooled interest- or dividend bearing client trust account, established with an eligible financial institution with the Lawyers Trust Fund of Illinois designated as income beneficiary, for the deposit of nominal or short-term funds of clients or third persons.” (Rule 1.15 (i)(2))

Prior to the establishment of IOLTA, banks paid no interest on pooled client trust accounts. Lawyers have never been allowed to benefit from the property they hold in trust for their clients, and it is not cost-effective for financial institutions to pay interest on nominal or short-term funds of individual client. With IOLTA, the interest that was previously retained by financial institutions is remitted directly to the Lawyers Trust Fund and used for the following purposes:

• Support the provision of civil legal assistance to the poor throughout Illinois; and
• Support such other programs for the benefit of the public as are specifically approved by the Supreme Court of Illinois for exclusively public purposes.

The first IOLTA program in the United States began in Florida in 1978. When the Lawyers Trust Fund began operations in 1983, Illinois became the 11th state to benefit from IOLTA income. By 1995, all 50 states and the District of Columbia had IOLTA programs.

Illinois’ original IOLTA rule allowed lawyers to take part in IOLTA on a voluntary basis. In 1987, the Supreme Court amended the rule to mandate lawyer participation in the program. The Supreme Court has amended the safekeeping of property rule several times since 1987, including a 2007 amendment that required banks to pay comparable interest rates on IOLTA deposits. In 2011, the Supreme Court amended Rule 1.15 to clarify the mandatory nature of the IOLTA program. As amended in 2011, Rule 1.15 provides that:

• There are only two options for the deposit of client funds:
  1. An IOLTA account, with interest remitted to the Lawyers Trust Fund, or
  2. An interest-bearing client trust account established to hold the funds of the client, with the client receiving the interest.
• All client funds must be held in interest-bearing accounts.

More information about Rule 1.15 is on the IOLTA Basics and Rules & Resources pages. If you have questions about the IOLTA program, contact Terri Smith, Director of Banking at 312-938-3001, or David Holtermann, General Counsel, at 312-938-3076.