DELAWARE SUPREME COURT MAKES CHANGES IN IOLTA PROGRAM
Many attorneys routinely receive client funds that they hold in trust for clients for future use. Traditionally, such funds had been placed in non-interest-bearing checking accounts. However since 1983, when the Delaware Supreme Court instituted the IOLTA program in Delaware, attorneys have been able to pool eligible client funds in an interest-bearing account. Interest from the account has then been used by the IOLTA program (administered by the Delaware Bar Foundation) to assist Delaware’s legal services providers for low income persons, including Community Legal Aid Society, Inc., Delaware Volunteer Legal Services, Inc., and Legal Services Corporation of Delaware. Since its inception in Delaware, the IOLTA program has provided almost $23 million to these organizations.
While attorneys with trust accounts may currently opt out of participation in the IOLTA program, starting November 1, 2010, the Delaware Supreme Court will require participation for all attorneys with pooled trust accounts pursuant to new Rule 1.15 of the Rules of Delaware Lawyers’ Rules of Professional Conduct. The new Rule, which was issued by the Supreme Court on June 10, 2010, also requires IOLTA accounts to be kept in financial institutions that provide “interest rate comparability” for IOLTA accounts. This means that the interest rate paid on these accounts must be comparable to the rates by the financial institution on its other accounts with similar attributes.
Delaware joins a majority of states that have made their IOLTA programs mandatory and have adopted interest rate comparability. These changes were made by the Supreme Court on the recommendation of its IOLTA Advisory Committee and the Delaware Bar Foundation.
For further information contact Steve Taylor.