Switch to universal IOLTA significant

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:Dec 29, 2004;

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By Abigail Johnson ajohnson@ibj.com

    An Indiana Supreme Court decision will have a long-ranging effect on pro bono service delivery in Indiana.

    The high court’s decision at the end of November to bring all lawyer trust accounts into the Interest on Lawyer Trust Account program is expected to generate up to $200,000 annually for pro bono legal services around the state. The action by the court came after a hearty approval of the measure by the Indiana State Bar Association’s House of Delegates in mid-October.

    Chuck Dunlap, executive director of the Indiana Bar Foundation, which administers the IOLTA program, said the decision came at a critical time for the program.

    Interest rates were low in 2004, meaning that IOLTA revenues were significantly down. IOLTA in Indiana has been operational since the fall of 1999, and many programs in the state’s 14 pro bono districts are only just now getting off the ground.

    Revenues were at $260,000, far below the amount needed to run the programs in 2005. Dunlap said district administrators around the state were warned about the shortfalls and told they should start planning for budget cuts.

    A sizeable donation by Indiana Pro Bono Commission Chairman J. Philip Burt and his wife, Barbara, made up revenue shortfalls in 2004, but Dunlap said the move toward a universal IOLTA program will help boost revenues significantly in years to come.

    The goal is that the program would not be so dependent on the ebbs and flows of the interest rates and that by saving money for low-interest years, the program could become more stable.

    Of the money the Burts gave to Indiana’s IOLTA programs, $10,000 will be held as seed money for the J. Philip and Barbara Burt Access to Justice Fund. Dunlap said the Burts’ $140,000 gift was the largest single outright gift to the bar foundation in the organization’s history.

    Dunlap said he is pleased to see the widespread support IOLTA programs have received from lawyers in the state.

    “Everybody recognized the need to do this was a really significant thing for Indiana,” Dunlap said. “It was a testament to the Indiana attorneys and everybody recognizing the importance of this program.”

    Dunlap said pro bono leaders recognize that IOLTA funds could disappear or be reduced in the future, so he feels it’s important to be prepared in the event that happens. By being able to generate larger revenues, some of that money can be set aside for future funding needs, he said.

    The rule governing universal IOLTA is still being crafted, but Dunlap hopes the new guidelines will be in effect by July 1. At this point, Dunlap said enforcement of universal participation would likely be handled by the state’s disciplinary commission.

    Participation from banks is as important as participation from attorneys, said Dunlap, who noted there are educational materials being developed for Indiana banks. Dunlap also said attorneys who have trust accounts at non-participating banks will not be required to change banks, but the bar foundation will focus on encouraging the bank to participate in IOLTA.

    In making this move, Indiana joined 27 states that require all attorneys with trust accounts to be part of the IOLTA program. In a handful of states, attorneys have the option to opt out of the program. Until this change, Indiana was an opt-out state.

    Since the fall of 1999, Indiana’s IOLTA accounts have generated more than $1.7 million.

    Monica Fennell, executive director of the Indiana Pro Bono Commission, said without the switch to universal IOLTA participation, it’s possible that pro bono services in some parts of the state might not have been able to continue.

    “The pro bono commission and the bar foundation were trying on all fronts to find ways to increase that revenue,” Fennell said.

    Although the exact amount the new IOLTA guidelines will generate is uncertain, Fennell said whatever new money comes into the program will help with service provision.

    “I think it’s a great statement about the priority of access to justice for all the lawyers in the state, and judges and justices too,” she said.
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Chuck Dunlap, executive director of the Indiana Bar Foundation, said the Indiana Supreme Court’s order moving Indiana to universal IOLTA participation was helpful for the state’s pro bono efforts.