ACJF’s major funding source is from the Interest on Lawyers' Trust Accounts (IOLTA) of individual lawyers and law firms, who have designated the payment of interest on their IOLTA accounts to the ACJF. The Foundation is also supported by donations, which qualify as charitable contributions for federal and Alabama income, gift and estate tax purposes.
2. Are Alabama lawyers and law firms authorized to remit their IOLTA interest to the ACJF?
Yes. The Alabama Supreme Court, in an Order dated August 28, 1992, amended the Alabama Rules of Professional Conduct (which governs lawyers' uses of client trust funds) to permit interest on IOLTA accounts to be remitted by lawyers and law firms through their depository institutions either to the ACJF or the ALF, as designated by the individual lawyer or law firm.
3. Is the ACJF targeting only ALAJ (Alabama Association for Justice) Members for interest on their IOLTA accounts for the ACJF?
The ACJF is appealing to all Alabama lawyers and law firms to designate the ACJF as the recipient of interest on their IOLTA accounts and, in fact, has a range of lawyers from various areas of practice.
4. Is it permissible for the trust account to be non-interest bearing because the bank is willing to give me some advantages?
Client trust accounts may not be taken into consideration as part of your overall banking relationship. Lawyers may not benefit, even indirectly, from clients' funds unless the lawyer is specifically authorized to retain any such benefits for himself/herself. The term benefit means not only interest which accrues on any such account, but also any other preferential treatment, rebate, or other reward earned because of such financial arrangement.
5. May an attorney or law firm designate both the ACJF and the ALF as recipients of interest from one IOLTA account?
No. You must designate either the ACJF or the ALF for each IOLTA account. A lawyer or law firm may, however, have two IOLTA accounts with one designated to the ACJF and one to the ALF.
6. Will the ACJF's funds be distributed to clients of ALAJ members or to individuals?
No. The ACJF's funds will be used for the charitable purposes described in our mission and for administrative expenses. Pursuant to its mission statement, the ACJF will make distributions to organizations and groups which provide targeted services for disadvantaged Alabamians.
7. Once the ACJF receives IOLTA funds, who decides how the funds are used?
The Board of Directors of the ACJF decides how the funds are used. The executive director carries out the Board's decisions. The funds will be used to provide support for organizations aiding or assisting Alabama residents in need.
8. How does the Board select the grants?
Traditionally, ACJF has used a competitive grant process in which applications are received once a year and are thoroughly reviewed by the ACJF board and staff. However, with limited funds available due to historically low IOLTA (Interest on Lawyers Trust Accounts) receipts, ACJF is limiting grant applications to organizations seeking funds for broad impact initiatives as outlined in the criteria under grantmaking.
Organizations with potential for funding will be asked to submit an Initial Inquiry through ACJF’s online grant system for review by the Grants Committee. A limited number of organizations that submit Inquiries will be then be selected to submit a full application that will be developed by the potential grantee in cooperation with ACJF staff and the committee. All funded proposals will be approved by the ACJF Board of Directors.
9. Can a bank subtract all account related fees from the interest earned on the account?
No, only certain fees can be paid through the interest earned on IOLTA accounts. These fees are: per check charges, per deposit charges, a fee in lieu of minimum balance, federal deposit insurance fees, sweep fees, and a reasonable IOLTA account administrative fee.
10. How often does a bank have to remit interest from its accounts?
Interest from all ACJF IOLTA accounts can be remitted to ACJF at least quarterly; however, most banks remit monthly. These remittances can be sent to ACJF at P.O. Box 1549, Montgomery, AL 36102-1549 or remitted through an ACH. A report that includes certain information on each account is also required.
11. How is the interest rate on IOLTAs determined?
The Alabama Supreme Court has ruled that attorneys must have their IOLTA in a bank that pays a rate on IOLTA accounts that is comparable to its other similar accounts. The Court also provided a prevision called a safe harbor in which banks are allowed to pay .55% of the federal fund rate. Each bank chooses which of these two options they will pay. The rates paid are monitored by ACJF.
12. HOW CAN I JOIN NOW!
A lawyer or law firm can designate the interest from their trust account/s by completing a simple form, which requires the name and address of the law firm and bank, the account number and a signature. The form also asks whether the account is a new account, a non-interest bearing account, or whether the interest is being converted from an IOLTA account payable to the AL Law Foundation to an account payable to the ACJF.
Take the form to your bank and send a copy to the ACJF, P.O. Box 1549, Montgomery, AL 36102-1549; or by fax at 334.263.2003 or email at firstname.lastname@example.org.