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Tax-free justice for all: In defense of IOLTA [Blowback]

January 11, 2013|By Patrick Kelly
  • California's Interest on Lawyer Trust Accounts, or IOLTA, program raises money to fund legal services for those who can't afford them. Above: the federal courthouse in Los Angeles.
California's Interest on Lawyer Trust Accounts, or IOLTA, program… (Los Angeles Times )

We're all familiar with the most visible damage caused by our Great Recession -- high unemployment, widespread home foreclosures, lost retirements and more. Also on that list is a less recognized tragedy: Only the relatively well-to-do can afford a lawyer, while working- and middle-class families have limited or no access to legal representation when dealing with the challenge caused by our slow economy.

In other words, the rest of us must go it alone. Or must we?

Long ago, California, along with every other state, adopted a creative approach to fund not-for-profit organizations that provide basic legal services for working-class families free of charge. It's called theĀ Interest on Lawyer Trust Accounts program, or IOLTA. Basically, it requires lawyers to deposit in special interest-bearing accounts certain client funds that are so small or held for such a short period of time that they would otherwise not earn interest. The interest from these special accounts is then used to fund legal services for those who can't afford to hire lawyers. And it doesn't use any of your tax dollars.

In California, the IOLTA program has in good economic times generated as much as $20 million annually. These funds have provided legal services to help veterans victimized by fraud, children who have been abandoned, seniors who have been denied healthcare and families faced with impending home foreclosures. The list of legal needs is endless. And while the recession has had an impact on the levels of IOLTA funds, the legal community continues to search for additional, non-tax dollars to supplement the program.

Unfortunately, judging from lawyer Charlotte Allen's Jan. 2 Times Op-Ed article, in which she called the use of client account interest to fund legal services for the poor "legal larceny," there are still misconceptions about IOLTA. This, despite the fact that the program's constitutionality was upheld by California's appellate courts in 1985 and by the U.S. Supreme Court in 2003.

Such attacks are either a deliberate attempt to ignore longstanding law or are motivated by those who are comfortable with the fact that the underprivileged in our society have little or no access to our justice system. We at the State Bar refuse to be guided by such thinking. Indeed, our nation's founders created a system of justice that was to be available to all, not just a privileged few.

In short, the brilliance of IOLTA is that it essentially creates something out of nothing, and in the process provides legal services to the people who need help to access the promise of "justice for all."


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Patrick Kelly is president of the State Bar of California.

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