[Congressional Record Volume 156, Number 173 (Wednesday, December 22, 2010)]
[Senate]
[Pages S10963-S10964]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                   Interest on Lawyer Trust Accounts

  Mr. MERKLEY. Madam President, I rise to discuss and ask unanimous 
consent for consideration of H.R. 6398. I

[[Page S10964]]

will get to the unanimous consent language in a moment, but right now I 
want to describe what this is about. Then I wish to yield to my 
colleague from Georgia to add a little bit of the impact of this issue.
  The issue is this: In all 50 States in America, lawyers have to put 
clients' funds into trust accounts. Under the law, they are not allowed 
to earn interest on these accounts. Over time, an arrangement has been 
worked out whereby the banks pay interest, but it does not go to the 
clients; it goes to fund civil legal services for those who cannot 
afford those services.
  This arrangement is in great jeopardy if we do not pass this bill 
today. I will expand on that jeopardy in a moment, but at this point I 
simply am going to yield to my colleague from Georgia.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. ISAKSON. Madam President, I thank the Senator from Oregon. This 
is very important work, and we are in our late hour. Sometimes we do 
our best in the late hour.
  The unintended consequence of the Dodd-Frank legislation with regard 
to IOLTA is it not being extended and we are going to literally have 
thousands of escrow accounts held by law firms and attorneys, real 
estate transactions, dispute resolution transactions, and beneficial 
programs that will have to be spread among many more banks because the 
insurance level, which is now limited, drops to $250,000. It would 
force the transfer of escrow account money out of any number of banks. 
At a time when capital is critical in small community banks, the 
unintended consequence might have been to take them below tier one 
capital requirements and put them in a stress situation.
  I commend the distinguished Senator from Oregon for his work on this 
legislation. I thank the Senator from Louisiana, Mr. Vitter, for his 
consent for us to bring this forward. I give wholehearted support to 
the unanimous consent request.
  I yield back to the Senator.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. MERKLEY. Madam President, I appreciate so much the partnership of 
my colleague from Georgia. He has laid out clearly the impact of a 
failure to fix this legislation on our community banks where lawyers, 
exercising their fiduciary responsibilities, would have to move their 
trust accounts out of these special accounts where the interest goes to 
legal services and legal education and into no-interest-bearing 
accounts so that no one gains from that movement. In the course of it, 
they would be moving funds often from community banks to other 
institutions, imperiling these community banks.
  I wish to address the other side of this issue, which is the 
important work these funds do in all 50 States. I will speak 
specifically to the State of Oregon, but there are parallels because 
all 50 States participate with these accounts.
  In Oregon, we have, first, the association of Oregon Legal Services 
Program, its primary source of civil legal assistance available to low-
income Oregonians. To give a sense, if a woman is having a big 
challenge with domestic violence, she can get legal aid through this 
type of assistance. If a family is trying to struggle with a mistake on 
a foreclosure process so they can save their home, they can get 
assistance through this program. They have 20 offices throughout the 
State of Oregon to serve Oregonians living in poverty.

  Second is the Juvenile Rights Project. This provides legal services 
to children and families through individual representation in juvenile 
court and school proceedings to help children who are in 
extraordinarily difficult circumstances.
  A third is Disability Rights Oregon, the Oregon Advocacy Center, 
which assists those who are disabled, who are victims of abuse or 
neglect, or have difficulty acquiring health care or need to exercise 
their rights in regard to special education. They can turn to the 
Oregon Advocacy Center-Disability Rights of Oregon for help.
  In addition, these funds pay for legal-oriented education for our K-
12 students. Let me give an example of three programs in Oregon. These 
programs assist 15,000 students in our State.
  One is the High School Mock Trial Competition. This type of mock 
trial competition is an enormous learning exercise for our students in 
how our courts function and how the facts of a case are presented and 
how the principles of law are applied.
  Then we have the summer institute training for teachers so that 
social studies teachers can learn more about the role of law and be 
more effective in conveying that vision to our students.
  Then I also want to mention the We The People Program on the 
Constitution and Bill of Rights. Here in this Chamber, we discuss the 
Constitution and the Bill of Rights virtually on a daily basis. 
Virtually every day on this floor, we discuss how these founding 
documents affect how our laws are applied and how freedoms are 
protected in the United States of America. This program helps our 
children learn those fundamental principles. Sort of the heart and 
spirit of the American democratic world are conveyed through this We 
The People Program.
  I also wish to commend a whole host of banks in Oregon that have 
agreed not only to pay interest on these lawyer trust accounts--and 
IOLTA stands for interest on lawyer trust accounts--but to pay 1 
percent, which is above the going rate on most types of transaction 
accounts. They do that because they benefit from the deposits, and they 
know their communities benefit from these services and these programs.
  This legislation will resolve a problem in which lawyers, applying 
their fiduciary responsibilities, would have had to withdraw their 
funds from these accounts and put them in other non-interest-bearing 
accounts, to no benefit to anyone and to a great deal of harm to so 
many.

                          ____________________