IOLTA

For any attorney holding client funds in a trust account — required in nearly every state.

IOLTA stands for Interest on Lawyers' Trust Accounts. It's a pooled trust account that holds client funds you're not yet entitled to — retainers, settlement proceeds, costs advanced — with the interest earned redirected to state legal aid programs instead of paid to you or the client.

Why it matters for a solo or small firm

For a solo or small firm, IOLTA isn't optional bookkeeping — it's the account regulators audit first, and mishandling it, even commingling firm and client funds by accident, is one of the fastest ways to draw a bar complaint with no intent to misuse funds required.

Example

You take a $3,000 retainer for a new matter. It goes into the IOLTA account, not your operating account, until you've actually earned it by billing time against it.