Change in IOLTA Rules Rejected by Bar Governors
An already agitated State Bar of Georgia Board of Governors halted a proposal Saturday requiring lawyers to establish client trust accounts at banks that agree to offer competitive interest rates.
Earlier in the board's meeting at Jekyll Island, members hotly debated a nomination to the state's Judicial Qualifications Commission. Some lawyers at the meeting said the contentious tone may have carried over to the discussion on trust account rates, but supporters of the measure say that no one appeared to oppose the requirement in acrimony.
"For most people I talked to, it was a question of timing," said State Bar Secretary Rita Sheffey, who is vice chair of the newly formed Civil Legal Services Task Force, which made the proposal. "Most said they would likely fully support it, but they just got a copy of the proposal on Thursday."
Bar President Charles "Buck" Ruffin, who appointed the task force this fall to find ways to raise funding for agencies that provide legal aid to indigent parties in civil cases, said the proposal will come back before the board during its mid-year meeting in January. If authorized, it would go to the state Supreme Court for final approval.
The governors received the final version of the proposal "about 40 hours before the meeting, and so a lot of them felt like they needed more time to review the materials," Ruffin said. "They had not had the time to ask questions like we had in the weeks this stuff had been under consideration [by the task force], and I don't blame them. That's fine."
The new rules proposed by the task force would establish a bar-approved list of eligible banks at which lawyers must hold trust accounts. Those banks would have to agree to pay interest rates or dividends that are no less than what they offer their non-IOLTA customers.
Interest on lawyer trust accounts (IOLTA) goes to the Georgia Bar Foundation for grants to agencies such as Georgia Legal Services and the Atlanta Legal Aid Society. Supporters estimated that requiring comparable rates could raise as much as $5 million to $6 million for legal aid over several years.
Currently, 33 states have similar rate requirements for lawyer trust accounts, bar general counsel Paula Frederick said. The rules change also would allow lawyers who live in areas without eligible banks or those who have business relationships with non-eligible banks to apply for a waiver from the requirement.
The task force, which is led by McKenna, Long & Aldridge partner J. Randolph Evans, also presented the board with a future proposal to raise fees paid by out-of-state lawyers to participate in Georgia cases. Ruffin and Sheffey noted that the board voted to support the concept of increasing pro hac vice fees, although the task force won't ask the board to officially approve backing the measure until January.
Past bar president Robin Frazer Clark said she was struck by the belligerent tone of the board meeting during the debate and vote on the JQC nomination.