Massachusetts IOLTA Program Overview
The Supreme Judicial Court created the Interest on Lawyers' Trust Accounts (IOLTA) program in 1985 by adding DR 9-102 (C) under Rule 3:07. On January 1, 1998 DR 9-102 (C) was replaced by Rule 1.15 (e) of the Massachusetts Rules of Professional Conduct. Originally voluntary, the SJC converted IOLTA to a "comprehensive" program in 1990. As a result, lawyers holding funds on a client’s behalf must place the funds either in an account which pays interest to the client or in an IOLTA account. An IOLTA account is selected if the funds are relatively modest, or large amounts held by the lawyer for only a short period: in either of these situations, the interest that might be earned for the client would be less than the cost of establishing and maintaining an account for the benefit of the client.
THE CHARITABLE ENTITIES
The Boston Bar Foundation and the Massachusetts Bar Foundation are each governed by a board of trustees and have a long tradition of supporting a variety of public service activities. They have directed IOLTA funds toward activities such as alternative dispute resolution projects, judicial education, and pro bono attorney programs, as well as toward direct support of legal services programs. The Massachusetts Legal Assistance Corporation (MLAC) was established in 1983 by the Legislature to provide funds for civil legal assistance to low-income people throughout Massachusetts. It is governed by an eleven-member board of directors, ten of whom are appointed by the Supreme Judicial Court. The eleventh member is the Chief Justice for Administration and Management of the Trial Court or that Justice’s designee. In addition to IOLTA funds, MLAC distributes state appropriated funds and other grants to legal services providers.
IMPORTANCE OF THE PROGRAM
Since the IOLTA program was created, the legal needs of low-income and other vulnerable Massachusetts residents have grown in both scope and complexity. The nature of poverty has also changed. An increasing number of low-income people work at low-paying jobs with no health insurance and few workplace protections, and they lack childcare and adequate transportation resources. A disproportionate slice of their income goes to housing that, because of short supply, is often both costly and substandard. In addition, many people who are not considered low-income cannot afford to hire an attorney and are not able to navigate the legal system on their own. IOLTA funds are essential to addressing these challenges and making access to justice a reality for all because they provide significant revenues for legal aid and administration of justice programs in the Commonwealth.