Interest On Trust Accounts (IOTAs)
In 1978, the State of Florida was the first in the nation to develop an IOTA program which required that financial institutions pay interest on these accounts to benefit a legal aid foundation, now known as Funding Florida Legal Aid. For many years, Florida’s financial institutions have been proud partners with their lawyer clients in supporting the legal aid needs of Floridians.
In March of 2023, the Florida Supreme Court issued an order amending the Rules Regulating the Florida Bar in regards to IOTAs. The amended rule provided that all lawyers must maintain their trust accounts in institutions that pay a rate as set by the Court. The new rate amounted to a 3000% increase in interest that banks would be required to pay to the legal aid program. Banks, particularly many community banks, will find it difficult to continue offering these accounts to their legal customers.
The FBA immediately filed a Motion for Rehearing with the Court, which was later granted. In its order granting the FBA’s motion, the Court also required that the Florida Bar Foundation report on the implementation of the new rule. Following that report, the Court ordered that any interested party be allowed to comment on the new rule. FBA submitted a response and combined exhibit of almost 30 banks and over 200 lawyers opposing the new rule. Florida’s Chief Financial Officer Jimmy Patronis as well as the Florida Chamber of Commerce also submitted comments opposing the new rule.
While the Florida Supreme Court had the FBA appeal under review, the FBA also pursued a legislative fix as another path to resolving this untenable solution. During the 2024 Legislative Session, Florida Senator Erin Grall (R-Vero Beach) and Representative Robert Brackett (R-Vero Beach) introduced SB 1336 and HB 1253, respectively, legislation that would reform Florida’s current IOTA program. The bills sought to provide a more appropriate index and interest rate than the 2023 rule, which inappropriately based the rate on the Prime Index. While these measures ultimately failed to pass the full Florida Legislature, the hearing of the bill during the committee process reopened negotiations between the FBA and the Florida Bar. These negotiations have remained open as both sides look to set the rate at a market-based formula that will be fair for all sides involved.
In March 2024, the Florida Supreme Court issued a new order requiring that the Florida Bar again provide an update on the implementation of the IOTA ruling by April 1, 2024. This order also allows the FBA and other interested parties with another opportunity to comment on the Bar’s implementation report by May 1. Click here to review the Court’s order.
In March of 2023, the Florida Supreme Court issued an order amending the Rules Regulating the Florida Bar in regards to IOTAs. The amended rule provided that all lawyers must maintain their trust accounts in institutions that pay a rate as set by the Court. The new rate amounted to a 3000% increase in interest that banks would be required to pay to the legal aid program. Banks, particularly many community banks, will find it difficult to continue offering these accounts to their legal customers.
The FBA immediately filed a Motion for Rehearing with the Court, which was later granted. In its order granting the FBA’s motion, the Court also required that the Florida Bar Foundation report on the implementation of the new rule. Following that report, the Court ordered that any interested party be allowed to comment on the new rule. FBA submitted a response and combined exhibit of almost 30 banks and over 200 lawyers opposing the new rule. Florida’s Chief Financial Officer Jimmy Patronis as well as the Florida Chamber of Commerce also submitted comments opposing the new rule.
While the Florida Supreme Court had the FBA appeal under review, the FBA also pursued a legislative fix as another path to resolving this untenable solution. During the 2024 Legislative Session, Florida Senator Erin Grall (R-Vero Beach) and Representative Robert Brackett (R-Vero Beach) introduced SB 1336 and HB 1253, respectively, legislation that would reform Florida’s current IOTA program. The bills sought to provide a more appropriate index and interest rate than the 2023 rule, which inappropriately based the rate on the Prime Index. While these measures ultimately failed to pass the full Florida Legislature, the hearing of the bill during the committee process reopened negotiations between the FBA and the Florida Bar. These negotiations have remained open as both sides look to set the rate at a market-based formula that will be fair for all sides involved.
In March 2024, the Florida Supreme Court issued a new order requiring that the Florida Bar again provide an update on the implementation of the IOTA ruling by April 1, 2024. This order also allows the FBA and other interested parties with another opportunity to comment on the Bar’s implementation report by May 1. Click here to review the Court’s order.
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