Bar News - January 21, 2015
NH Bar Foundation News: IOLTA Account Choices Widened by New Law
By: Dan Wise
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
Institutions at the Leadership Level offer 2 percent or more on IOLTA accounts.
Institution for Savings
Piscataqua Savings Bank
TD Bank Massachusetts
Washington Savings Bank
Partner Level institutions offer 1 percent or more on IOLTA accounts.
New Hampshire Bar members with IOLTA trust accounts now have a greater variety of financial institutions to consider in placing their escrow accounts.
Last month, HR 3468, the Credit Union Share Insurance Fund Parity Act, was signed into law, ensuring credit unions parity with banks on escrow accounts, including IOLTA accounts.
Following the bill’s signing by President Barack Obama on Dec. 19, Debbie Matz, chair of the National Credit Union Administration board, stated: “Credit unions now have parity with banks and, effective immediately, can fully insure lawyers’ trust accounts up to $250,000 for each owner of the funds, which they could not do before.
“An attorney who is a member of the credit union where the trust account is opened now has a choice of financial institutions for that trust account. This enhances public confidence in both the banking and the credit union systems, now that federal share and deposit insurance programs administered by NCUA and the FDIC are the same.”
NH Supreme Court Rule 50 1(a) specifies that IOLTA accounts shall be established at “any bank or savings and loan association authorized by federal or state law to do business in New Hampshire and insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or other financial institution with adequate federal insurance covering client funds.”
Lisha Brosseau, program coordinator for the NH Bar Foundation, said she had been fielding inquiries from credit unions even before the legislation had passed that were interested in participating in IOLTA. Other IOLTA programs around the country are also fielding requests.
The NH Bar Foundation annually makes grants for operating funds to civil legal services providers serving disadvantaged and vulnerable people, including NH Legal Assistance, the NH Bar Association’s Pro Bono Referral Program and the Legal Advice & Referral Center. In the current fiscal year, grants of $960,000 were made for civil legal aid programs. Of the 49 participating financial institutions offering IOLTA accounts in New Hampshire, there are two groups of institutions that pay higher interest rates and waive some or all fees for IOLTA accounts. These are known as “Leadership Level” and “Partner Level” institutions.
“We have been grateful to the community-minded banks that have been stalwart supporters of IOLTA,” said Jack Middleton, chair of the NH Bar Foundation. “We welcome the opportunity presented by additional financial institutions that our members can choose from for their financial needs. We encourage all members to consider using financial institutions that will maximize the interest earned on their IOLTA accounts.”
Leadership Level institutions pay at least 2 percent interest on IOLTA accounts. Interest earned from Leadership Level institutions typically amounts to slightly more than half of all revenue earned by IOLTA. Significant contributions also are earned from financial institutions at the Partner Level (between 1 percent and just under 2 percent), most notably TD Bank, one of the largest banks in the state. (See accompanying list of institutions).
In the coming months, it is expected that the list of Leadership and Partner level institutions will expand with credit unions in different parts of the state signing on.
Steve Casey, director of finance for the Massachusetts IOLTA Committee, recently wrote about the potential of credit unions offering IOLTA accounts. “Financial institutions (the credit unions) that are actively seeking IOLTA business and that have a history of paying higher deposit account rates could provide a short–term boost to IOLTA programs that are positioned to take advantage of this potential change,” he said.