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Assembly Bill 1723 (Assembly Committee on Judiciary - 2007)

Chapter 422, Statutes of 2007, AB 1723

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Revises the laws governing Interest on Lawyer Trust Accounts (IOLTA accounts) and requires attorney and law firms to deposit or invest their IOLTA accounts, as newly defined, in financial institutions that offer high yielding interest or dividend accounts.

According to the statistics from the California Commission on Access, IOLTA funding produced $10,180,796 in revenue in 2005 for the Legal Services Trust Fund Program (LSTFP). In comparison, IOLTA funding in 1993 generated $18.9 million, which if adjusted for inflation is approximately $24.8 million. Initiatives by the LSTFP have produced some success with its work with banks, encouraging them to reduce service charges and/or increase the interest rates they are paying on IOLTA accounts, to the point of increasing revenues approximately $115,000 monthly or $1.4 million on an annual basis. However, that increase is still far less than what is needed to adequately fund legal services.