Legal Foundation of Washington reports $34M in IOLTA revenue, urges cautious stewardship to state Supreme Court

The Legal Foundation of Washington told the Washington Supreme Court in May 2024 that interest on lawyer trust account (IOLTA) income for calendar year 2023 exceeded $34,000,000, enabling the foundation to expand multi-year grant commitments and launch new equity-focused programs while warning the court that the windfall is cyclical and requires careful stewardship.

"IOLTA interest for the calendar year of 2023 exceeded 34,000,000," Julie Farris, president of the Legal Foundation board, said during the foundation's annual presentation. She added, "We could spend it all and still not spend enough," stressing that higher revenue does not eliminate unmet legal needs.

The foundation reported $10,950,000 in direct legal-aid services provided in 2023 and said partnership grants awarded in November 2023 totaled nearly $30,000,000. LFW described a move from one-year to two-year grant cycles so partner organizations can better forecast hiring and retention. Presenters said partnership grants for 2024–25 were planned at roughly $27,300,000 (two-year commitments) and described $40,000 grants that aggregated to $400,000 in a program the foundation expects to expand to $1,000,000 next year.

Caitlin, an LFW staff member who presented the foundation's mission, reminded the court that the foundation was "created by the Supreme Court in 1984 to administer the interest on lawyer trust account program and other available funds, to programs, that provide civil legal aid for Washington state's poorest and most vulnerable people." That history framed the foundation's stewardship approach and its recent decisions to reinvest in short-term reserves and extend grant cycles.

The board outlined several programmatic priorities tied to the revenue increase: an accelerator grant program for new civil-justice initiatives, five new partnership grants targeted to communities of color through a race-equity pool, a special initiative focused on Indigenous communities and additional outreach in Southeast Washington. LFW said these steps were taken to broaden impact while keeping core legal-aid services funded.

Justices asked about coordination with recent state funding for right-to-counsel and how LFW interacts with the Office of Civil Legal Aid (OCCLA). Caitlin said OCCLA administers right-to-counsel appropriations through independent contracts, some with LFW grantees, and that providers coordinate across funding streams to prevent eviction and serve low-income clients.

The court also asked about research and workforce development. LFW said it recently discussed updating the civil legal needs study with state partners and hopes the court or a court-chaired task force will be involved; presenters also described a one-time data internship that used 2020 census and American Community Survey data to compare population demographics with grantee-reported client demographics, and noted that the Goldmark internship is the foundation's principal internship program.

Justices pressed the foundation on how interest rates and account choices affect IOLTA revenue. LFW explained that individual law firms choose where to hold IOLTA accounts; that the court adopted a comparability rule in 2010 requiring banks to pay comparable rates on IOLTA accounts; and that LFW uses both a full-time staff member and an outside contractor to monitor bank rates and encourage banks to adopt a "safe harbor" option (set at 75% of the federal funds rate) or otherwise maximize returns for IOLTA accounts. Board treasurer Gary Melanson, who identified himself as a financial advisor, said LFW stays in contact with banks and monitors rates to protect future grant capacity if interest income declines.

The court thanked the Legal Foundation for its work and partnership; the presentation closed with the court indicating willingness to help lead an updated civil legal needs study and to continue engagement with the foundation on preserving and deploying IOLTA funds.

The court did not take any formal vote during the session; the meeting concluded with a plan to reconvene in a year.