U.S. Sen. David Vitter, R-La., has placed a "hold" on a noncontroversial amendment to the Dodd-Frank Wall Street Reform Bill that would help guarantee private funding for law-related education, legal aid to the poor and the administration of justice. The amendment has broad bipartisan support and has already passed the House, but thus far Vitter has refused to budge.
He reportedly is trying to leverage additional changes he wants in the bill. A call to his office for comment was not returned by press time.
The amendment Vitter is holding up would extend past Dec. 31 the existing FDIC protection to special bank accounts lawyers are required to set up to hold clients' funds. The special accounts are known in the legal profession as IOLTA accounts, an acronym for "interest on lawyers' trust accounts."
Under the rules of the legal profession, lawyers cannot earn interest on funds they hold in trust for their clients. Instead, interest on "IOLTA accounts" is pooled by state bar associations and used for law-related civic education, legal aid to the poor and to assist in the administration of justice. All such funds are private and thus save millions in similar government programs.
Last year, Louisiana lawyers generated more than $1.5 million from their IOLTA accounts. That money was spent on programs inside the state. The 2009 figure is almost $500,000 higher than in 2008. In the wake of Hurricanes Katrina, Rita and Gustav, and in the aftermath of the BP oil disaster, legal aid to the poor in Louisiana is more crucial than ever, IOLTA advocates say.
Without the FDIC coverage in the amendment Vitter is holding up, lawyers across the country would face an ethical dilemma because they are legally bound to protect clients' funds. If IOLTA accounts are not insured by the FDIC, many attorneys would have to deposit clients' funds in accounts where the interest is not directed toward programs that benefit the legal system or the poor.
IOLTA supporters say Vitter is the sole opponent in the Senate. The House approved the amendment overwhelmingly in a voice vote on Nov. 30. Vitter reportedly has been urged by colleagues and supporters in the legal profession to withdraw his hold, but to no avail. — Clancy DuBos