California Bar Journal
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IOLTA ruling
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ness’ because there is no cost to plaintiffs.”

Nowlin also rejected the claims by William Summers, a client of Houston attorney Michael Mazzone, that IOLTA forces him to support causes with which he disagrees. In fact, the judge said, the only purpose of IOLTA programs is to support legal services for the poor, which he said is an important state interest.

“The decision upholding IOLTA is a very important part of our efforts to provide access to justice,” said State Bar President Andrew Guilford. “Without IOLTA, those efforts would be greatly hampered.”

The case has already been the subject of a Supreme Court ruling in 1998 that the interest earned by most client money is the property of the client. However, the court did not decide if State Bar use of such money is constitutional. It remanded the matter to the Fifth U.S. Circuit Court of Appeals and the Texas trial court to decide that question.

The plaintiffs said they will appeal.

A similar challenge to the Washington state IOLTA program is pending before the Ninth Circuit Court of Appeals.

IOLTA programs, which raise about $100 million annually throughout the U.S., collect money from the interest earned on client money attorneys hold in their trust accounts. Last year in California, the State Bar’s Legal Services Trust Fund program handed out $11 million to more than 100 legal services operations.

Program director Judy Garlow said the Texas ruling is good news for low-income Californians for whom IOLTA provides a lifeline when they face legal problems.

“This ruling confirms what we have always said — that there is no loss to clients with IOLTA,” Garlow said.