BILL ANALYSIS
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THIRD READING
Bill No: AB 940
Author: Assembly Judiciary Committee
Amended: 4/13/09 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 6/9/09
AYES: Corbett, Harman, Florez, Leno, Walters
ASSEMBLY FLOOR : 73-0, 5/14/09 - See last page for vote
SUBJECT : Attorneys: Interest on Lawyer Trust Accounts
SOURCE : State Bar of California
DIGEST : This bill specifies that a financial institution
other than a bank may hold an Interest on Lawyer Trust
Account (IOLTA) and requires that financial institutions
holding IOLTA accounts carry deposit insurance. This bill
also requires attorneys to report to the State Bar their
compliance with laws regulating IOLTA accounts.
ANALYSIS : Existing law requires an attorney or law firm
that receives or disburses trust funds to establish and
maintain an IOLTA account in which the attorney or firm
must deposit or invest all client deposits or funds that
are nominal in amount or are on deposit or invested for a
short period of time. All such funds may be deposited or
invested in a single unsegregated account and the interest
and dividends earned on those accounts must be paid to the
State Bar to be used for programs that provide civil legal
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AB 940
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services to indigent persons. (Bus. & Prof. Code Sec.
6211(a).)
Existing law requires an attorney or law firm that
establishes an IOLTA account pursuant to Section 6211(a) to
meet specified requirements, including that the IOLTA
account be established and maintained with an "eligible
institution" that must offer an interest rate or dividends
on the IOLTA account that is not less than that generally
paid to nonattorney customers on similar accounts. (Bus. &
Prof. Code Sec. 6212.)
Existing law defines "eligible institution" to mean a bank
or any other financial institution authorized by the
Supreme Court. (Bus. & Prof. Code Sec. 6213(k).)
This bill revises the definition of "eligible institution"
to instead provide that the term means either: (1) a bank,
savings and loan, or other financial institution regulated
by a state or federal agency that pays interest or
dividends on the IOLTA account and carries deposit
insurance from an agency of the federal government; or (2)
any other type of financial institution authorized by the
Supreme Court.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/10/09)
State Bar of California (source)
Legal Aid Association of California
ARGUMENTS IN SUPPORT : The State Bar of California states
that the bill's expansion of the types of financial
institutions that may hold IOLTA accounts in addition to
banks is consistent with current practice.
ASSEMBLY FLOOR :
AYES: Adams, Anderson, Arambula, Beall, Bill Berryhill,
Tom Berryhill, Blakeslee, Block, Blumenfield, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
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Cook, Coto, Davis, De La Torre, De Leon, DeVore, Duvall,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuller,
Furutani, Galgiani, Garrick, Gilmore, Hagman, Hall,
Harkey, Hayashi, Hernandez, Hill, Huber, Huffman,
Jeffries, Jones, Knight, Krekorian, Lieu, Logue, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
Niello, Nielsen, John A. Perez, V. Manuel Perez,
Portantino, Price, Ruskin, Salas, Silva, Skinner,
Solorio, Audra Strickland, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada
NO VOTE RECORDED: Ammiano, Conway, Fuentes, Gaines,
Saldana, Smyth, Bass
RJG:nl 6/10/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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