IOLTA Distribution for 2008-2009 will be $15,527,155, including $904,788 new Justice Gap money. This is an increase of 12.29% over the amount distributed last year (although the percentage increase to each program will vary depending on allocations within each county).

Status of Comparability

The Supreme Court agreed to the State Bar request to rescind the rule that would have prevented implementation of IOLTA comparability, and the State Bar Board of Governors adopted rules implementing comparability - all on an expedited basis, allowing the Legal Services Trust Fund Program to begin implementation very quickly.

Virtually all banks are in the pipeline for compliance. Two hundred and nineteen banks are eligible and 48 banks have been identified as provisionally eligible (meaning we are still working with them to identify comparable rates). Effective March 1st, all banks will pay dividends and interest rates comparable to dividends and interest rates paid to each bank's similarly situated account holders (retroactive if necessary).

As previously indicated, IOLTA rates tend to follow the Federal Funds Target Rate. Unfortunately drops in the Federal Funds Target Rate in late 2007 were followed by an unprecedented 75 basis points in mid-January, followed immediately by another 50-point drop a week later. On March 18th, the Federal Reserve dropped the target rate another 75 basis points to 2.25%.

Given the dropping rates, we almost certainly would have been looking at cuts of 20% or more were it not for implementation of the new comparability legislation. Fortunately, with comparability, we are able to increase IOLTA revenue 12.29% over last year, for a distribution of $15,527,155. (Of course, the percentage of your program's increase will depend on the allocations of qualified expenditures between the programs within your county.) While this is disappointing, the good news is that when interest rates rise, the IOLTA program will be in place to capture the upswing.

Because rates are dropping as we negotiate, and we don't have a track record on rates or costs, our projections for IOLTA revenue are still very rough. The difference in projected revenue ranges from a high of $50 million if the fed funds rate had stayed at its September 2007 rate of 4.75, to a low of $11 million if the fed funds rate drop to 1.0%. We will keep you apprised of IOLTA revenue as the year progresses.