All terms

IOLTA

IOLTA — An IOLTA is an interest- or dividend-bearing lawyer trust account in which interest earned on pooled client funds is remitted to a state bar foundation to fund legal services rather than paid to the lawyer or the client.

IOLTA is created by state supreme court rule, so its terms vary; North Carolina's rule, for example, requires that every general trust account be an interest- or dividend-bearing account with funds "available for withdrawal upon request and without delay" and that interest "be paid to the North Carolina State Bar to be used for the purposes authorized under the Interest on Lawyers' Trust Accounts Program." The rationale, common across states, is that funds nominal in amount or held briefly cannot earn enough interest to justify the cost of a client-specific account. For a collections firm, IOLTA discipline is a client-audit item as much as a bar item: collected funds sit in trust between receipt and remittance, and commingling firm fees with client funds is the fastest route to both a bar grievance and an adverse bank finding.

See also

• Three-way reconciliationA three-way reconciliation proves that the trust account's general ledger balance, the sum of all individual client ledger balances, and the adjusted bank statement balance are identical as of the same date.
• RemittanceRemittance is the scheduled transfer of collected funds from the firm's trust account to the creditor client, net of the firm's earned fee and any agreed costs, accompanied by an account-level accounting.
• Contingency feeA contingency fee is a fee payable to the collections firm as an agreed percentage of amounts actually collected, earned only on recovery rather than billed for time.

Where this appears

• IOLTA trust accounting and three-way reconciliation
• Client Trust Accounting for Collections Firms: What Does Three-Way Reconciliation Actually Require?

Last reviewed 2026-07-29

This is an informational reference, not legal advice, and using it creates no attorney-client relationship. Limitations periods turn on facts this page cannot know — which state's law governs, the contract type, when the claim accrued, and whether anything tolled or revived it. Confirm against the primary source and your own counsel before acting.