NAIP Highlights June 2022

Banking Bites – Are you prepared for rising interest rates? Here is what to remember…

by Christine Fecko (NY), Banking Committee

Are you ready?  Forget about what you heard in March about hitting 1.5% by the end of the year.  That’s old news.  On May 4, 2022, the Federal Reserve announced a 0.50% increase to the Federal Funds Market Rate (FFTR) and Chairman Jerome Powell indicated “broad support” for additional 0.50% increases in each of the next two meetings.  This means the FFTR would hit 2.00% by August and additional hikes in the third and fourth quarters could bring us to 2.5% by the end of the year.  Does your IOLTA program have a plan to ensure that IOLTA rates keep pace with that?


1. Identify The Right People

Start your outreach by verifying your contact list. Include the bank personnel with actual knowledge and authority for IOLTA rates. If the primary contact person is unresponsive, escalate. Approach the banks you want to review strategically. Reaching out to 300 banks at once may overwhelm your small office. Consider starting with small banks to gain confidence or with a few large banks with more money at stake. Regardless of your approach, be systematic and set deadlines. Time is money! Literally.

2. Ask for Everything

A compliance check should request information on all interest-bearing accounts, regardless of restrictions. This means business products and individual products and government products, as well as any products for special customers (e.g., high wealth individuals). Pro tip: ask for internal reports that show all rates that the bank pays on all products – it may be called a “Deposit Rate Specification Report.” Get everything you need to do your analysis. Be dogged.

3. Evaluate the Results

In most states, the IOLTA rate must be not less than what the bank’s best customer receives. It doesn’t matter that only 5 customers receive that rate. It doesn’t matter whether the bank publicizes the rate. Keep in mind that compliance generally means that each IOLTA account should receive the highest rate available among all comparable products. This means that the IOLTA rate may need to be tiered. For example, IOLTA accounts under $100k may get the business checking rate of 0.25% and IOLTA accounts over $100k get the private wealth checking rate of 0.50%.

4. Present and Negotiate the IOLTA Rate

In presenting your position on the IOLTA rate the bank should pay, know your legal authority. In your state, is rate setting a collaboration or do you determine comparability? Can you remove a non-compliant bank from your program? Understanding your power should inform your negotiating position and you should only discuss taking action that you’re willing to take.

Give the bank options where possible: flat, tiered, or a “net effective” rate (one that creates a flat rate based on the net revenue you would receive from a tiered rate structure). If you are negotiating a rate, set an expiration date for rate review that makes sense given what you know of the rate environment. Your rule may allow the bank to “emulate” the comparable rate without converting the IOLTA accounts to the comparable product (such as when the comparable product is an overnight investment account). This part of your compliance effort can get complicated, and it may make financial sense to get help from an outside consultant or a third-party rate provider.

5. What Now?

Keep in mind that the Fed’s rate increases will not necessarily change your IOLTA rates overnight – typically they lag by 3-6 months. In the meantime, consider sending out a letter now that lets your banks know that you know where rates are headed, reminds them of their obligation to maintain IOLTA rates, and puts them on notice of your intent to do a compliance check this summer or fall. It may prod voluntary rate adjustments and make your job just a little easier.

Good luck! If you have questions, please reach out to the NAIP Banking Committee.

“A Whole Community of People Supporting Me…”: Benefits of NAIP’s Mentor Program

by Guion Johnstone (KY), Membership Committee

Having a mentor through NAIP – which then expanded into many informal NAIP mentors – was an invaluable resource for me when I started as the Executive Director of the Kentucky IOLTA Fund. As a public interest lawyer, I had a lot of passion for the work that IOLTA supports, but completely lacked any banking experience that I realistically needed for the job. And, as a small program with only one other person on staff, I did not have much in the way of resources for learning the ropes within my office.

On one of my first days on the job, I was informed that IOLTA “pretty much takes care of itself.” I started sensing that was not the case when I received an initial call from my NAIP mentor, Len Horton, from Georgia. I could tell he was a wealth of information, but honestly, I gathered from the jargon he was using that I had a lot more to learn than I initially thought. Basis point? Comparability? Safe harbor? What in the world did all this mean? Through those initial months, Len continued to touch base with me and to serve as a resource when I had even the most basic of questions.

