Is This an IOLTA Account?
by John Burnett, BOL Guru Guru Bio
Question: I have a customer that is a law firm and has a client specific trust account and the client is a large financial firm. In the contract between the law firm and their client, the client has requested that the account must not earn any interest. The law firm is acting as a collection agency for this financial company. Is this an IOLTA account? Can the client request no interest be paid to the account?
Answer: That account does not fit any definition of an IOLTA account that I have seen. IOLTA accounts are not client-specific, they hold funds of many clients usually in small per-client amounts and/or for short periods. A law firm cannot earn interest for itself on a client-specific account. Any interest would have to go to the client. In this case, the client is a firm and has asked not to receive interest. That's totally acceptable, as far as I can see.
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