As you know, the IOLA program requires attorneys to deposit funds received from clients either in interest bearing accounts for the benefit of clients or in interest bearing IOLA accounts. The interest is pooled and managed by the IOLA Board of Trustees to fund non-profit civil legal services. More specifically, the money is used to fund civil legal services for people who otherwise cannot afford access to the civil courts.
Access to civil justice should not be based upon the ability to pay for necessary legal services. The IOLA program, created in 1983 after significant input from the State Bar Association, is designed to provide such access, but funding in New York State has lagged behind what is required. The most prominent problem is that many of the banks that handle IOLA accounts pay a mere pittance (.57% on average) in interest compared to the interest paid on other, comparable accounts. That is, until now.
Effective August 15, New York banks will be required to pay an interest rate on IOLA accounts proportionate to the rates they pay their best customers with similar accounts. What that would mean, according to the Notice of Adoption of the new regulations, is that if 75% to 85% of the December 2006 total estimated balance of $3.1 billion in IOLA accounts were subject to an interest rate of 2.75% instead of the .57% average, the range of increased annual revenue would be between $45 million and $55 million, annually.
This significant increase in funding for civil legal services will enable New York lawyers to do what we do best -- provide justice for all of our citizens, regardless of one’s ability to pay. It means that the working single mother with a dispute over healthcare for her child will have someone to turn to help fight for her rights. It means that the family facing eviction from their home will have an advocate helping to make things right. It means that more often than not, justice will indeed be for all, and not just for all who can afford it.
The New York State Bar Association has been at the forefront of reforming this policy. Back in May, we were proud to weigh in on this matter in support of Governor Spitzer’s announcement of the proposed new regulations. I am prouder still that the “proposed” label can now be removed.
New York lawyers have a rich tradition of providing thousands of hours of pro bono services, but altruistic lawyers, in-and-of-themselves, are not enough. We needed this funding increase to help seal the justice gaps that pro bono services cannot. We applaud the actions of the IOLA Board of Trustees and Governor Spitzer for making access to civil legal services a priority. I am also proud of yet another example of the State Bar Association’s long-term commitment to making positive change happen