About six months into my job, I went to my first ABA/NAIP workshop. I attended the very first session that was for new executive directors. Len, who I had not yet met in real life, was there waiting for me so that I had someone familiar to sit with and to introduce me to everyone. Having Len there made showing up at a conference where I knew no one much less intimidating. During that two-day period, I felt like a sponge soaking up more information than I had ever anticipated. Indeed, I had a lot to learn because it was clear from the sessions that IOLTA did not “take care of itself.” I pretty much fell in love with Terri Smith-Ashford and Lushawn Phillips, who were and are banking goddesses. As I was feeling a bit overwhelmed with all my new knowledge, Kim Paulding offered the fantastic advice that she always returns home from the workshops with a plan to implement one new thing she learned.

After returning home to Kentucky, I began thinking about all the initiatives I wanted to implement. If Len didn’t know the answers, he always gladly connected me with someone who did. It’s taken several years, and our program is still very much a work in progress, but I cannot emphasize enough how much members of the NAIP community have supported me. I have cold-called people all over the country to talk about unclaimed funds and enforcing comparability requirements. I have driven to Tennessee to meet with Barri Bernstein to discuss software and to Ohio to meet with Angie Lloyd to discuss leadership banks. Everyone has been, without exception, tremendously warm and helpful.

Kentucky’s program has developed by leaps and bounds in the last five years. It is not because I was a great hire (remember.…I didn’t know what a basis point was). It is because of NAIP– starting with Len as my mentor and then, with time, a whole community of people supporting me.


EJC Conference

by Angie Lloyd (OH), Communications Committee

Members of the NAIP community met, learned, brainstormed, and generally caught up with each other last week at the ABA/NLADA Equal Justice Conference in Minneapolis.

Bridget Gernander hosted an amazing homemade dinner on Wednesday, featuring classic Minnesota dishes and a robust game of Codenames. Conference participants spent the rest of the week at the annual gathering of legal services and pro bono advocates sharing ideas about everything from DEI efforts to funding and supporting innovations like a Justice Bus. This year’s conference focused on strengthening partnerships among the key players in the civil justice system and enjoyed participation from a broad range of partners from throughout the U.S.

NAIP members from Arkansas, Indiana, Michigan, Minnesota, North Carolina, Ohio, Oregon, Texas, Utah, Virginia, and Wisconsin attended. Karl Doss presented on Virginia’s DEI efforts. Kim Pauling presented with Erika Rickard of the Pew Charitable Trust on Utah’s research on the impact of representation in bankruptcy proceedings. J. Singleton from presented on evaluating legal help portals and Ang Tripp of Michigan, in her capacity as a Michigan Access to Justice Commission member participated in the Access to Justice Chairs portion of the meetings.  The most exciting part of this year’s EJC was the opportunity to see colleagues in person and to have all of the wonderful, creative, and idea-sparking conversations that happen outside of sessions – in the hallways, at breakfast, and at the amazing host committee reception.

Committee Updates

by Caroline Behe, NAIP Operations Director

As an integral part of moving NAIP forward, NAIP’s committees meet monthly to ensure that objectives are on task and moving forward.

Our committees have been busy continually improving NAIP and the membership experience this fiscal year.

Earlier this year, NAIP and the Banking Committee joined the National Community Reinvestment Coalition (NCRC). The NCRC is leading discussions on the TD Bank and First Horizons merger. They held a joint call regarding the Community Benefit Agreement (CBA) with major stakeholders including the executives from TD Bank on May 6th. As the NAIP representative, Bill Penn was on the agenda to present on IOLTA. He did an excellent job amid quite the “room” of presenters (and observers too). The IOLTA/CRA/CBA ask fit perfectly in the fold with the other presentations and that this could be REALLY big and beneficial for the IOLTA programs (& therefore the LMI communities). We hope to hear more in the coming weeks and will update you soon.

The Communications Committee and Website Sub-Committees have been working to increase member communication through regular newsletters, social media, and creating additional opportunities to improve member networking and discussions.

The Education Committee has been continually developing member education, including a great opportunity coming up in June. Kate Marple will be leading a webinar for NAIP on storytelling to help inform policy change, raise awareness around social issues, and raise funds using client-centered language.

The Membership Committee is finishing up projects revolving around the salary survey and steering the membership renewal campaign. Their work has centered on increasing member visibility and member benefits. The membership committee has also been working on launching a new version of the NAIP Mentorship Program. We’ve included an article regarding the program above,–Make sure not to miss it!

If you are interested in joining an NAIP committee, please email me. NAIP’s Committee list includes Banking, Education, Communications, Membership, Racial Justice, Strategic Partnerships, and the Website Sub-Committee.