Lawyer trust accounts in Iowa

Lawyers in Iowa are required to segregate funds of a client from those of the lawyer. By Iowa Supreme Court ORDER, the IOLTA (Interest On Lawyer Trust Accounts) program became effective July 1, 1985 in Iowa, with the amending of Disciplinary Rules 9-102 and 9-103 of the Iowa Code of Professional Responsibility and the establishment of the Iowa Supreme Court Lawyer Trust Account Commission.

Effective July 1, 1985, and continuing to this date, Disciplinary Rule 9-102 requires all funds of clients paid to a lawyer or firm involving the practice of law in Iowa to be deposited in one or more identifiable interest bearing trust accounts located in Iowa.

Disciplinary Rule 9-102 provides three types of interest bearing trust accounts lawyers may establish:

1) A pooled, interest bearing trust account for deposits of client funds that are nominal in amount or reasonably expected to be held for a short period of time. This interest bearing trust account is commonly called an IOLTA account. The interest accruing on this type of account, net of transaction costs, is to be paid to the Lawyer Trust Account Commission, which in turn grants these funds to organizations primarily providing direct legal services to the poor in civil cases.

2) A separate interest bearing trust account for a particular client in which the interest, net of transaction costs, would be paid to the client.

3) A pooled interest trust account with subaccounting which will provide for computation of interest earned by each client's funds and the payment thereof, net of transactions costs, to the client.

In determining which type of interest bearing trust account to use when clients funds are received, lawyers are required to estimate whether the funds to be invested could be utilized to provide a significant positive net return to the client. Factors to be considered in this determination include the amount...