Glossary
IOLTA
IOLTA (Interest on Lawyers' Trust Accounts) is a program requiring lawyers to deposit short-term or nominal client funds into pooled trust accounts, with interest directed to civil legal aid rather than the firm or client.
When client funds are too small or held too briefly to earn interest for the client, bar associations require deposit into an IOLTA account instead of a separate account per client. The pooled interest funds legal services for people who cannot afford a lawyer.
IOLTA rules vary by state and province, but the core principle is consistent: client funds go into a designated trust account, the firm never touches the interest, and records must show every client's balance at all times.
Small firms often struggle with IOLTA compliance because their bank and their practice management software do not talk to each other. Reconciliation becomes a monthly spreadsheet exercise that invites errors.
LawNest Firm plan tracks trust balances per client, logs every deposit and disbursement, exports ledger statements for reconciliation, and lets you apply trust to invoices in one flow — reducing the gap between bank records and matter files.