In New Jersey, IOLTA is the acronym for Income
on Non-Interest Bearing (IOLTA) Lawyer Trust Accounts.
Participation in New Jersey's IOLTA program
is mandatory for lawyers. The IOLTA Fund was
created by Supreme Court Rule 1:28A, and operates under the auspices
of the Court, with an independent Board of Trustees. A small
administrative staff handles the day-to-day management of the IOLTA program.
Very often, the amount of money that a lawyer handles for a single
client is nominal in amount, to be held for a short period of time,
or is the result of multiple parties or clients deciding to pool
advance payments against the costs of litigation in a single fund.
It would not be feasible for attorneys to establish separate interest-bearing
accounts for such clients, as the cost of administering the accounts,
including the lawyer's time and the bank's charges,
would be greater than the amount of interest that would be generated.
The Supreme Court of New Jersey permits these client deposits to
be pooled in common trust accounts which are interest-bearing to IOLTA.
The income is forwarded to the Fund directly by the financial institution
once the IOLTA Trust Account has been established.
The money collected by IOLTA is dedicated to
providing legal representation and assistance to the poor, improvements
in the administration of justice, and legal education to the public.
The funds can be used for no other purposes.