STAFF
FREQUENTLY ASKED QUESTIONS
Below you will find a number of frequently asked questions about the DC IOLTA program and the DC Bar Foundation. The questions address the following categories:
ATTORNEY FREQUENTLY ASKED QUESTIONS
SHOULD I OPEN A DC IOLTA ACCOUNT?
Every member of the DC Bar who receives client funds is subject to the trust rules governing the DC Bar. Under the rules that took effect on August 1, 2010, unless you fit within an exemption, you must place eligible client funds in a DC IOLTA account. As of August 1, 2010, lawyers may no longer “opt-out” of the DC IOLTA program.
HOW DO I KNOW WHAT FUNDS SHOULD GO INTO A DC IOLTA ACCOUNT?
If you are holding funds for a client that would not earn net interest for the client – either because you won’t hold them for long, or because they are nominal in amount – those funds should go into a pooled, interest-bearing IOLTA account. The rules stipulate that
lawyers will exercise their good faith judgment in deciding which funds are IOLTA eligible.
I PRACTICE BOTH INSIDE AND OUTSIDE THE DISTRICT OF COLUMBIA. WHAT SHOULD I KNOW?
As of August 1, 2010, Rule 1.15 provides an exemption for members of the DC Bar who are admitted and “principally practicing” in a jurisdiction other than DC, and fully participating in that jurisdiction’s IOLTA program. Many lawyers in your circumstance currently maintain separate IOLTA accounts: one for their DC matters and one for matters in the other jurisdiction. As of August 1, 2010, you can comply with DC’s rules by maintaining separate IOLTA accounts, or by having a single IOLTA account that remits to DC or whichever jurisdiction where you are admitted and “principally practicing.” If you are uncertain of how the new rule fits your circumstances, email iolta@dcbarfoundation.org or email Daniel Mills, Director, DC Bar Practice Management Advisory Service (dmills@dcbar.org).
WHERE DO I GO FOR MORE INFO ABOUT MY IOLTA OBLIGATIONS FOR OTHER STATES?
A good starting point is the IOLTA program in the other state in which you are admitted. A directory of IOLTA programs, with contact information is available at: www.iolta.org.
HOW DO I OPEN A DC IOLTA ACCOUNT?
For information on how to open a DC IOLTA account, please see the step by step guide here.
HOW DO I FIND AN APPROVED BANK FOR MY DC IOLTA ACCOUNT?
Your DC client trust funds, including your IOLTA funds, must be held at a DC Bar approved bank. The DC Bar Foundation posts a lists of all approved banks on our website here.
HOW DO I DECIDE WHICH BANK TO USE FOR MY DC IOLTA ACCOUNT?
We encourage you to select a DC Prime Partner Bank, as these banks have made a commitment to our community by providing higher interest rates on DC IOLTA accounts. IOLTA revenues in DC support critically-needed civil legal services in our city’s poorest
communities. DC Prime Partner Banks have generously agreed to do better for IOLTA, and are our partners in supporting access to justice. Opening your IOLTA account with a DC Prime Partner Bank helps put more money to work to provide free legal services for the most vulnerable in our community.
CLIENT FUNDS WERE MISTAKENLY DEPOSITED IN MY DC IOLTA ACCOUNT. WHAT SHOULD I DO?
The DC Bar Foundation will refund, through your bank, any interest that was paid to the DCBF as a result of the erroneous deposit. You will need to work with your bank to get them to calculate the interest that was paid to DCBF on these funds. A letter on firm letterhead,
accompanied by the bank’s written analysis of the account, will be needed to start the refund process.
Email iolta@dcbarfoundation.org with questions and to get the process started.
I WOULD LIKE TO LEARN MORE ABOUT HANDLING CLIENT FUNDS. ARE THERE ANY RESOURCES?
Yes. The District of Columbia Bar has a Practice Management Advisory Service which can answer certain questions. Contact Director Daniel Mills at dmills@dcbar.org. The DC Bar also regularly offers courses that provide practical information on the handling of client funds. Check the DC Bar’s current continuing legal education offerings for more information.
