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Judicial Branch, State of New Hampshire

Laura Kiernan
Communications Director
603-271-2646 ext 2359

NH Supreme Court Proposes All Eligible Lawyers Participate in IOLTA

Funds from program support civil legal services

CONCORD, April 5 —The New Hampshire Supreme Court has proposed that court rules be amended to require all eligible New Hampshire lawyers participate in the state "IOLTA" program which is the largest source of funding for civil legal services and pro bono programs. If the rule change is made, New Hampshire would join 40 other states around the country that require all lawyers to maintain client funds in interest-bearing trust accounts which generate funds for IOLTA grants to non-profit organizations.

The proposal to change the rule is now before the Supreme Court Advisory Committee on Rules, which is authorized to hold a public hearing and accept written comment on the proposal before voting on whether to recommend its adoption to the Supreme Court. The rules committee's next meeting is April 7, during a date for a public hearing will be considered.

Revenue from IOLTA (Interest on Lawyers Trust Accounts) funds two of New Hampshire major sources of civil legal aid: New Hampshire Legal Assistance, which has offices statewide; and the New Hampshire Bar Association's Pro Bono Referral Program, which connects low income clients with lawyers who donate their services. Almost 90 percent of eligible New Hampshire lawyers who hold client funds currently participate in the state's IOLTA program.

The proposal to make IOLTA participation mandatory, which if approved, would take effect January 1, 2011, was initiated by the New Hampshire Access to Justice Commission in response to a dramatic reduction in IOLTA revenue since 2009 as interest rates declined and fewer client funds were deposited. The New Hampshire Bar Foundation, which administers the IOLTA fund, awarded $830,000 in grants to non-profit organizations in 2010, compared to $1.7 million in grants in 2007. While IOLTA revenue has decreased, the nationwide economic downturn has generated an increased need for low cost civil legal services. In New Hampshire, IOLTA grants provide substantial support to New Hampshire Legal Assistance and the New Hampshire Bar Pro Bono Referral Program, as well as other non-profit organizations.

"We need to reach out to every available resource to help low income citizens who need legal assistance to make it through these tough economic times," Associate Supreme Court Justice James E. Duggan, the co-chair of the New Hampshire Access to Justice Commission, said. Duggan noted that in 1982, New Hampshire was the second state to establish an IOLTA program after changes in federal laws cleared the way for income to be generated through these accounts.

"New Hampshire lawyers have a long and proud history of supporting legal assistance programs and this is one more important step we can take at a time when it is really needed," Duggan said.

IOLTA revenue is generated by small or short-term amounts of client funds that lawyers deposit in pooled interest-bearing trust accounts. The client funds are too small to generate interest on their own and ethical rules prohibit lawyers from gaining any financial benefit from client funds. Through IOLTA, lawyers have access to the funds, as needed for their clients; the banks send the interest earned on the accounts to the state IOLTA program. All 50 states have IOLTA programs, according to the American Bar Association.