IOLTA Inadequacies and Proposed Reforms

21 Wake Forest J. Bus. & Intell. Prop. L. 83

In the United States, the Interest on Lawyers Trust Accounts
(IOLTA) program is one of the most significant sources of funding for
civil legal service programs representing indigent people. IOLTA
revenue totaled approximately $270.2 million in 2019, and nearly 90%
of IOLTA program grants support legal aid offices and pro bono
programs. IOLTA’s mission to “provide civil legal aid to the poor and
support improvements to the justice system.” Although IOLTA is a
large source of funding, its basis in the Federal Funds Target Rate
(FFTR) hinders its ability to reliably finance low-income civil legal
services. The Federal Open Market Committee (FOMC) of the Federal
Reserve System adjusts the FFTR based on economic indicators
signaling inflation or recession, slashing the target rate during
recessions to encourage market growth. As a result, IOLTA funds
decrease during economic recessions when people are most in need of
low-income legal services.