Dru Stevenson


IOLTA (Interest on Lawyers' Trust Accounts) is a popular mechanism for funding legal services for the poor, and such programs now operate in every state. IOLTA programs suffer from badly depleted resources due to the current financial environment, causing painful cutbacks at the nonprofit legal aid entities that depend on IOLTA for their operating expenses. This shortfall casts doubt on the wisdom of widespread dependence on IOLTA. The previous academic literature about IOLTA focused on input-side issues: the original owners' property rights in the interest taken to fund the programs, the compliance of lawyers with the program's requirements, and the role of banks as intermediaries. Instead, this Article focuses on the output side, analyzing some unconsidered consequences of IOLTA programs. This Article analyzes five previously ignored policy concerns about IOL TA: crowding out effects, monopoly and monopsony effects, agency problems, and moral hazard problems. Finally, the Article offers some modest policy reforms in response to these issues.

Included in

Law Commons



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.