The All Powerful Bar in Florida (and other states) has a Charitable arm called the Florida Bar Foundation, a not for profit corporation supported by numerous cash streams. A small percentage of their income comes from member donations,
but if figures from
Their annual report from 2016
are correct The Florida Bar Foundation received a total of 5.5 million in income last fiscal year (down from a high of 44 million ten years ago when interest rates were higher) and a whopping
44.6% of that was from interest on IOTA accounts.
UPDATE 2018: According to the 2017 report, the Foundation received 50% (up from 44% the year before) of its money from IOTA interest. Assuming their budget was balanced, they got and spent nearly 11.5 million dollars that year. This means IOTA interest was approximately $5,750,000, up about $250,000–just in interest alone in a near zero interest market, meaning their IOTA accounts held over a quarter of a billion dollars that belonged–not to the Bar– but to litigants who were making NOTHING on their own money!
What are IOTA accounts?
“The Interest on Trust Accounts (IOTA) program was implemented by the Florida Supreme Court in 1981. The nation’s first IOTA program, it serves as a model for similar programs across the country and creates millions of dollars in funding for legal aid each year. IOTA contributions are allocated annually to the three uses for IOTA funds, approved by the Florida Supreme Court:
Legal Assistance for the Poor
Improvements in the Administration of Justice
Law Student Assistance
Under IOTA, all nominal or short-term funds of clients or third persons are pooled into an interest-bearing checking account benefiting IOTA that “…the lawyer has determined cannot practicably be invested for the benefit of the client or third person.”…….
In order to earn that much in an environment of 1% interest, the principle in those accounts is north of 245 million dollars !!!!
check the math $5,500,000 x 0.446/.001=$245,000,000
That is some real money– and none of it is theirs!!! Yet they keep the earnings on other people’s money held in trust at the sole discretion of a lawyer for their own discretionary unmonitored use. All the lawyer has to do is determine that that money is not suitable for investment for the benefit of its owner!!
The irony is that these trusts have been created to pay pro bono lawyers and help out law students by making other people poor and unable to afford lawyers. And when these people look for legal aid they are turned away!!
The Florida Bar Foundation is in a money crunch because of low interest rates. So what is the best strategy to generate more revenue—EASY, take more money from litigants (like in probate) into IOTA accounts.