Thanks President Obama! Now we can have a Happy New Year!

Here’s the official press release:

Office of the Press Secretary

For Immediate Release

December 29, 2010

Statement by the Press Secretary, 12/29/2010

On Wednesday, December 29, 2010, the President signed into law:

H.R. 6398, which provides for permanent Federal deposit insurance coverage for Interest on Lawyers Trust Accounts, the interest earned on which is used by States to support legal aid for low-income individuals.

Why does this mean?

This amendment will provide Interest on Lawyers Trust Accounts (IOLTAs) with the same temporary, unlimited insurance coverage afforded to noninterest-bearing transaction accounts under the Dodd-Frank Wall Street Reform and Consumer Protection Act – H.R. 6398 extends unlimited FDIC insurance to IOLTA accounts through December 31, 2012.

For more details, http://www.fdic.gov/deposit/deposits/changes2.html.

Happy New Year!

-RFW


IOLTA Funds Need Protection – YOU can help!

I have just learned that the Temporary Liquidity Guarantee Program (TLGP) does not cover Interest on Lawyer Trust Accounts (IOLTA). This is very disturbing!

 

FULL DISCLOSURE: The South Carolina Access to Justice Commission is funded by an IOLTA grant from the South Carolina Bar Foundation.

 

If you’re familiar with IOLTA, skip on ahead. If you’re not familiar with IOLTA, here’s a little background.

IOLTA is a way to support access to justice to people living in poverty without taxing the public or charging attorneys or their clients. IOLTA is pooled to provide civil legal aid to the poor and support improvements to the justice system.

When a client pays a lawyer, those funds must placed in a trust account separate from the lawyer’s own money. Typically funds in these accounts are used for court filing fees, real estate closing, settlements and retainers. If the funds are sufficient to generate net interest that to allocate directly to the client, then the client receives the interest. If not, the funds are deposited into an IOLTA account.

These funds, in conjunction with other grants and programs, enable non-profit legal service providers to people with civil legal matters.

Every state in the U.S. operates an IOLTA program. Between 1991 and 2003, IOLTA generated more than $1.5 billion nationwide to ensure justice for our country’s most vulnerable residents.

SOUTH CAROLINA. 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.

South Carolina’s history:

~established by Court rule in 1986 as a voluntary program
~became opt-out in 1987
~became mandatory in 2005

THE CRUX. Client funds in excess of $250,000, currently held in IOLTA accounts, are eligible for unlimited insurance if they are removed from the IOLTA account and placed in “non-interest bearing deposit transaction accounts.

Do attorneys hold client funds in excess of $250,000 in the IOLTA account, as mandated by court rule, OR place their client funds in a non-interest bearing deposit transaction account in order to qualify for the new insurance?

Attorneys hold their clients’ trust and confidence. Attorneys are bound by rules of conduct. (SC Rules)  Attorneys want to do what’s right. Attorneys want to follow the law.

How You Can Help. Please contact your United States Senator or Representative. Ask to speak with your Senator or Representative’s Financial Services/Banking Legislative Assistant and tell them you want IOLTA accounts to be covered under the TLGP. Ask the Congressional office to call or fax a letter to the FDIC NOW about their concern that IOLTA accounts should be covered under the TLGP. Follow up the call with an email explaining the importance of covering IOLTA under the TLGP.

Remember: IOLTA pays for legal assistance for people who have very little and are hoping that someone can help them through the legal maze.

Maybe they are victims of abuse and had to leave with only the clothes on their back. Maybe they lost their job in this distressing economy and now are about to lose their home. Maybe they are trying to chose between paying for life-saving medication and their rent because of an office mix-up. Maybe they’re your neighbor. Maybe your co-worker. Maybe , just maybe , YOU could be the voice that helps them.

Please make the call!

-RFW