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Simple English definitions for legal terms
Interest on Lawyers' Trust Accounts
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A quick definition of Interest on Lawyers' Trust Accounts:
Interest on Lawyers' Trust Accounts (IOLTA) is a program that allows lawyers or law firms to put their clients' money into an account that earns interest. The interest earned is then used for charitable purposes, such as providing legal aid to people who cannot afford it. Almost all states have an IOLTA program, which can be voluntary or mandatory.
A more thorough explanation:
Interest on Lawyers' Trust Accounts (IOLTA) is a program that allows lawyers or law firms to deposit their clients' retained funds into an interest-bearing account. The interest earned on these accounts is then designated to charitable, law-related purposes, such as providing legal aid to the poor. Almost all states have either a voluntary or mandatory IOLTA program.
For example, if a lawyer is holding $10,000 of a client's money in a trust account, they can deposit it into an IOLTA account. The interest earned on this account will then be used to support legal aid programs for those who cannot afford legal representation.
IOLTA programs help to ensure that low-income individuals have access to legal services, which they may not be able to afford otherwise. By designating the interest earned on these accounts to charitable purposes, lawyers can contribute to the greater good of their community.