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Making it Count: IOLTA Partnerships Pay Off

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As attorneys and clients alike face incredibly difficult times, the success of the new IOLTA program is a bright spot, providing much-needed hope to those who support the needy. Several years ago, when the Access to Justice Commission, the state bar and the Nevada Law Foundation began their collaborative journey to improve IOLTA interest, the task could have been likened to Sisyphus, endlessly pushing that rock up an insurmountable hill. Fortunately, this is a group not daunted by hurdles to a laudable goal and those efforts are now coming to fruition.
While the minimum interest and reporting elements were new in 2010, IOLTA has been mandatory in Nevada since 2008, meaning one can no longer “opt out” for IOLTA eligible funds (short-term or nominal in amount). As before, individual interestbearing trust accounts may still be set up to inure to the benefit of the client. Pursuant to Rule 217, lawyers need only verify that IOLTA qualifying funds are placed with a participating financial institution as listed on the state bar’s website, and report the same along with annual dues. Currently a member is exempted only if there is no participating financial institution within twenty (20) miles or if the member does not process any fiduciary funds. The 2011 dues cycle marked the first
Membership Participation
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compliance reporting for attorneys under the amended rule. Despite the mandatory element of the new rule as it pertains to attorneys, the response from the bar’s membership has been overwhelmingly supportive. Many members conducted successful campaigns to encourage banks of choice to participate; several of the new banking partners confirmed that those campaigns were a critical component to encouraging their participation. Due to significant banking participation, very few members were required to move existing IOLTA accounts. The state bar now begins compliance review and notification. Over the next few months, any discrepancies noted will generate a letter affording the member an opportunity to remediate or otherwise communicate with the state bar to rectify the situation. It is important that members respond to these letters, as failure to do so will result in disciplinary review.
Nevada now has the unprecedented participation of 24 IOLTA financial institutions providing dramatically improved interest, currently at a minimum rate of .75 percent APY. From the original banks that started the ball rolling with significantly improved interest almost three years ago, to the newest partners, the financial institutions below are to be commended.
Banking Participation
Participating Financial Institutions
Updated March 2011
Bank of America Bank of George Bank of Nevada Bank of North Las Vegas Bank of the West City National Bank Financial Horizons Credit Union First Asian Bank First Independent Bank First Savings Bank First Security Bank of Nevada Heritage Bank M & I Bank Meadows Bank Mutual of Omaha Nevada Bank & Trust Nevada Commerce Bank Nevada State Bank Northern Trust Bank Plaza Bank (formerly Southwest USA) Service 1st Bank of Nevada Silver State School Credit Union U.S. Bank Wells Fargo
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Where the Money Goes
Nevada has six core legal aid providers for the state who receive the major portion of IOLTA funds: Legal Aid Center of Southern Nevada, Nevada Legal Services (the only statewide provider and only recipient of LSC funds), City of Las Vegas Senior Law Project, Washoe Legal Services, Volunteer Attorneys for Rural Nevadans and Washoe County Senior Law Project.
These six organizations face a ratio of about 5,000 Nevadans in need to every one civil legal aid attorney. Their services help a wide group of disenfranchised Nevadans including veterans, seniors, victims of domestic violence, children in foster care needing protection in the courts, victims of consumer fraud and victims of the mortgage/ foreclosure crisis. In addition, clinics and forms are provided to help thousands each year to represent themselves in many areas including bankruptcy, small claims, landlord/tenant, and divorce – a crucial part of easing the impact of increasingly high numbers of pro se litigants on the courts. For two decades, the Nevada Law Foundation has been the tax-exempt foundation designated by the Board of Governors and the Nevada Supreme Court to administer IOLTA funds. In the 2008 calendar year, the foundation granted $921,300 IOLTA dollars, with the six core legal aid providers sharing a total of $752,000 and 14 other law-related programs sharing $169,300.
