Last Updated: April 2024

Well, I Reckon I-OLTA Change That Rate

An IOLTA Update from Access to Justice

The Arkansas Access to Justice Foundation has announced a significant update to the preferred bank program for interest on lawyer trust accounts (IOLTA). Effective June 2024, the Foundation’s preferred bank program will be indexed to the Federal Funds Target Rate (FFTR), moving away from a flat rate to a dynamic model better suited to reflect changes in economic conditions.

Under Administrative Order Number 22 and Arkansas Rule of Professional Conduct 1.15, eligible institutions that maintain IOLTA accounts must pay the highest rate or dividend generally available to their non-IOLTA customers when the IOLTA accounts meet or exceed the same minimum balance or other eligibility qualifications. The Arkansas Access to Justice Foundation is responsible for the administration of the IOLTA program. The Foundation conducts periodic compliance reviews of participating banks to ensure compliance with these rules. Preferred banks have agreed to pay a higher interest rate than what they might pay under Arkansas’s compliance rules and thus are exempt from periodic reviews.

Under the new system, the preferred rate for participating banks will be set at 60% of the FFTR, with a minimum floor of 0.5%. This adjustment means that the rate will adapt in response to changes in the FFTR, ensuring that it remains aligned with the broader financial environment. This change is a strategic move to normalize Arkansas’s rate, which has historically been among the lowest in the nation, most recently at a flat rate of 1%.

Preferred banks choose to offer rates higher than required under Arkansas’s compliance rules to support the Foundation’s mission to fund legal aid and other access to justice initiatives in Arkansas. Despite a less-than favorable rate environment in the past, many of these preferred banks have continued their support, contributing significantly to the legal aid ecosystem in the state. This support has helped enable the Foundation to provide grants to legal service providers such as the Center for Arkansas Legal Services and Legal Aid of Arkansas.

The new preferred rate structure promises to be an equitable and efficient method. The Foundation deeply appreciates the continued support and dedication of its bank partners. An easy way for attorneys to support Access to Justice is to open their IOLTA account with one of our Preferred Bank Partners! An updated list will be provided on our website in June. Click here to see the current list of preferred banks.