The next step is to deposit the earned money into the attorney’s own accounts to be used for her business.Keeping earned money in the IOLTA will get an attorney in trouble with the state. Once it is time to bill the client for some of the work, send the bill to be approved, then withdraw the appropriate payment immediately from the account.The retainer will go on the books as a liability. Deposit the retainer into the IOLTA, and record the deposit in the books under the client’s name.Receive the retainer (or funds held in escrow), and decide if it is within the parameters of a CTA or an IOLTA.
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Failing to keep the records straight can result in a big confused mess and may cost clients extra money in the long run.Īttorneys must follow the process of the IOLTA program to keep things running smoothly.
![iota account iota account](https://bitcoinhub.co.za/wp-content/uploads/2018/03/IOTA.jpeg)
This can make the bookkeeping a little tricky, so it is important to keep great records about how much each client has in the account, how much money has been earned from each client, etc. This is a common problem when operating an IOLTA, but can be arranged correctly with proper communication between the attorney and the bank.Īn IOLTA is a pooled checking account, allowing the attorney to deposit funds from several clients into one place in order to earn interest. The bank fees must be paid by the attorney, from a normal checking account. If her bookkeeper does not record the deposits and withdrawals properly, the attorney will face severe consequences, possibly even losing her license.Īttorneys and bookkeepers must be sure that the IOLTA does not pay bank fees directly from the funds in the account. Now banks will allow ILOTA checking accounts to earn interest, and that interest goes straight to the IOLTA program.Īn attorney must be certain to follow the correct rules when recording the IOLTA in the books. However, the rule was modified in order to service this charitable program. The program faced opposition in the US because of a rule already in place stating that the attorney should never earn interest on a client’s money. The idea for using interest on small retainers began in Australia in 1964, then Canada, and soon after was adopted by Florida. These programs are strict about how the funds are used, how they should be recorded, and how an attorney should handle the account. Most of the United States have a requirement that every attorney maintain an IOLTA for the small retainers. The funds are also used to improve the legal system in each state. IOLTAs are special accounts that earn interest for the IOLTA program, which uses the money to provide legal services to people who otherwise couldn’t afford an attorney.
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This fund collects interest on small client retainers, or retainers that will not be held for very long.
IOTA ACCOUNT PLUS
At the conclusion of the case, any remaining funds, plus the interest earned, will go back to the client.Īn IOLTA – Interest on Lawyer’s Trust Account – is also a Client Trust Account, but it is set up a little differently. As the attorney earns money, she can send a bill to the client, and withdraw her earnings from the account. They must be placed into a Client Trust Account, and held there as long as the attorney and client are working together. The retainer funds do not belong to the attorney. The money is required up-front to ensure that their hard work will be paid for and that the client won’t have to scramble to meet payment deadlines along the way. Attorneys usually receive a large retainer before beginning a legal case.