Client Trust Account

Attorney Client Trust Account and IOLTA

The article discusses the Interest on Lawyers’ Trust Accounts (IOLTA) program, a mandatory system for attorneys handling nominal or short-term client funds that cannot generate net income for the client due to the small amount or brief holding period. These funds are pooled in an IOLTA account at approved financial institutions, and the interest earned is directed to the State Bar of California, which distributes it to nonprofits providing legal services to the indigent. The article outlines the legal requirements for lawyers in California regarding the handling of client funds, including the establishment of interest-bearing trust accounts for larger or longer-held client deposits that can generate net income. It further details the rules for maintaining these accounts, ensuring proper segregation of client funds, and the annual reporting and compliance mandates for lawyers. Additionally, it touches on the practical aspects of setting up and managing a client trust bank account, emphasizing the importance of clear labeling and maintaining financial stability of the bank to protect client funds.