IOLTA Basic Information
The South Carolina Supreme Court created the Interest on Lawyer Trust Accounts or “IOLTA” program to provide funds for law-related public service projects and programs designed to improve the administration of justice.
Rule 412, SCACR, governs the IOLTA program.
The South Carolina
Supreme Court has approved amendments to the state’s IOLTA rule to
include interest rate comparability. The amendments were
effective on June 15, 2010.
To view the
Guidebook for Lawyers and Law Firms, please visit
comparability rule requires attorneys to place their IOLTA accounts
in a financial institution that pays those accounts the highest
interest rate or dividend generally available at that institution to
other customers when IOLTA accounts meet the same minimum balance or
other account qualifications, if any. Bank rates are based on each
individual bank’s own rates that have already been established under
their customary rate setting procedures. The rule change does not
require attorneys to contact their banks for higher rates. The
Bar Foundation will work with each institution to implement the new
rule on a bank by bank basis beginning in January 2010.
South Carolina’s history:
~established by Court rule in 1986 as a voluntary program
~became opt-out in 1987
~became mandatory in 2005
~comparability adopted December 2009;
effective date June 15, 2010
Following the United States Supreme Court’s holding in Brown v. Legal Foundation of Washington, the Foundation asked the Court to amend Rule 412 of the South Carolina Appellate Court Rules to convert the current opt-out IOLTA program to a comprehensive program which provides for universal attorney participation. On January 6, 2005, the SC Supreme Court ruled that participation in the SC IOLTA program become mandatory. The effective date for the Rule amendments was March 1, 2005. With this conversion, South Carolina became the 30th state to adopt a mandatory program for attorneys.
Before the creation of IOLTA, nominal or short-term client funds held in escrow or trust were customarily pooled and deposited into non-interest bearing checking accounts. Such funds should be deposited in special interest-bearing IOLTA checking accounts at participating financial institutions. The interest generated on IOLTA accounts, less reasonable service charges, is automatically forwarded by financial institutions to the South Carolina Bar Foundation. The Foundation uses these funds to provide grants for charitable and educational law related public service projects and programs to improve the administration of justice in South Carolina.
For more information about the Commission on National Association of IOLTA Programs, please click here. Or, you may visit IOLTA.org.
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