Many Indiana lawyers maintain trust accounts in which funds are held on behalf of clients for distribution at a later date. In some cases, these fund balances are large and are held for long periods of time, but more often the balances are small and/or are held for a short period of time. Traditionally, it has not been permissible for these types of short term or nominal balance trust accounts to earn interest.
In 1997, the Indiana Supreme Court amended Rule of Professional Conduct 1.15, thereby creating the Interest on LawyerTrust Account (IOLTA) program in Indiana. In 2005, the Indiana Supreme Court further amended Rule 1.15, requiring attorneys to convert all trust accounts into IOLTA accounts if the accounts contain deposits that are of short duration and/or of a relatively small balance so that they could not earn income for the client in excess of the costs incurred to secure the income. The resulting interest is paid to the Indiana Bar Foundation to be distributed for charitable purposes as delineated in Rule 1.15. The funds will be used primarily to support pro bono civil legal services for persons of limited means.
- the establishment of pro bono programs;
- to provide for equal access to civil justice to persons of limited means;
- to provide law-related education programs for the public;
- to assist in research about the legal system;
- to improve the administration of justice; and
- to fund other public service programs specifically approved by the Indiana Supreme Court.
All fifty states and the District of Columbia have approved IOLTA programs. In Australia and Canada, where the IOLTA concept originated, the programs have been operating since the 1960s.
For more information about IOLTA at the national level, visit www.iolta.org.
IOLTA Rule (PDF)