2008 IOLTA Fund Recipients:
Legal Aid Center of Southern Nevada (LASCN) (702) 386-1070 800 8th St., Las Vegas, NV 89101
Washoe Legal Services (775) 329-2727 299 S. Arlington, Reno, NV 89501
Nevada Legal Services (702) 386-0404 530 S. Sixth St., Las Vegas, NV 89101
Volunteer Attorneys for Rural Nevadans (775) 883-8278 904 N. Nevada St., Carson City, NV 89703
• 9th Judicial Court Appointed Special Advocates • Clark County Law Foundation Trial by Peers • Clark County Neighborhood Justice Center • Committee to Aid Abused Women • Court Appointed Special Advocates Northeast Nevada • Foster Care and Adoption Association of Nevada • Las Vegas Senior Citizens Law Project • Legal Aid Center of Southern Nevada • Nevada Bar Foundation • Nevada Foundation for Consumer Education • Nevada Disability Advocacy Law Center • Nevada Legal Services • Relevant Education About the Law • SAFE House • Temporary Assistance for Domestic Crises • Volunteer Attorneys for Rural Nevadans • Washoe County Court Appointed Special Advocates • Washoe County Bar Foundation • Washoe County Senior Law Project • Washoe Legal Services
In the 2009 calendar year, with legal aid providers facing huge funding shortfalls, the foundation granted $1,074,500 IOLTA dollars of which the six core providers shared a total of $958,000 and eight other law-related programs shared $116,500.
City of Las Vegas Senior Citizens Law Project
(702) 229-6596 310 S. 9th St., Las Vegas, NV 89101
Washoe Senior Law Project
(775) 328-2592 1155 E. 9th St., Reno, NV 89512
2008 IOLTA Fund Recipients:
• Clark County Law Foundation Trial by Peers • Committee to Aid Abused Women • Court Appointed Special Advocates
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• • • • • • • • • • • •
Las Vegas Senior Citizens Law Project Legal Aid Center of Southern Nevada Nevada Disability Advocacy Law center Nevada Legal Services Northeastern Nevada Relevant Education About the Law (REAL) SAFE House Temporary Assistance for Domestic Crises Volunteer Attorneys for Rural Nevadans Washoe County Court Appointed Special Advocates Washoe County Senior Law Project Washoe Legal Services
The Nevada Law Foundation apprises that for the 2010 and 2011 calendar years, thanks to the success of the IOLTA program, there was sufficient funding to fulfill the grant requests of the core legal aid programs with some monies left for law-related programs. Annual reporting for the 2010 calendar year will be forthcoming later in 2011.
The Access to Justice Commission, the state bar and the Nevada Law Foundation appreciate the continuing efforts of banks, lawyers, the bench and bar in keeping IOLTA viable in Nevada and supporting civil legal aid. The legal profession brings its own unique support system to our communities that no else can. It requires little effort to ensure IOLTA funds are in one of many participating banks and generates a huge payoff. IOLTA accounts large and small cumulatively provide a critical source of funding for beleaguered legal aid services providing a lifeline to tens of thousands of Nevadans each year. The rural counties will be the hardest hit by funding cuts. Recently NLS was able to respond immediately when we got a call from Missouri Legal Aid, whose client was in their office because the father of her children had kidnapped them. He wasn’t on the birth certificate and hadn’t signed an acknowledgement, he was here in the country illegally, and he was on the run. He happened to be arrested in Elko on criminal battery charges and it appeared in the paper. When Missouri did a Google search, they found it and called us. NLS responded immediately and the children are now back with their mother. What would have happened if we had not been there? – Anna Marie Johnson, Executive Director, Nevada Legal Services
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The Bottom Line
IOLTA has a critical and growing role in supporting statewide civil legal aid, and there is reason to quietly celebrate the success of the new program. However, this discussion must be tempered by the scope of the deepening crisis for both civil legal aid and for Nevada as a whole. Before the current economic crisis, civil legal aid only had the resources to help about 20 percent of qualified people in need and less than half of the children in the court systems in need of representation. That doesn’t even include the working poor. Due to the commitment of a handful of banks before the new IOLTA rule took effect, Nevada avoided a catastrophic crash in IOLTA funding, managing to break even from the previous year and keep most existing programs in place for one more cycle. Those few banks, however, could not be expected to shoulder this burden alone for long, especially with the coming economic collapse. IOLTA used to represent on average about 10 percent of total funding for civil legal aid statewide. It’s not news to anyone that budget cuts both federally and locally are fierce for 2011. Nevada civil legal aid is going to be hit hard from reductions in other funding sources, for some estimates are as deep as 50 percent. That means the anticipated increase in IOLTA revenue, as exciting and critical as it is, still represents funding triage. The Nevada Law Foundation recently expanded its Board of Trustees to a talented, motivated 21-member board; the members have been working incredibly hard this past year on a battle plan to meet the challenges of these unprecedented economic circumstances. For more details, watch Nevada Lawyer this summer for an article from the foundation.