BANK FREQUENTLY ASKED QUESTIONS
WHAT TAX ID NUMBER SHOULD BE ON THE ACCOUNTS?
Every DC IOLTA account uses the DC Bar Foundation Tax ID Number: 52-1109547. That is because the DC Bar Foundation is the owner of the interest earned on every DC IOLTA account.
PLEASE NOTE: The DC Bar Foundation does not own the IOLTA accounts, it only owns the interest.
WHAT IS IOLTA?
IOLTA stands for Interest on Lawyers Trust Accounts. IOLTA programs operate in every state, DC, and the Virgin Islands. Established by courts or legislatures, the programs allow lawyers to place nominal or short-term client funds in a single interest-bearing account. Interest is remitted to a designated program – the DC Bar Foundation.
WHAT DOES IT MEAN TO BE A PRIME PARTNER?
Prime Partner banks have increased the value of their partnership with the DC IOLTA program by paying higher yields on IOLTA accounts to support the legal services safety net in the District of Columbia. The Prime Partner Program will recognize those banks that choose to go above and beyond the eligibility requirements of the revised Rule to support the DC IOLTA program in its mission to ensure that low-income persons in the District of Columbia have access to critically needed legal aid by designating them as DC IOLTA’s Prime Partner Institutions. Download the Prime Partner Enrollment Form for information about the requirements and benefits of becoming a Prime Partner.
WHAT DO WE NEED TO KNOW ABOUT ACCOUNT TITLES?
All DC IOLTA Accounts must include both the name of the lawyer/law firm and the phrase “IOLTA” or “Trust Account.”
WE WOULD LIKE TO OFFER IOLTA ACCOUNTS TO DC LAWYERS. CAN WE JUST START OFFERING IT?
No! DC lawyers can only hold trust accounts, including DC IOLTA accounts, at financial institutions that have been approved by the DC Board on Professional Responsibility.
WE HAVE BEEN APPROVED. WHAT’S NEXT?
Download the DC Bar Foundation’s Guidelines for Financial Institutions. That will contain all the information you need to get started and to submit reports and remittances to the DC Bar Foundation. If you have any questions, contact iolta@dcbarfoundation.org.
If you haven’t already signed up as a DC Prime Partner this is the right time to do so.
SHOULD OUR BANK OFFER DC IOLTA ACCOUNTS?
No bank is required to offer IOLTA accounts or to participate in an IOLTA program. However, many financial institutions offer such accounts as a convenience to their lawyer or law firm customers.
HOW DO WE BECOME A DC APPROVED DEPOSITORY?
The DC Board on Professional Responsibility handles the approval process. As part of that process, the DC Bar Foundation will need to review and approve the rate(s) your bank proposed to offer for DC IOLTA accounts. Your institution will also need to complete an undertaking (agreement) with the DC Board on Professional Responsibility. A copy of all the forms you need is available here.
DO THE NEW IOLTA RULES SET INTEREST RATES FOR DC IOLTA ACCOUNTS?
No. The rules require that rates be “comparable.” Your bank has three choices in proposing an interest rate under the DC IOLTA Program. Your bank can provide the documentation outlined in the comparability toolkit, demonstrating that your proposed IOLTA rate is comparable with similar products at your institution. Your bank can also elect the DC IOLTA benchmark rate. The third option is to join us at the Prime Partner rate. More information is in the Prime Partner Enrollment Form.
RATE COMPARABILITY FREQUENTLY ASKED QUESTIONS
WHAT IS RATE COMPARABILITY?
Rate comparability makes sure that IOLTA accounts are treated fairly. Under the DC IOLTA program, banks that wish to offer IOLTA accounts must agree to pay IOLTA accounts the highest rate available at that bank to similarly situated non-IOLTA accounts. Rate comparability has been a part of DC’s IOLTA program since August 1, 2010.
HOW CAN BANKS GET INFORMATION ABOUT RATE COMPARABILITY REQUIREMENTS?
Detailed instructions and forms are available on the DC Bar Foundation’s website. You can also contact the DC Bar Foundation for a copy at iolta@dcbarfoundation.org.
