Guest Author
As the founder of three Florida-based banks, I understand the importance of keeping costs low and protecting margins. That’s why some of my banking and finance colleagues consider my opposition to a proposed new, lower cap on interest rates paid on attorney IOTA accounts a betrayal.
However, the banking relationships earned through these accounts are immeasurably beneficial, regardless of any potential claims of slim margins.
The Florida Legislature is considering a bill to cap the interest paid on lawyer trust accounts that help provide legal services for low-income Floridians. I believe that would be the wrong approach.
In 2023, the Florida Supreme Court amended the rule requiring lawyers to ensure banks provide heightened interest rates on their trust accounts compared to other accounts. The interest paid on these accounts were directed to pay for legal representation for individuals who couldn’t afford an attorney.
This was both effective and right. It increased funding for legal aid across the state to help further meet the overwhelming need.
Unsurprisingly, bankers, who wrongly believe it will cost them, are now lobbying for a reversal. The truth is, very few banks hold much in lawyer trust accounts.
The IOTA rate in its current form should not run healthy banks out of business. If a bank’s day-to-day cash acquisitions are majorly impacted by IOTA interest, then the bank is not on healthy financial footing. On any given day, banks operate on the assumption that we must be prepared to pay out to all customers at once. Consequently, IOTA accounts are not a substantial part of banks’ interest-earning potential.
To be clear, it is not mandatory for banks to maintain IOTA accounts. We do so because IOTA accounts make banks substantial money from the accounts, even at the current level dictated by the amended Supreme Court rule. That may be one reason more banks have joined to service IOTA accounts after the 2023 rule amendment.
Regardless, it is the right thing to do. The resources generated for legal aid by the interest paid on IOTA accounts are critical to protecting Floridians’ right to due process, and the Florida Legislature should act to protect it.
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Ken LaRoe is the founder and CEO of Climate First Bancorp.
3 comments
Bored in Tally
April 9, 2025 at 7:46 pm
Isn’t the author the same guy who tried to start a bank for marijuana money. The internet says he supports DEI programs greatly but was still sued for discrimination. He doesn’t tell you that they aren’t using bank money or lawyer money to get interest but client money to the tune of $300 Million every year. Where’s my cut of that money?
StPeteAttorney
April 10, 2025 at 4:49 am
Thank you Ken Laroe for braving standing up to the bank lobbyists and supporting legal aid in our state!
For those who don’t know -Florida is one of two states in the entire country that does not fund civil legal aid at the state level, and banks paying IOTA means legal aid doesn’t rely on taxpayer dollars. The interest earned on IOTA accounts is so minimal that distributing it to individual clients is
impractical, so rather it is given to legal aid programs that serve the community as a whole.
Also, IOTA is VOLUNTARY for Banks; they do not have to offer trust accounts to lawyers if they don’t want to – this bill is exclusively about greed.
Bored in Tally
April 10, 2025 at 7:45 am
You got a few things right in your opinion. It is about greed. It’s about greed from the Bar Foundation that had them get the Supreme Court to change a rule (without input from Banksas was SOP) that now requires banks to treat them substantially better than any other client with a similar account all so they can take in almost $300 million as opposed to the roughly $10-20 million that was before the rule.
You are right that Florida is one of only two states that doesn’t fund Legal Aid? Why is that? Why should the Banks be unfairly taxed to provide a free service, where virtually every similar free service like that is funded by tax payer dollars? The Banks stated in their testimony that they would support a state appropriation. Has the Bar asked for one? No.