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Long hearing on SB 31: bar groups, legal-aid providers and nonprofits oppose changing IOLTA rules that fund civil legal services
Summary
Senate Bill 31 would change how interest on lawyers’ trust accounts is handled, making participation in interest-on-lawyer-trust-account (IOLTA) programs voluntary and allowing clients to direct interest under some options. Dozens of witnesses from the Montana Justice Foundation, legal-aid groups, private practitioners and nonprofit service
Senate Bill 31, introduced by Senator Barry Usher, would change handling of interest on lawyers’ pooled trust accounts (IOLTA accounts). The sponsor characterized the issue as a question of who controls interest on client funds and asked the committee to consider whether clients should decide how nominal-interest income on pooled trust accounts is distributed.
Opponents—who were numerous and included the Montana Justice Foundation board president Carlo Canty, Montana Legal Services Association (MLSA), the Montana Justice Foundation’s executive director, CASA program directors, private-practice attorneys and bankers—testified that the existing IOLTA framework is needed to fund civil legal aid and a range of nonprofit programs and that the bill would create administrative burdens, tax and banking complications, and reduced funding for clients who currently rely on grants supported by IOLTA revenue.
Carlo Canty, president of the Montana Justice Foundation board, described the foundation’s role in dispersing IOLTA funds and…
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