Frequently Asked Questions

What is IOLA?
"IOLA" stands for the Interest on Lawyer Fund of the State of New York. IOLA is an entity within the Executive Branch of the State of New York. Established by the Legislature in 1983, IOLA receives its funding solely from the interest on New York lawyers' IOLA trust accounts. The Fund uses this income to award grants to non-profit organizations in New York that provide civil legal assistance to low-income people.

What legal assistance is supported by IOLA's grants?
IOLA's grants allow non-profit organizations to help low-income New Yorkers obtain professional assistance for civil legal problems that affect their most basic needs: food, shelter, jobs and access to health care, among others. In 2008, IOLA provided $25 million in grants to over 70 grantee organizations. In recent years, IOLA grantees annually assisted more than 500,000 individuals with more than 250,000 legal problems.

How is IOLA administered?
IOLA is governed by a fifteen member board of trustees appointed by the Governor -- seven in the Governor's sole discretion and eight upon the recommendations of other State leaders: the Speaker of the Assembly, the Majority Leader of the Senate, the Minority Leaders of the Assembly and Senate and the Chief Judge. IOLA is administered by a small staff from an office in New York City.

Does IOLA receive taxpayer support?
No.

Does IOLA receive funding from the biennial registration fee that New York lawyers pay to the Office of Court Administration?
No.

Are IOLA funds available to the State government for other purposes?
No. Every dollar earned by IOLA is used for grants to civil legal assistance organizations and the administration of IOLA.

What is the difference between IOLA and the Lawyers' Fund for Client Protection?
IOLA and the Lawyers' Fund for Client Protection (www.nylawfund.org) are unrelated entities with entirely different missions. IOLA is solely concerned with providing financial support for non-profit providers of civil legal assistance. The Lawyers' Fund, on the other hand, provides reimbursement to law clients who have lost money or property as a result of lawyers' dishonest conduct in the practice of law. The Lawyers' Fund is financed by the members of the legal profession in New York State through a registration fee required by law.

Are all New York lawyers subject to IOLA's requirements?
No. Only those who hold "qualified" funds in trust for a client, as explained below, are subject to IOLA's requirements and must establish an IOLA account.

What client funds are covered by IOLA's requirements?
Client funds held in trust by a lawyer that are "too small in amount or are reasonably expected to be held for too short a time to generate sufficient income to justify the expense of administering a segregated account for the benefit of the client or beneficial owner" are subject to IOLA's requirements. These are termed "qualified funds" by IOLA and are appropriate for deposit in the lawyer's IOLA account.
[21 NYCRR 7000.2(d)].

Who determines which funds must be deposited in an IOLA account?
The determination is made solely at the discretion of the lawyer in accordance with the Code of Professional Responsibility. There is no change in the lawyer's ethical responsibility to the client.
[Judiciary Law 497, § 4 and 5]

Does the use of IOLA accounts affect the client's ownership of or access to the deposited funds?
No. The principal deposited in an IOLA account remains the property of the client. The lawyer's records must reflect the individual identity and amount of each deposit. Only the interest earned on the account is remitted to IOLA.
[Judiciary Law 497, § 6]

How does a lawyer open an IOLA account?
The process is simple and does not impose added administrative burdens on lawyers. All a lawyer must do when he or she receives "qualified funds" is open an account at a participating bank. The account must be opened in the name of the lawyer or law firm and must include the following in the account title: "IOLA" and "Attorney Special Account," or "Attorney Escrow Account." Once the account is opened, fill in an enrollment form (obtained from the bank, or from the IOLA Fund's website), give the top part to the bank, and send the bottom to IOLA.

How can a lawyer know which banks offer IOLA accounts?
Nearly all banks in New York offer IOLA accounts. However, if in doubt ask the bank or call the IOLA office.

Who pays taxes on the interest income earned on the IOLA account?
Nobody! The Internal Revenue Service has ruled that there are no tax consequences to the client, lawyer or IOLA resulting from interest earned on IOLA accounts. This is because all interest income is remitted to IOLA and IOLA is an instrumentality of the State. Also, there are no IRS reporting requirements for lawyers, banks or clients. To ensure this, all IOLA accounts must bear IOLA's tax identification number.

What happens in the event of the death of an attorney who managed an IOLA account that still has funds in it?
The procedure for designation of successor signatories is explained in the Disciplinary Rules of the Code of Professional Responsibility.
[1200.46 DR 9-102(f-2)(1)]

Are IOLA deposits protected by the FDIC?
IOLA Deposits are covered up to $100,000 for each client whose funds are on deposit in an IOLA account. For more information, see the FDIC website for more information.

What if I have additional questions?
Call IOLA at (646) 865-1541 during business hours and someone will assist you. After hours, you may leave a message and someone will get back to you.

Many files on this site are in PDF format and must be viewed using Adobe Acrobat Reader. If you don't have Adobe Acrobat Reader installed on your computer, click the button at right to download this free software.