A proposal to clear the way for mandatory IOLTA in Virginia met no opposition as it came before a House of Delegates panel this month.
The House Courts civil subcommittee approved the IOLTA bill 8-0 Jan. 15. It would end a 26-year ban on requiring Virginia lawyers with trust accounts to have interest on client money sent to support legal aid offices. Virginia is one of only five states without mandatory IOLTA, and legal aid programs are struggling.
“We’ve already lost a million dollars in the voluntary IOLTA program this year, due to interest rates hovering near zero percent,” said Mark Braley, executive director of the Legal Services Corporation of Virginia. “We’ve also lost close to $2 million in filing fee revenue due to the decline in legal activity in the courts during the pandemic. So, this would be a much needed shot in the arm for us,” Braley said.
Mandatory IOLTA could bring in as much as a $1 million a year in additional legal aid revenue, said bill sponsor Del. Rip Sullivan, D-Alexandria.
Removal of the ban on mandatory IOLTA has momentum this year as bankers ended their traditional opposition.
“We feel it’s time to leave the question of mandatory lawyer participation in this program up to the State Bar and the Supreme Court,” said Matt Bruning with the Virginia Bankers Association. He noted more member banks now are participating in the IOLTA system.
The measure has support of the Virginia Bar Association and the Virginia Trial Lawyers Association.
“There are a significant number of Virginians that are unable to afford legal services and this is a step in the right direction,” said Mark Dix of the VTLA.