Bar News - April 16, 2014
NH Bar Foundation News: Good for You, Good for IOLTA - Get to Know Your Banker
By: Dan Wise
Financial institutions play a significant role in the success of the IOLTA program. The amount of funding generated through IOLTA each year is dependent upon several factors, including interest rates and bank service fees.
Another Set of Options:
In addition to the Leadership Banks (listed next to the bar chart on the bottom half of this page) the Bar Foundation now is recognizing “Partner Banks” that are paying at least 1 percent on IOLTA deposits. The Partner Banks listed below are responsible for nearly 30 percent of IOLTA’s revenue this year.
If you are considering a new banking relationship, the Bar Foundation suggests that you contact one of the Partner Banks listed below as an option for your trust accounts and your IOLTA account.
The contributions of banks, large and small, to the IOLTA Program, are a key part of a partnership between the legal community, banks, and the court to support this efficient form of charitable giving to civil legal services.
Institution for Savings
NBT Bank (formerly Hampshire First)
Piscataqua Savings Bank
Santander Bank (formerly Sovereign)
TD Bank – NH & MA
Washington Savings Bank
When possible, the Bar Foundation encourages attorneys to consider using a Leadership Bank (see banks listed below) which are currently paying at least 2 percent on IOLTA deposits. This group of banks accounts for about half of IOLTA’s annual revenue, which the Bar Foundation then grants as core funding to civil legal aid organizations that assist eligible low-income residents with serious legal problems. In the current year, IOLTA grants totaled $780,000 for core programs, providing civil legal services to disadvantaged people statewide. IOLTA funding is a vital lifeline for access to justice in our state.
However, attorneys and firms may not always be able to use a Leadership Bank, as they may have already established financial relationships with banks or have a rapport with an experienced and responsive bank officer in their communities.
Some New Hampshire attorneys have had success in approaching their banks and personally asking for preferred treatment for their firm’s IOLTA account. It can be possible to ask for a higher interest rate to be paid on an IOLTA account, even though the bank is not currently paying a Leadership Bank rate. If the bank is not able to increase the interest rate, an attorney can ask if the bank would consider waiving some or all of the service fees associated with an IOLTA account.
Mark Fernald, of Fernald, Taft, Falby & Little in Peterborough, has his IOLTA account with Lake Sunapee Bank, which is not currently a Leadership Bank.
“When we set up that account four or five years ago, I said that other banks were paying 2 percent on their IOLTA accounts, and the bank agreed to do that for us,” Fernald said. He said the bank waives out-going wire transfer fees. “Our relationship with the bank has gone really well,” he adds. He believes the bank’s continued support for IOLTA is a valuable part of their relationship.
Law practice management advisors emphasize that it is important for lawyers to develop a rapport with bank officers handling their firm’s accounts, and not just leave these matters to the person who handles finances for the firm. Lawyers’ trust accounts require careful handling, and lawyers are held personally responsible for violations of trust accounting rules.
“If necessary, spend the time to educate your banking institution,” advises Steven J. Best, an attorney and law practice management consultant, in a recent white paper on trust accounting practices. Best advises that attorneys make sure that “any fees on trust accounts should be drafted from the firm’s operating account. That includes bank charges, overdraft fees, check or deposit slip fees, printing fees and credit card merchant account fees.”
You Can Make a Difference!
2014 Leadership Banks
Bank of New Hampshire
Community Guaranty Savings Bank
Mascoma Savings Bank
Meredith Village Savings Bank
Merrimack County Savings Bank
Passumpsic Savings Bank
Sugar River Bank
Interest earned on $250,000
Select a Leadership Bank
Under Supreme Court Rule 50, interest earned on lawyers’ trust accounts that are either too nominal or held for too brief a time to warrant setting up a separate client account, must be kept in a pooled IOLTA account. The interest is forwarded to the New Hampshire Bar Foundation to be used for charitable purposes. Attorney participation in IOLTA supports the statewide IOLTA Grants Program which funds nonprofit organizations that provide free or reduced-fee civil legal services to our most disadvantaged residents and educational programs about the law and the courts.
for Your IOLTA Account
Leadership Banks are those banks that demonstrate the strongest support for the IOLTA Program by paying above-market rates of 2 percent or more. As you can see, Leadership Banks make a difference!