Contact: Charles Dunlap
Indiana Bar Foundation
317.269.2415 (voice

Legal Aid to the Poor Gets Boost From Supreme Court:
Court to Adopt Universal IOLTA Plan

Thousands of indigent residents of Indiana will have greater access to justice following a decision by the Indiana Supreme Court to fold all Indiana lawyer trust accounts into the Court’s current trust account program, Chief Justice Randall T. Shepard announced today.

The decision by the Supreme Court to bring all lawyer trust accounts into the seven-year old Interest On Lawyer Trust Account (IOLTA) program is expected to generate an additional $75,000 to $200,000 annually for programs that encourage Indiana lawyers to provide free, or pro bono, civil legal services to the indigent.

The action by the Court follows a nearly unanimous approval by the Indiana State Bar Association’s House of Delegates of a resolution on October 15, 2004 that supported the move to universal IOLTA.

“Thanks to the leadership of the Indiana Pro Bono Commission, the Indiana State Bar Association and the Indiana Bar Foundation, there will be greater funding for programs that help people with legal problems obtain justice,” said Chief Justice Shepard.

In 1997, the Indiana Supreme Court formally approved court rules that allows interest on lawyer trust accounts to be collected by the Indiana Bar Foundation and used to fund programs that encourage pro bono work by Indiana lawyers. With that 1997 decision by the Court, Indiana became the 50 th state to form an IOLTA program. It became operational in the fall of 1999.

Attorneys must keep client funds separate from their own, and most attorneys put all client funds into a single checking account. Previously, the law prevented these checking accounts from paying interest. In any event, the amount of interest that could be earned for each client was small and would likely not generate enough interest to pay for the cost of calculating the interest and mailing a check. When the federal banking regulations changed in the early 1980s, it became possible to earn interest on the total of the client funds in an account. The IRS approved a program that would allow that interest to be used for charitable causes.

In many states, bar foundations organized a program to collect that interest on a statewide basis and to use the money to fund free legal services for the poor and other law-related projects. Today, these programs generate over $100 million each year.

In 28 states, all attorneys with trust accounts must be part of the IOLTA program. In a handful of states, attorneys have the option to “opt-out” of the program. Until this change, Indiana was an “opt-out” state. A number of states began as “opt-out” states and later switched to a program that required all attorneys to enroll.

Since the fall of 1999, Indiana’s IOLTA accounts have generated over $1.7 million and the bulk of that money has been used to fund local programs that encourage attorneys to provide free, or pro bono, civil legal services to the poor. Thousands of Indiana attorneys have signed up to take cases in local programs supported by the Supreme Court, the Indiana Bar Foundation and the Indiana State Bar Association.

While the program has been successful, the drop in interest rates prompted the Indiana Bar Foundation, which operates the IOLTA program for the Supreme Court, and the Indiana Pro Bono Commission, which reviews the funding request from the 14 local pro bono committees, to ask the ISBA’s House of Delegates to support a resolution urging the Supreme Court to require all Indiana attorneys to enroll in the IOLTA program. The ISBA’s Board of Governor’s had also voted to support the resolution.

In 2005, the Indiana Bar Foundation will provide almost $400,000 to the local programs. The drop in interest rates has had a dramatic impact. In 2001, the program collected $803,032 in interest but only $397,328 for the fiscal year that ended June 30, 2004. Switching to the more comprehensive program will generate an additional $75,000 for pro bono programs each year. It is estimated that about 60 percent of the lawyers in Indiana with trust accounts are already enrolled.

An exact timetable for implementation is being developed. However, attorneys can enroll in the IOLTA program immediately, explained Charles Dunlap, executive director of the Indiana Bar Foundation.

“Converting to an IOLTA account is relatively simple and requires little more than filling out a one-page form. Our staff and the bank will do the rest, including calculating and collecting the interest. You won’t need new signature cards or checks. The only real difference is that the Bar Foundation will begin paying standard monthly service fee, if there is any. It is really an easy way to support an excellent cause,” he said.