What the Future Holds
April 2011
Nevada Lawyer
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As Nevada’s largest nonprofit law firm, we believe that no one should be denied justice because they cannot afford an attorney. We represent the last best hope for thousands of low-income and unemployed residents who face a range of legal challenges. And yet, it is our clients who inspire us every day for the strength they show under such difficult circumstances … homeowners struggling against foreclosure, foster children searching for loving homes, victims of domestic violence fighting back against their abusers, consumers seeking justice against outrageous fraud. – Barbara Buckley, Executive Director, Legal Aid Center of Southern Nevada
State Bar of Nevada Member Benefits
Your state bar membership entitles you to the following benefits:
Fastcase – free online legal research for all active members. Career Center – help in finding legal jobs and candidates. CoreVault – tailored and managed services that automatically store and encrypt critical data offsite at private data centers. ABA Retiremement Funds – tax-qualified retirement plan services for the legal community. Ethics hotline – for all ethics related questions. Call 800-254-2797 to get the answers you need. State Bar Publications – Monthly subscription to Nevada Lawyer magazine and weekly subscription to the E-Newsletter. Lawyers Concerned for Lawyers – confidential help from a fellow lawyer is a phone call away. LawPay – credit card processing for attorneys. ABA Discount – 15% off ABA publications.
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Can I opt-out of IOLTA for funds that qualify as short-term or nominal?
No. Back in 2008, the Nevada Supreme Court amended SCR 217 to convert IOLTA from opt-out to mandatory. In practical effect, a lawyer must maintain an IOLTA-designated account in a participating financial institution for funds in this jurisdiction which are nominal in amount or to be held for a short period of time, where the interest on such funds is remitted to the Nevada Law Foundation (the designated taxexempt foundation pursuant to SCR 216). As before, interest-bearing trust accounts which inure to the benefit of a client are permitted (SCR 219).
What must I do to be in compliance with the new IOLTA rules?
1. At least annually, verify your IOLTA account(s) is in a participating financial institution. Verification shall consist of consulting with the official list of participating financial institutions published and maintained on the State Bar of Nevada website. 2. Report your IOLTA information on your annual member dues statement and verify you have checked to make sure your bank is participating in the IOLTA program (unless you are exempt). 3. Notify the state bar within 30 days if you move or open new IOLTA accounts throughout the year, on the form provided. 4. Establish and follow reasonably prudent procedures during the year to make sure all trust accounts, including IOLTA, are operating within the requirements of the rules of professional conduct. Notify the Nevada Law Foundation of any concerns that arise.
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Are there exemptions to the IOLTA requirement?
Yes. A lawyer is exempt if there is no participating financial institution within 20 miles (SCR 217(3)). As always, inactive members and active members who otherwise do not process fiduciary funds in this jurisdiction remain exempt from the requirement to have a trust account, IOLTA or otherwise. Remember: SCR 78.5 sets forth the preliminary threshold requirements for all funds held in any fiduciary capacity in connection with a representation, whether as trustee, agent, guardian, executor or otherwise. The regulatory imperative of this rule is disciplinary oversight, requiring that all trust accounts be in financial institutions that have an agreement to provide the state bar with overdraft notifications, and that all members as a condition of maintaining licensure are deemed to have consented to this reporting and production. All fiduciary funds are therefore trust funds and subject to the requirements of SCR 78.5. SCR 217 provides additional requirements for a separate class of trust accounts, IOLTAs, which are trust funds that are nominal in amount or to be held for a short period of time. IOLTAs pool money that would not otherwise generate interest for the benefit of the public good.
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Remember: Banking participation in the IOLTA program is entirely voluntary on the bank’s part. The onus is on the lawyer to ensure accounts are properly designated and with a participating financial institution. However, the state bar and the Nevada Law Foundation have made it easy by posting a list, updated monthly, for the purposes of verification. The Nevada Law Foundation monitors banking reports and submits monthly statements to the state bar detailing which banks are meeting the criterion of SCR 217. From those reports the state bar compiles and publishes the list of participating banks each month for members’ use.
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to the information reported by financial institutions. The state bar will then notify individual members of any inconsistencies and provide the member with an opportunity to remediate or otherwise respond.
If my bank is not a participating financial institution, must I move my IOLTA?
Yes, unless the 20-mile exemption applies. However, with 24 participating financial institutions representing more than 97 percent of all current trust accounts held in the state, very few members should be required to do so. More Questions about IOLTA? Phone: IOLTA hotline 702-317-1407 Email: KRISTINA mARzEc is a 15-year employee of the State Bar of Nevada. She worked for 12 years in the Office of Bar Counsel before assuming the position of Access to Justice Executive Director in 2008.
how will the state bar monitor member compliance?
Beginning in spring 2011, and at least annually thereafter, the State Bar of Nevada and the Nevada Law Foundation will work together to compare the information submitted on members’ dues statements
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