Oklahoma Bar Journal

Bar Foundation News | IOLTA Interest Rate Comparability is Fully Implemented, Effective Jan. 1, 2023

By Valerie Couch

Every day in the course of the Oklahoma Bar Foundation’s work, we hear compelling stories. We hear stories of lives transformed by the foundation’s support. We also hear tragic stories of people derailed by the lack of legal services. Our work takes us to the intersection of the law and mental illness, drug dependency, domestic violence, homelessness and child abuse and neglect. These stories drive us to be better, more effective and more connected to the urgent needs of Oklahomans.  

To increase resources to meet these ever-growing needs, the foundation recently asked the Oklahoma Supreme Court to amend Oklahoma Rule of Professional Conduct 1.15, Safekeeping Property. On Oct. 10, the Supreme Court granted the request and amended the rule, effective Jan. 1, 2023. With this change, Oklahoma joins 38 other state jurisdictions that have fully implemented interest rate comparability as a requirement for lawyers’ trust accounts – a step that will significantly increase revenues for the foundation’s grant programs in the coming years. 

Prior to the amendments, Rule 1.15 contained a provision for interest rate comparability on lawyers’ trust accounts by stating, “The rate of interest payable on [an IOLTA] account shall not be less than the rate paid by the depository institution to regular, non-lawyer depositors.”  

The problem, however, was the rule did not contain any provisions implementing rate comparability. The rule did not have a mechanism for determining the interest rates financial institutions were paying on non-lawyer deposit accounts or what the IOLTA rates should be. Consequently, many financial institutions offering preferred interest rates to non-IOLTA depositors did not provide comparable rates on IOLTA accounts and, in fact, routinely paid extremely low rates, even on IOLTA accounts with large balances. We needed technical adjustments to the rule to ensure that fair and comparable interest rates were paid on lawyers’ trust accounts.  

The new amendments to Rule 1.15 correct the problem and ensure that banks and other qualifying financial institutions treat IOLTA accounts fairly and equally – the same as accounts of other non-lawyer depositors. Importantly, the rule accomplishes this without regulating banks and without imposing any new requirements on Oklahoma attorneys.  

A financial institution’s participation in the Oklahoma IOLTA program has always been voluntary, and so it will continue to be. Each institution will continue to set its own depository interest rates based on the factors it normally considers. Each institution will also continue to decide whether to meet the requirements necessary to be qualified by the OBA Office of the General Counsel to offer IOLTA accounts – the same as in the past. 

Similarly, Oklahoma attorneys will proceed as usual. When an attorney seeks to open a new IOLTA account, the attorney can check with the Oklahoma Bar Foundation to identify financial institutions qualified to offer IOLTA accounts. In the unlikely event an institution decides not to pay the same rates on IOLTA accounts that it pays on non-attorney accounts with the same balances and other requirements, the foundation will work with the attorney and the institution to resolve the matter. 

This is a welcome and needed change! Fully implemented interest rate comparability will increase revenue for the foundation’s IOLTA grant program and bring us in line with many other states that have long benefitted from this program. IOLTA forms the bedrock of our ability to help others in accordance with our mission. Through this change, Oklahoma lawyers have greatly strengthened our profession’s ability to have an impact where human need is most urgent.  

Thank you to everyone involved in this effort and to the OBA Board of Governors for their support!  


What is IOLTA? IOLTA is an acronym for interest on lawyers’ trust accounts, established by Oklahoma Rule of Professional Conduct 1.15, Safekeeping Property. Under this rule, client funds held by attorneys that cannot earn net interest for a client must be deposited into an interest-bearing trust account. Interest earned by pooling these funds in an IOLTA account is paid to the Oklahoma Bar Foundation. IOLTA funds support legal aid programs for the poor, elderly, children, domestic violence survivors, the homeless and many others. It also supports access to justice programs, law-related education, high school mock trial programs and many other critical law-related charitable programs and activities throughout Oklahoma. 

What do the amendments to Rule 1.15 do? The amendments clarify the presence and meaning of rate comparability in Rule 1.15 and clarify what bank fees and service charges can be assessed on an IOLTA account. 

What is rate comparability? Rate comparability ensures that IOLTA accounts are treated fairly and equally, like the accounts of other bank customers. Rate comparability means a financial institution that wishes to offer IOLTA accounts to attorneys must pay the same rates of interest on IOLTA accounts as it pays on other non-attorney accounts with the same balances and other requirements.  

