MLAC is the largest funding source for civil legal aid in Massachusetts, with revenue from the state budget, the Interest on Lawyers’ Trust Accounts (IOLTA) program and the Board of Bar Overseers dues add-on program.
The majority of MLAC funds go toward General Support of civil legal aid programs. General Support funding provides legal aid programs with the flexibility they need to manage their day-to-day operations. The solid financial foundation of General Support makes it possible for legal aid programs to leverage additional funds from other sources.
One of MLAC’s two largest sources of revenue is an appropriation from the Commonwealth of Massachusetts. The appropriation for fiscal year 2019 is $21 million.
MLAC also receives 67 percent of the revenue generated by the Interest on Lawyers’ Trust Accounts (IOLTA) program.
Under Massachusetts Supreme Judicial Court rules, an attorney holding funds on behalf of a client must place the funds either in an account that pays interest to the client or in a pooled IOLTA account. An IOLTA account is used only if the funds are relatively modest, or will be held by the lawyer for a short time, so that the interest earned would be less than the cost of setting up and maintaining a separate account. Though the individual amounts of interest are small, the interest from the combined IOLTA accounts is significant.
The Massachusetts IOLTA Committee, appointed by the Supreme Judicial Court, distributes IOLTA funds to three charitable entities: MLAC, the Massachusetts Bar Foundation and the Boston Bar Foundation.
Massachusetts banking institutions continue to be important partners with lawyers and law firms in making IOLTA a success. Fair interest rates are the single most important factor in generating IOLTA revenue for legal aid programs.