Guest Author
In 1981, Florida’s bankers and attorneys worked together to solve a problem – how to provide legal assistance for people who could not afford it.
Law firms have a “trust” account to deposit client money. This account keeps client money separate from law firm operating accounts. When this money is aggregated with other clients’ money, it can earn more interest.
Together, working with The Florida Bar’s charitable foundation, The Florida Bar Foundation, now known as Funding Florida Legal Aid (FFLA), a first-in-the-nation program was created to use the interest on client money in law firm trust accounts to fund Legal Aid services.
For 42 years, the program worked well, and Florida bankers were happy to work with Florida attorneys to support this worthy cause. However, in 2023, the Florida Bar rewrote the rules and dramatically increased the interest rate they require banks to pay FFLA. This program, which had been collecting and spending around $10 – 20 million per year, depending on interest rate levels in the market, suddenly raked in $280 million in one year – so much money that the attorneys could not figure out how to spend it all and put more than $140 million in reserves.
In fact, with all of this extra money, FFLA has gone beyond their original noble cause and extended funds to hire lobbyists, support egregious lawsuits against Florida job creators and property owners, increase a student loan repayment program exclusively for attorneys and other questionable programs. These programs are not primarily supported by donors to FFLA, they are primarily supported by the significant interest paid on law firms’ client’s money. This significant interest is counter to the 1987 ruling by the 11th Circuit Court of Appeals in Cone v. The State Bar of Florida, 819 F.2d 1002, which determined that the interest gained for the program was nominal. A jump to nearly $300 million (projected interest revenue for 2024-2025) is certainly not nominal.
The FFLA has yet to justify why they should be treated better than any other individual, family, non-profit or business, including you. They believe they should get more money through the Supreme Court’s edict because they cannot raise money elsewhere. Banks are willing to help the FFLA explore other sources of income, such as increased support from Bar members or a state appropriation. We all want to continue the good work for which this program was initially conceived and created. Still, the recently imposed rate increase of more than 3,000% is unsustainable, unconstitutional and affects all bank customers’ interest, not just IOTA accounts. The current arbitrary rate jeopardizes the entire program and must be reset to a more reasonable, nominal, and sustainable level comparable to what other non-IOTA bank customers receive.
Legislation HB 173/SB 498 is before the Florida House and Senate. It would do exactly that and guarantee that this vital program continues for years to come. The bill has been voted favorably in all three Senate committees of reference and deserves the same consideration in the House.
A fairly set interest rate that adequately funds this critical effort is in everyone’s best interest – attorneys, bankers, and, most importantly, the citizens of Florida. I urge the Florida Legislature to continue working on the good bills they have before them on this issue and pass them this Legislative Session so that Funding Florida Legal Aid can continue the good work it has done for decades and the decades yet to come.
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Scott Jenkins represents the Bankers for a Sustainable IOTA Program.
