What is an IOLTA account? A pooled trust account whose interest funds legal aid. How IOLTA works, and what trust accounting software costs on published prices.
What is an IOLTA account? IOLTA stands for Interest on Lawyers’ Trust Accounts. It is a pooled, interest-bearing trust account where lawyers hold client funds that are too small, or held too briefly, to earn net interest for the client. The bank sends the interest to a state IOLTA program, which uses it mainly to fund civil legal aid.
This guide explains how IOLTA works, where the rules come from, and what trust accounting software costs on the prices vendors publish. Trust account rules vary by state, so this is a description, not compliance advice. Check your own state’s rules and IOLTA program.
How IOLTA Accounts Work
The ABA Commission on IOLTA’s overview explains the logic. Lawyers often hold money that belongs to clients, such as settlement checks or fees paid in advance. Large sums held for a long time can go in a separate trust account that earns interest for the client. Small or short-term sums cannot earn interest for the client after costs, so they are pooled in a single IOLTA account, and the interest goes to the state program.
The ABA says IOLTA programs operate in all 50 states, the District of Columbia, Puerto Rico and the US Virgin Islands. It reports that IOLTA has generated more than $4 billion since 1981, that grants nationwide topped $175 million in 2020, and that more than 90% of grants went to legal aid and pro bono programs. Most banks treat IOLTA accounts as NOW or business interest checking accounts.
Each state runs its own program. New Jersey’s, for example, is the IOLTA Fund of the Bar of New Jersey, which publishes separate guidance for attorneys and banks and keeps an attorney registration process.
Where the Rules Come From
The model rule is ABA Model Rule 1.15, Safekeeping Property. It requires lawyers to hold client and third-party property separate from their own, to keep complete records of trust account funds, and to preserve those records for a period after the representation ends (the model rule brackets five years, and states set their own). It allows lawyers to deposit their own funds only to cover bank service charges, and it requires advance fees and expenses to go into the trust account until they are earned or incurred.
The comment to Rule 1.15 adds that lawyers should keep current books and records under generally accepted accounting practice and follow any recordkeeping rules set by law or court order, pointing to the ABA’s Model Rules for Client Trust Account Records. States adopt their own versions. That recordkeeping is what trust accounting software is built to handle: client ledgers, a trust account journal and regular reconciliation of the bank statement against both.
What Trust Accounting Software Costs
Prices below are from each vendor’s own pricing page, checked October 24, 2026.
TrustBooks is the narrowest tool. Its pricing page lists a trust-only tier at $59 per month, firm and trust accounting at $79, and a $249 tier where its accountants complete bank reconciliations for one account, each covering up to 100 transactions a month, with a 14-day free trial.
LeanLaw runs on QuickBooks Online. Its pricing page says every plan includes trust accounting and lists Core at $55 per user per month and Pro at $75, with a seven-day free trial.
Practice management suites include trust accounting too. Bill4Time’s pricing page lists trust accounting in its Legal Pro plan at $59 per user per month billed annually. CosmoLex’s pricing page lists plans at $49, $99 and $129 per user per month, with trust accounting and ledgers among its features. Clio’s pricing page says accounting, including trust reconciliation, comes on every plan from its $49 Starter tier.
The trade-off is scope. A trust-only tool is cheaper if the firm already has billing software it likes. A suite avoids double entry but costs more per user.
Common Questions
What does IOLTA stand for?
Interest on Lawyers’ Trust Accounts.
Who gets the interest on an IOLTA account?
The state IOLTA program, which, per the ABA, uses it mainly to fund civil legal services for people with low incomes.
Is an IOLTA account the same as a trust account?
An IOLTA account is one kind of client trust account: a pooled account for nominal or short-term funds. Larger or longer-held funds may go in a separate interest-bearing trust account for the client.
Do I need special software for trust accounting?
No rule we reviewed requires specific software, but the recordkeeping the rules describe is why many firms use tools that keep client ledgers and reconciliations together. Check your state’s requirements.
The Verdict
Real. IOLTA is a long-standing, well-documented system, and several vendors now publish clear prices for the software that keeps trust records straight. The cheapest option depends on whether a firm needs trust accounting alone or a full billing suite.
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