What did Rule 1.15 say about interest rates before the amendment? The rule that was amended included rate comparability by stating, “The rate of interest payable on the account shall not be less than the rate paid by the depository institution to regular, non-lawyer depositors.” It did not, however, contain necessary language or a process for determining what rates financial institutions were paying on accounts of other non-lawyer depositors or how to determine comparable rates. 

Does rate comparability regulate banks? Is a bank required to offer IOLTA accounts? No, rate comparability provisions do not regulate banks. A bank’s participation in the Oklahoma IOLTA program has always been voluntary and will continue to be voluntary. Each bank individually decides whether it wants to meet the requirements necessary to qualify to offer IOLTA accounts to attorneys. 

Does an IOLTA comparability rule set bank rates? No, rate comparability does not set or compare rates among banks. Rates paid under comparability are set by each bank and are based on all the factors a bank normally considers when it sets rates. Comparability only requires a participating bank to pay interest rates comparable to what it already pays its similarly situated non-attorney customers. For example, most financial institutions offer non-IOLTA depositors preferred interest rates for larger balances. However, these same institutions do not distinguish between small- and large-balance IOLTA accounts. The amended Rule 1.15 simply ensures that financial institutions now pay the large-balance IOLTA account the same rate it would otherwise qualify for if it were not an IOLTA account. 

How do banks comply with rate comparability? The amendments to Rule 1.15 offer banks several different options if they want to offer IOLTA accounts. They can 1) perform an analysis of their different products to establish what they pay as a comparable rate, 2) pay a safe harbor interest rate keyed to the familiar federal funds target rate, which would be more than 60% of the federal fund target rate or 0.60%, or 3) pay a rate that is agreed to by the financial institution and the foundation. 

Why would a bank choose to pay a safe harbor rate? A safe harbor rate is extremely simple and easy to implement. If a bank chooses to pay a safe harbor rate, it does not have to perform an analysis of its products. The bank will be automatically presumed to meet the rate comparability requirements. In the 38 other IOLTA jurisdictions that have rate comparability in their rules, banks often choose to pay a safe harbor rate. 

Do rate comparability provisions impose any new requirements on Oklahoma attorneys? No. The prior Rule 1.15 already required attorneys to open IOLTA accounts at financial institutions that have been approved by the OBA Office of the General Counsel to offer IOLTA accounts. The amendment simply adds the rate comparability provision a bank must meet to be approved. Oklahoma attorneys do not have to do anything different from what they already do. 

How will attorneys know if a bank is in compliance and is a bank that is approved to offer IOLTA accounts? The Oklahoma Bar Foundation, as the administrator of the IOLTA program, will make an individual determination on whether a bank is in compliance with the rate comparability provisions documentation and reporting requirements. The foundation will report its determinations to the OBA Office of the General Counsel and continue to maintain in its office a list of approved institutions. 

What is the impact when banks pay low interest rates? Low interest rates paid on IOLTA accounts mean the Oklahoma Bar Foundation’s ability to make grant awards to meet the legal service needs of Oklahomans is impaired. Low rates impair the ability to make awards to programs that rely on the foundation for annual funding and the ability to make consistent annual awards nonprofits can rely on. Low rates can even jeopardize the existence of some programs and prevent the funding of new programs. 

What changes do the amendments make regarding bank fees and service charges on IOLTA accounts? The prior Rule 1.15 said lawyers can only deposit their own funds in an IOLTA account to pay for bank fees and service charges in the amount necessary for that purpose. The amendments clarify what fees may be charged to an IOLTA account and what normal service charges are paid by a lawyer or law firm. Because IOLTA funds are used for charitable purposes, banks participating in the IOLTA program are asked to waive all fees and service charges on those accounts. 

Specifically, the only fees that may be deducted from IOLTA interest or dividends are the reasonable costs for banks to comply with their IOLTA reporting and payment requirements under Rule 1.15 and any fees for use of automated investment features assessed to similar non-IOLTA customers on bank products, if they are used to establish a comparable rate. A bank may not assess against the interest or dividends earned on an IOLTA account those service charges normally imposed on business accounts, such as insufficient funds charges, fees for certified or cashier’s checks, etc. Such charges remain the financial responsibility of the lawyer or law firm as a normal operating cost of the practice and should be properly disclosed to the lawyer or law firm by the bank. 

Scan the QR code with your phone or visit http://bit.ly/3GFHSHD to read the order.

Valerie Couch serves as the 2022 Oklahoma Bar Foundation president.

Originally published in the Oklahoma Bar Journal – OBJ 93 Vol 10 (December 2022)