Late last year, the State Bar of California launched its Leadership Bank program, recognizing financial institutions that help maximize funds to support meaningful access to justice for low-income Californians.
“Financial institutions in California hold nearly $5 billion in IOLTA accounts, the interest on which goes to support legal aid,” said Leah Wilson, Executive Director. “We know that attorneys and law firms care about increasing the availability of legal services for the millions of Californians who cannot afford to pay for these services. We are excited to highlight banks that choose to be a leader in supporting this work, recognizing and leveraging their tremendous economic power to do good for the neediest in the state.”
To become a designated Leadership Bank, financial institutions need to:
• Pay at least the established compliance rate (ECR) on their Interest on Lawyers’ Trust Accounts (IOLTA). The current ECR is 68 percent of the Federal Funds Rate (FFR); and
• Waive fees and charges on all IOLTA accounts, regardless of the account’s size.
The State Bar distributes grants to nearly 100 legal aid organizations who deliver crucial legal services to the most vulnerable low-income Californians. Examples of the impact these legal aid organizations have include:
• Enabling nearly 4,900 families to stay in their homes (2017);
• Obtaining more than 4,800 restraining orders to protect survivors from domestic violence (2017);
• Serving over 11,000 clients in the areas of consumer protection and financial matters (2018); and
• Supporting tens of thousands of seniors, veterans, and individuals with disabilities with civil legal issues (2018).
For 2020, the State Bar Board of Trustees approved a record distribution of $55.6 million in IOLTA funds. This dramatic leap in IOLTA revenue is largely the result of two factors: an improving economy that has driven rising interest rates, and the State Bar’s work with banks to maximize interest revenue.
However, the vast majority of need for legal aid in California remains unmet. The California Justice Gap Study estimates that 60 percent of low-income Californians (in households at or below 125 percent of the federal poverty level) reported experiencing at least one civil legal problem in their households in the past year, but only a small portion of those problems were addressed by legal aid. Meanwhile, legal aid organizations are able to fully resolve only 30 percent of the cases brought to them, with insufficient resources being a major limiter.
Becoming a leadership bank will afford the following benefits to financial institutions:
• Visibility as a partner in access to justice: The State Bar will highlight Leadership Banks on its website, publishing the inaugural list in January 2020. The State Bar will make attorneys aware that selecting a Leadership Bank for IOLTA funds will increase funding for and the impact of civil legal aid.
• Marketing edge: Financial institutions will have permission to advertise their Leadership Bank designation as evidence of their support for civil legal aid.
Ability to obtain Community Reinvestment Act (CRA) credit: Being a Leadership Bank will help financial institutions fulfill their CRA obligations by generating funds that will go directly towards assisting those most in need.
• Demonstrated social responsibility: Financial institutions care about their customers and their communities. This is another way to support veterans, seniors, and low-income Californians struggling with disability benefits, medical care, and other issues affecting their financial health.
The State Bar of California’s mission is to protect the public and includes the primary functions of licensing, regulation and discipline of attorneys; the advancement of the ethical and competent practice of law; and support of efforts for greater access to, and inclusion in, the legal system.
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