IOLTA Accounts Taking a Hit

The economic downturn - OK, the recession - has its unexpected effects too.  The Wall Street Journal's legal blog has an interesting article about The Recession's Latest Legal Casualty: IOLTA.

It's not just layoffs at big law firms and booming bankruptcy and employment law practices that have resulted from the recession.  Legal Aid Societies have been taking a hit as interest rates have plummeted to near zero.  There's still money in those IOLTA accounts, they simply aren't earning much interest. 

In 2007, the ABA reports that IOLTA accounts generated $212 million which was distributed to legal aid and other charitable groups.  It will be interesting to see what happens over the next year.  Along with decreased IOLTA revenues, legal aid groups can also likely expect a decrease in donations just like other charitable organizations, and decreased funding from states as budget deficits mount.

The Wall Street Journal blog article is at:  The Recession's Latest Legal Casualty: IOLTA.

The original news report was in the New York Times:  Interest Rate Drop Has Dire Results for Legal Aid.

- Peter H. Berge

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