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SB 31

IOLTA Bill providing Interest back to client

2025 Regular Session Introduced by Barry Usher

Montana bill requiring attorneys to return IOLTA interest to clients instead of directing it to legal aid and justice initiatives, eliminating major funding source for low-income legal services.

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Bill Summary · SB 31

Legislative bill overview

SB 31 would require Interest on Lawyer Trust Accounts (IOLTA) to be returned to clients rather than directed to other purposes. The bill aims to ensure that interest earned on client funds held in trust by attorneys reverts to the clients who own those funds. This represents a change from current IOLTA practices where interest is typically directed to state bar associations or legal aid programs.

Why is this important

IOLTA programs generate millions of dollars annually that fund legal services for low-income individuals and civil justice initiatives across states. Redirecting this revenue stream to individual clients would eliminate a significant funding source for legal aid organizations while potentially providing minimal benefit to individual clients (since IOLTA accounts typically earn very small interest amounts). The change raises fundamental questions about balancing individual property rights against public access to justice.

Potential points of contention

  • Legal aid funding impact: Eliminating IOLTA revenue would substantially reduce resources available for legal services to low-income Montanans, potentially forcing cutbacks in civil legal aid programs
  • Individual client benefit: Most clients would receive negligible interest amounts (often cents to a few dollars), raising questions about practical value versus administrative burden
  • Constitutional property rights: Whether client funds generate sufficient interest to warrant individual return versus collective public benefit through legal aid programs

Compiled from official sources — confirm details with the bill’s official record.

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