Wachovia Yields to Request for Higher Iolta Rate

Summary

---

When interest rates slumped about three years ago, IOLTA - interest on lawyer trust accounts -inevitably followed suit. Now that interest rates have climbed (most recently to 4.5 percent on short-term federal funds), the Maryland Legal Services Corp. has been campaigning for increases in IOLTA, a key funding source for its low-income clientele.Last week, a national bank did just that. Wachovia raised its IOLTA rates at the request of a 'major' IOLTA depositor, who prefers to remain anonymous.

Although pleased with the anticipated $750,000 annual boost in revenue this rate hike will generate, MLSC Executive Director Susan Erlichman wants more lawyers to ask the same of their own banks. We're not trying to get attorneys to change banks -, Erlichman said, just get them to change their banks' behavior, so IOLTA is implemented the way it was intended.In 1982, when the General Assembly identified IOLTA as a possible funding source for civil legal services programs, the average interest rate for such accounts in Maryland was 5.5 percent. As of January this year, however, it had plummeted to 0.59 percent. The sharp drop followed a decline in short-term interest rates nationwide. However, as the Federal Reserve has raised those rates - 14 times in the past year and a half - net interest on IOLTA accounts remained lower than other corporate accounts.The MLSC has managed to avoid a crisis in its funding capabilities over the last few years, thanks to an increased filing fee surcharge dedicated to supporting legal service providers, as well as more money going into IOLTA accounts due to the favorable real estate market.

See the full content of this document

Extract

---

Wachovia Yields to Request for Higher Iolta Rate

Honor rollIn making her case for higher rates from the banks, Erlichman said she's not asking for better treatment, but ...

See the full content of this document

---