Supreme Court updates IOTA interest rate formula

The Florida Supreme Court has approved a Florida Bar proposal that changes how interest rates are calculated on lawyer trust accounts, a move designed to align the court’s Interest on Trust Accounts program with recently enacted legislation and help ensure continued funding for civil legal aid services.

Acting June 4 in Case No. SC2025-1730, the court amended Rule Regulating The Florida Bar 5-1.1 to require participating financial institutions to pay a specified rate tied to the Wall Street Journal Prime Rate on IOTA accounts which generate millions of dollars annually to support legal services for low-income Floridians.

Under the amended rule, banks and financial institutions participating in the IOTA program must “pay, net of all fees and charges assessed by the eligible financial institution, the Wall Street Journal Prime Rate in effect on the first business day of each month less 300 basis points (3.00%) with a floor of 0.25% and a ceiling of 1.50%.”

The ruling settles a debate over the interest rate banks pay on attorney trust accounts that flows to the non-profit Funding Florida Legal Aid for distribution to legal aid organizations throughout the state. The IOTA program is the state’s only dedicated source of legal aid funding.

In dissent, Justice Adam Tanenbaum argued that the Supreme Court lacks authority to regulate the interest rates paid by financial institutions participating in the program.

“While the rule characterizes financial institutions’ participation in the IOTA program as ‘voluntary,’ it still mandates those participating institutions pay a rate meeting court-set parameters,” Tanenbaum said.