DCBF Appeals for Delay in Interest Rate Cuts on IOLTA Accounts
May 19, 2020
The DC Bar Foundation (DCBF) is asking banks to reconsider reducing interest rates on D.C. Interest on Lawyers’ Trust Accounts (IOLTA), or, at a minimum, to delay a rate cut for as long as possible to avoid significant consequences on the District’s civil legal aid network.
In March, the Federal Reserve cut interest rates to a target of 0 percent to .25 percent to help prop up the economy during the coronavirus pandemic. Because of the critical role banks play as partners in the D.C. IOLTA Program, the DCBF says a significant cut in IOLTA rates at this time could have disastrous impact on the District’s most vulnerable residents.
The foundation, the largest funder of civil legal aid in the District, receives interest earned from thousands of pooled trust funds in D.C. IOLTA accounts and distributes it within the community by funding innovative legal aid programs, training legal aid attorneys, and helping legal aid attorneys pay off their law school debt.
“It is now more important than ever that D.C. Bar members support legal aid through individual giving, law firm support, and banking with D.C. Prime Partner banks that have committed to supporting legal services in our community by offering strongly favorable rates,” says Kirra Jarrett, CEO of the DC Bar Foundation. These banks are City First Bank of DC, Congressional Bank, Industrial Bank, Premier Bank, and the United States Senate Federal Credit Union.
IOLTA accounts represent a significant source of funding for the DCBF. With limited exceptions, D.C. attorneys entrusted with client or third-party funds are required to hold them in interest-earning IOLTA accounts. Interest accrued on the funds held, while minute when viewed from the perspective of individual accounts, collectively generates a substantial portion of the funding that supports DCBF’s access to justice work.
The District’s poorest residents have been disproportionately impacted by the novel coronavirus, and for many, their greatest challenges will arise once the crisis has passed. Issues relating to housing rights, debt collection, family law, and many other areas of practice are expected to overwhelm the courts and create an increased need for legal advice and representation.