HOW DO BANKS COMPLY WITH RATE COMPARABILITY?
Banks have three options to comply with rate comparability in DC. Banks can elect to provide the DC IOLTA Benchmark Rate on their DC IOLTA deposits. The Benchmark Rate is set by the DC Bar Foundation, based on analysis of relevant rates. Banks can also propose a rate to the DC Bar Foundation, providing specific supporting information demonstrating its comparability. The DC Bar Foundation will act on each proposal. Finally, banks can elect to become a DC IOLTA Prime Partner Bank, going above and beyond the straight comparability requirement by providing a higher rate of interest in order to strengthen the support for access to justice in the District. Prime Partner Banks and banks providing the Benchmark Rate receive automatic approval of their rate.
HOW WILL ATTORNEYS KNOW IF THEIR BANK IS IN COMPLIANCE AND IS AN APPROVED BANK?
The DC Bar Foundation, which administers the DC IOLTA Program, maintains a list of approved banks on its website. Banks are approved by the DC Board on Professional Responsibility, after they have signed the BPR undertaking (agreement) and after they have been found by the DC Bar Foundation to be in compliance with the rate documentation and reporting requirements.
DOES THE RATE COMPARABILITY REQUIREMENT REGULATE BANKS?
No. The rule regulates the behavior of attorneys. The rule sets the terms under which banks may offer DC IOLTA accounts. Bank participation in the IOLTA program is voluntary. Setting such a requirement by rules governing attorneys is similar to other requirements for banks that want to hold attorney trust accounts, such as requiring NSF notification and reporting or record retention requirements.
DOES RATE COMPARABILITY SET INTEREST RATES OR REQUIRE COMPARING RATES BETWEEN BANKS?
No. Rate comparability does not set rates or compare rates between or among banks. Rates are set by each bank for its customers based on the factors a bank normally considers when setting rates. Comparability only requires participating banks to pay interest rates comparable to what it already pays its similarly situated non-IOLTA customers. Bank can meet this requirement by providing sufficient documentation to establish this rate, or by paying the “benchmark” DC IOLTA rate, set by the DC Bar Foundation based upon analysis of the DC market.
WHERE HAS RATE COMPARABILITY BEEN IMPLEMENTED?
As of April 1, 2018, the 35 jurisdictions noted on this list have adopted IOLTA rate comparability. For purposes of this list, IOLTA rate comparability means that the IOLTA legislation, rules, court or legislatively-authorized regulations and/or guidelines, when read as a whole, provide that financial institutions that choose to offer IOLTA accounts must only pay an interest rate or dividend on IOLTA accounts that is no less than the highest interest rate or dividend generally available from that financial institution to its own non-IOLTA customers when the IOLTA account meets the same minimum balance or other eligibility qualifications. The jurisdictions are:
Alabama
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia)
Hawaii
Idaho
DC Bar Foundation 10/2019
Illinois
Indiana
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
New Mexico
New York
North Carolina
Ohio
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Washington
West Virginia
Wisconsin
Prepared by the ABA Commission on IOLTA//NAIP Joint Technical Assistance Committee.
WHAT PROCESS WAS FOLLOWED IN DC TO MOVE TO A RATE COMPARABILITY REQUIREMENT?
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Interest in implementing the concept was expressed by the DC Access to Justice Commission and the DC Bar Foundation, which engaged a consultant to evaluate the IOLTA rule framework to incorporate best practices from around the country, including a shift to a comprehensive, rather than opt-out IOLTA program for lawyers, and rate comparability.
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The DC Bar Foundation established a DC IOLTA Rules Working Group, which included representatives of the DC Bar and other stakeholders to develop a rule proposal. The proposed rules revisions followed the process for revisions to rules governing DC lawyers, and included two separate periods of public comment.
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The DC Court of Appeals issued the final rule changes on March 22, 2010, with an effective date of August 1, 2010. The revised rules are available on the DC Bar’s website, www.dcbar.org, and on the DC Bar Foundation’s rules page.