Opening an IOLTA
To open an IOLTA, you may need the following:
- The OLF’s tax ID, 93-0817536, must be attached to the account.
- Notice to Financial Institutions(pdf): The OSB does not require this form; however, some banks request documentation before opening an IOLTA. Even when not requested, this form can help a bank understand what kind of account you are requesting.
After the account is open the bank will send any interest to the Oregon Law Foundation.
Where to Open an IOLTA
Financial institutions play a significant role in the success of the IOLTA program. The amount of funding generated through IOLTA each year is dependent upon several factors, including interest rates and bank-imposed service fees. You can help the Oregon Law Foundation by establishing your IOLTA at (or moving your IOLTA to) one of our Leadership Banks & Credit Unions. Our Leadership Banks & Credit Unions pay the Oregon Law Foundation above-market interest rates on IOLTA deposits, in some cases over 125 times market rates.
What Goes into an IOLTA
ORPC 1.15-2 (c)(d) sets up the criteria for IOLTA. If a client’s funds are too small in amount or held for too short of a time to earn interest for the client, net of bank charges and your administrative costs, place them in an IOLTA.
An IOLTA has no effect on clients. Lawyers only place funds in IOLTA that otherwise would not produce net income for a client. Therefore, the client suffers no loss from IOLTA interest paying to the OLF.
If a lawyer later determines that a particular client’s funds in an IOLTA account would have earned net interest, the lawyer can request a refund of what the client would have earned pursuant to ORPC 1.15-2 (f). When determining the interest a client’s funds could make in a separate account, use the bank’s normal interest bearing account rate and not the OLF Leadership rate.
For more details on using an IOLTA see the Professional Liability Fund’s Guide to Setting up and Using Your Lawyer Trust Account (pdf).
There are no tax consequences for attorneys or clients from using an IOLTA. See IRS Revenue Ruling 81-209 and Revenue Ruling 87-2.
Banks may only apply IOLTA service charges against the interest paid to the OLF. Service charges include monthly maintenance fees, per item check charges, items deposited charges, and per deposit charges.
Lawyers are responsible for all other fees or transaction costs including fees for wire transfer, electronic transfer, non-sufficient funds, bad checks, stop payment, account reconciliation, negative collected balances, and check printing. Lawyers may absorb these costs or pass them to the clients if specified in their fee agreements.
Reporting to the Bar
ORS 9.675 requires all active bar members to certify annually whether they have Oregon IOLTA(s) and disclose the bank(s) and account number(s) of those IOLTA(s). Included in those who must certify annually are the following:
- Those who reside in another state must certify.
- Members who do not have a trust account must certify and check the proper reason for not having an account.
- Those employed by a firm that holds a central IOLTA must certify with the firm’s IOLTA information.
- Those who are active bar members who limit their work to serving as arbitrators or mediators must certify annually and place any advance arbitration or mediation fees in a trust account. See OSB Formal Ethics Opinion 2005-135.
- Active Pro Bono Members who maintain their own IOLTA account used for pro bono clients or arbitration/mediation advances must certify with their account information.
Individual lawyers can certify compliance through the OSB member portal, and Firm administrators can report for multiple attorneys through the firm portal. Additional IOLTA reporting information is available from the Oregon State Bar.