U.S. Supreme Court Ruling Upholds IOLTA

Seattle Washington, March 26, 2003 — Today, in a victory for low-income people across Washington state and the nation, the U.S. Supreme Court upheld the constitutionality of IOLTA (Interest on Lawyers Trust Accounts). The case, Brown v. Legal Foundation of Washington, was argued before the Supreme Court in December 2002. The opinion may be viewed at http://www.supremecourtus.gov/opinions/02pdf/01-1325.pdf.  

IOLTA accounts are used by lawyers and real-estate closing officers to deposit client funds that, because they are nominal in amount or expected to be held for a short period of time, would not provide a positive net return to the client.  However, by pooling these funds into one account, positive net interest accrues. The pooled interest is paid to the Legal Foundation of Washington to be used to provide access to justice in civil cases for poor people throughout the state. All 50 states have IOLTA programs; together, they generate approximately $150 million each year.  

Washington's IOLTA program has been operating since 1984, and provides four to six million dollars a year (one-third of the statewide civil legal justice system budget) to help poor people throughout the state. There are 28 nonprofit organizations in the Access to Justice Network which use IOLTA funds to provide legal assistance to low-income people. Last year, 30,000 individuals received legal assistance from these organizations.  

The WSBA has a longstanding professional, ethical and organizational commitment to the promise of equal justice for all. The IOLTA program plays an important role in helping to fund access to justice. Stated WSBA President J. Richard Manning: "The IOLTA fund is a unique and powerful way to generate substantial interest income to support civil legal services for the poor." 

The Washington State Bar Association is a private, nonprofit organization authorized by the Washington Supreme Court to license the state's 27,300 lawyers. The WSBA both regulates lawyers under the authority of the Court and serves its members as a professional association — all without public funding. As a regulatory agency, it administers the bar exam, provides record-keeping and licensing functions, and administers the lawyer discipline program. As a professional association, the WSBA provides continuing legal education for attorneys, in addition to numerous other educational and member-service activities. The mission of the WSBA  is to promote justice and serve its members and the public.

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